New-York tribune., 1900-05-06
HEAVY INSURANCE LOSSES.
THEY WILL CAUSE INCREASE IN RATES.
UNDERWRITERS SAY-REVIEW
OF SITUATION.

The fire insurance companies of the United
States. judging from the cries Of distress heard
now and then. are passing through an ordeal
of losses well calculated TO test their solvency.
Many underwriters do not hesitate to say that
rates viii have TO be largely increased If the
weaker companies stay in the field. The fire
in Ottawa and Hull. although across the border
and involving British companies TO a large X
tent has added to the dsquiet of the under
writers of this country, who get little comfort
from the outlook.
Elijah r. Kennedy, one of the prominent fire
insurance of the metropolis was seen yes
terday with reference to the present situation.
Il suppose" said Mr.. Kennedy that the
fire losses of the last four months are heavier
IN relation to the fire premiums for the same
period than they have ever been before in the
entire history Of fire underwriting in the United
States. Following upon the excessively disas-
trous results OF 1899. this continuance of losses
ts fairly appalling. 1t is a wonderful evidence
of the solvency of the companies that few
OF them have failed. and IT is an equally i'm
pressive testimony TO their fortitude and sta
bility that few of them have been driven
TO retire This condition, however cannot last
much longer. Even the companies that have
money that they could survive don't keep
their money TO lose in this way"
ITO what is the excessive and abnormal loss
Of this period due?" Mr.. Kennedy was asked
Il believe 1t is thoroughly agreed upon bv
underwriters that il is due the phenomenal |
and perhaps unprecedented prosperity of the
country In ordinary times what is called the
moral hazard is the cause Of numerous losses
"A man is unprosperous, sees failure ahead and
raises money by selling out to the insurance
companies. You would at first thought expect
that when all the rest of the country was pros
porous the fire insurance companies would
,yf- y,
ination of this element of moral hazard and it
is indubitabe that the losses among moor
risks where in ordinary times a moral hazard
would need TO be thoroughly investigated have
been much less in the last eighteen months
than we are accustomed to. But meantime the
great prosperous properties have been burning
On q risk under distrust a few companies might
write $1,000 $1,000 apiece and when 1t
burns it hurts no one OF them very much but
on a magnificent warehouse, prosperous TO the
highest degree, or great factory. where the
conditions absolutely exclude the possibility OF
moral hazard. why. the same companies have
perhaps $4,000 or $1,000 apiece, and the losses
by the destruction of number of these make
an enormous aggregate"
PROSPERITY INCREASES LOSSES
But how is the prosperity of the country
causing these losses?" inquired the reporter
Ashments. Take the instance of hosiery mill
in Pennsylvania. which the companies had
very large lines indeed. This property was
working not only all day. but also all night
and so much in demand were its products that
the entire output Of the mill for the next eight
months had been sold. But the mill burned to
the ground. Ordinarily the heat generated by
the friction in the machinery ceases shortly
after work shuts down at sunset but where the
friction is kept up all night long the danger
point is frequently passed in that excess of the
usual working hours Again, much cotton and
wool are flying about In such places and they
get into the oil and the journals thus creating
conditions favorable to spontaneous combustion
IL the mill is stopped every day and carefull,
looked after, and then is occasionally shut dowl.
day or two at time for repairs and cleaning
UP, these dangers are all guarded against: but
when the mill is going all the time cleanliness is
not possible. disorder ensues rubbish accumu-
lates. and the moment you have a dirty risk you
have a dangerous one. Then, 10 the boilers II
the fires must be kept up continuously night
and day, defects are created but are not discoV-
cred III that careful examination which is usu-