The times. [volume] (Washington [D.C.]) 1897-1901, 1900-06-03
INSURANCE MEN At War
Many Members Dismissed From the
Underwriters Association.
The Potomac Company nnd Six ouf-
side Concerns Leave the OrEnniz-
Said to lie Proposed The Disa-
greemcnt Over Extra Sub-Agencies


Serious trouble in the local insurance
field, which has been smoldering for sew
eral months, broke out IN a blaze yester-
day in the suspension by the Fire Insur-
ance Underwriters Association of a large
number of its most important and prom
inent members. The Potomac Insurance
Company of this city and its seventeen
agents. and the Home of New York. West
chester, Teutonia. Home of Baltimore
Rochester German, and Hamburg Bremen
| outside companies, and all their local
| agents were those against whom action
| was taken. There are threats and counter
threats of rate-cutting and other meas
ures and it is the opinion of prominent in
surance men ON both sides that the situa-
tion is a very disagreeable one for all
concerned and likely to be much more SO
before it is better.
The cause of the trouble is the rule
adopted last January that companies shall
pay large fees for each of their agents in
stead of dividing the expenses of the as
sociation according to the amount of busi-
ness done, as heretofore. The companies
and their agents who are suspended re-
they were unjust and unnecessary. The
suspensions followed and it is said that
large majority of the association voted
for this action
The companies and their agents who
have been suspended are as follows
Westchester of New York, represented by
Fitch, Fox & Brown and J. S. Swormstedt:
Home of New York, represented by ]. H.
Bradley; Rochester German and Ham
burg Bremen. represented by Heiskell &,
McLaren; Teutonia, represented by A. S.
Caywood; Home of Baltimore. represented
by Westcott, Wilcox G. Heiston, and the
Potomac of Washington and its agents,
Davidson & Davidson. Deeble & Co., B. H.
Warner & Co., Nauck & Nauck. Heiskell
& McLaren, and a large number of others.
The New Rule.
The new rule regarding fees was adopted
at the annual meeting of the association.
1t was to have gone into effect in March,
but was postponed until April and then a
second time, until now owing to the str4n-
uous figst against 1t by many of the mem
bers. Under the old plan the expenses of
the association. which are small. ranging
between $1,000 and $4,000 a year. were
divided up pro rata among all the COM
panies. local and foreign. In brief the
new rule charges each local company and
each central agency for a foreign company
s25 year fee and imposes additional fees
of SIS for one agent. $50 for each second
for every agent In addition to three main
tanned by any one company.
The arguments of those who favor the
new plan are that it Will provide addition
al revenue and that 1t will restrict the mul-
tiplication of smaller agencies and prevent
inexperienced and incompetent men from
engaging in the business.
On the other hand the Potomac Company,
which has the largest number of agencies,
and the other companies which are sus-
pended assert, that the rev rule is simply
intended to hamper their success and pre-
vent them from increasing their business.
1t is said by them that this system of
fees would provide five times as much rev.
enue as the association can use and al the
same time place an onerous burden on en-
terprise and growth.
1t is asserted by the former members
also that the fee of S100 for agents, in ex-
cess of three. is a prohbitive one. and
that the association intended it as such.
and did not expect to collect it. The plan
was adopted, they say, simply to forcs
them to give up their additional agencies.
This they have refused 10 do. preferring 6
suspension from the association.
Stntus of the Association.
The Fire Underwriters are voluntary
association for mutual protection and bene-
fit Membership is not compulsory, and
members are not bound by any rules ex-
cept in so far as they see fit to bind them
selves. The body has been considered al
most a necessity, however. and 1t is con-
ceded by all to have been an important and
highly beneficial organization. Up 20 the
present time there has never been any Sc
rious split Among the objects OF the as
sociation are the maintaining of equitable
rates. the prevention of trickery and un-
derhand methods in securing business, and
the examination and supervision of build
ing construction. electric wiring. and other
matters which directly affect risks. As the
fire insurance business has grown the work
of the association has increased in value
and Importance. Every city in the coun
try has an underwriters organization sim
liar to the local association, and they are
generally recognized as essential to the
orderly and proper conduct of the bust
ness.
among insurance men yesterday. Feeling
on both sides is bitter in the extreme,
and the opinion seems to be general that
the breach is a very serious one which
it will be difficult to overcome. The plans
of the former members are not yet fully
arranged, but it was said by several OF
them yesterday that they do not propose
to yield in the least in their position.
There is some talk of the formation OF
second organization and this will prob
ably be effected in some form, it is said
il the association does not reconsider its
action.
The present insurance rates are as low
as it is possible TO do business on profit
ably, it is said There are threats on
both sides, however. that these rates will
be cut in half if necessary. The associa-
tion also proposes to cut off all exchange
of business with the suspended members,
it is said.
In every case where there have been
similar fights in other cities they have re-
suited disastrously. In New York a few
years ago the underwriters association was
broken up and within six months rates
were cut to pieces. The largest hotels were
insured for "5 cents hundred or at the
rate of so cents annually on $1,000. In
short time a number of costly fires oc-
Cured and havoc was created in big sur
puses. 1t was found absolutely necessary
to reorganiZe the association.
CHINESE PIRATES REPULSED.