Kansas agitator. [volume] (Garnett, Kan.) 1890-1905, 1900-07-20
BUSINESS MEMS IDEAaFIRE INSURANCE

ton OF their policy holders. 1t might
be largely swept away by conflagra.
ton. The risk has been great, and yet
taking every hazard into considera.
ton, the average earnings from under.
writing of American companies on
their assets at risk have been less
than 3h per cent. Banks during the
same period have earned per cent.
1t will be seen. therefore. that the
fire insurance companies have been
earning but a small profit for the risk
assumed in the investment. That ths
risk is great is shown by the fact that
during the last quarter of century
over 1900 American fire insurance
companies have failed or retired, and
out of the survivors, only 80 organ
lied during the same period are still in
business.
Recognizing, then, that the com.
panies have not been bleeding the pub.
lie, policy holders who have been OBJ.
serving the trend of affairs see that
anti-compact laws, valued policy laws
and all legislation of such nature, in
variably cause higher rates because OF
the additional hazard, loss and expense
to companies which has to be collected
from the public.
Statistics show that from 1893 ratei
In the United States steadily declined
while in the anti-compact law states
they continued to increase, and not
until 1897 did they reach lower per.
centage than in 1893. The average rate
from 1893 to 1898 was $1.11 per 500
in the United States, eleven cents lower
than in 1893 In states having an an
ti-compact law the average rate during
the same period was $1.27, or one cent
lower than in 1893.
Laws prohibiting companies to as
sociate together to maintain fair rates
have utterly failed to reduce them.
After such laws are enacted, no COM
pany with business principles will
write policies at ruinous rates. The
old rates. therefore, prevail. II COM
panies were allowed to associate to-
gether and compare their experiences
In these states, the figures might show
that rates could be decreased. They
cannot reduce them because they are
forbidden by law to act in concert.
Valued policy laws which require
companies to pay the face Of the policy
in case of a total loss, whether the
property burned is worth that amount
or not. have increased the amount OF
fire waste and caused higher rates, be-
cause the greater loss requires just
that much more fire insurance tax.
When fire company Issues policy
Of $4,000, for example. 1t does not
agree to pay that amount in case of
loss, but 1t does give the policy holder
the privilege Of protection up to that
amount. If he has that much value
and it is destroyed. he is entitled Ia
that amount Of insurance.
To compel companies, therefore, to
pay the face Of policy, regardless OF
the value of the property destroyed. ia
an incentive to crime. When a man
through Misrepresentation secures $10,.
900 insurance on $4,000 worth Of goods
the valued policy law compels the com.
panies to pay, not the value Of the
property destroyed, but the amount
named in their policies as the limit OF
their liability.
The only persons who can possibly
be benefited by such laws are those
who carry insurance beyond the value
of their property. Rates have to be
increased where valued policy laws
prevail to cover increased fire waste,
in fact, 1t may be stated as an axiom
that any law that increases the expense
of fire insurance, or tends to increase
the fire waste Of this country, causes
increase in the cost OF
fire indemnity, which must be paid by
people who need 1t.