The state herald., 1901-01-25
FIRE INSURANCE in COLORADO

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State-Hs Deductions Thoroughly Mis-
leading.
The message of Governor Thomas
to the Legislature, while an able docu-
ment In many respects is convincing
in the fact that his figures as to Fire
Insurance In Colorado are based upon
information so erroneous as to be actu-
ally ridiculous.
We quote from the Governors mes
sage:
INSURANCE ASSESSMENTS"
The insurance companies doing busi-
ness in this state are by law required
to pay into the treasury two per cent
In excess OF the premiums annually re-
ceived over losses and ordinary ex-
penses incurred within the state. The
estimated income from this source FOR
the present biennial period is Sl95,60O,
or $97, 500 per annum. The actual re-
ceipts for the last two years exceeded
$2l5,000. 4This means that the receipts
of the insurance companies from policy
holders are annually over $4,000 in
excess of losses and expenses, the
great bulk of which is taken elsewhere.
The percentage paid to the state from
this enormous income, which Is largely
profit, is Insignificant. | am reliably
informed that the average specific In
surance tax throughout the union Is
over three per cent. An increase OF
one per cent on insurance receipts Will
give an additional 100000 to the state
for the next two years, and the added
burden to the companies will be scarce
ly perceptible."
In another part of the message the
Governor writes:
Il have referred to the states enor-
nous insurance business. Over $5,OOO,-
900 in excess OF losses and expenses
are paid annually to these companies.
by far the greater part Of which are
foreign. This tribute constitutes
tremendous drain upon our people.
The est mated premiums on fire in
surance paid by the citizens of Denver,
from April, 1900, to December, 1900, is
100000; losses by fire, s36o,629.45;
balance, 1896. .37O.55."
Where the Governor got his figures
or his ideas as to the law is unknown,
and his deductions make very untrue
and unfair statement when he attempts
to figure from the amount OF taxes
paid the apparent profit, as he even
eliminates the item OF expenses.
The facts are that for 1899. the last
year of official reports at hand, the
total premiums paid for fire insurance
for all companies combined. in Colo
RADIO, were sl,7O5,2 ,295. Losses paid were
81 .O72, ,669 or So $40 per cent. Ex-
penses average 40 per cent. or s6S2 lis,
showing losses and expenses to be ST.
1854. .7S7, or net loss to the business
in Colorado of $49.492 during that year.
The law taxing profits has been chang
ed and now the companies pay per
cent tax on gross premiums, which in
cludes taxing losses and expenses. 1t
is safe to say that expenses average
per cent higher in the mountain field
than In the more compactly built east
ern territory. owing to long distances
and high railroad and hotel fares.
We find that for twenty years the
average loss ratio In Colorado has ex-
ceeded forty-seven per cent Figuring
expenses at forty-three per cent leaves
an apparent profit OF only ten per cent.
which is not high. considering the
hazardous nature Of the business and
constant liability to connagrations like
those that visited and destroyed Clip
nla Craak fvira and Victor
The Governor. as quoted above. Is
evidently at sea as to profits when he
says the estimated premiums on fire
insurance paid by the citizens of Den
yer from April. 1900. to December,
1900. are 100000: losses by FIRE. $780,
629.i5; balance. s339,37O.55. omitting
entirely any a!lusion to expenses OF
s3ol, 900. most OF which is spent In the
state for taxes. commissions, travel
Ing and loss adjusting expenses.
II is solemn fact that through COM
petition. adverse legislation, and losses
and expenses the business OF fire insur-
ance has not yielded one-half OF one
per cent net profit In the United States
for all surviving companies for the
cycle OF 20 years, and that there have
retired or failed over three hundred
stock eompanies-the number OF mu-
tual companies that have failed being
beyond computation.
II Is also n fact that fre insurance
companies do not pay any losses or ex-
penses. They are simply clearing
houses for the collection and distribu-
tion OF the Are insurance tax. They
put up capital for carrying on the bust
ness. The policy holder must pay the
entire bill. and no matter how ap-
parently burdensome the legislation Is
made against the corporations the pre-.
mium payer pays the entire cost
Every Item OF cost Is added 10 the rate
The public. when enlightened as TO
such facts aS these. will undoubtedly
sec II to their advantage to le, the laws
OF supply and demand regulate the
cost Competition will. as II has al.
ways. hold the cost down to n taf,
minimum.
| Use for tIpls ttsfuse,