The Lamar register., 1901-01-23
FIRE INSURANCE IN COLORADO

| Five Millions Annually Out of tho
state-His 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 Flre
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,G0O.
or $97, 500 per annum. The actual re-
ceipts for the last two years exceeded
| $2l5,00O. This means that the receipts
| of the insurance companies from policy
| holders are annually over $5,OOOOOo 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. l 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 VIII
give an additional 100000 to the state
| for the next two years, and the added
! burden to the companies will be scarce
ly perceptibe."
In another part of the message the
| Governor writes:
II 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
$500, 900: losses by fire. $36O.629.45;
balance. s339,37O55."
| 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 $1.705.295. Losses paid were
$1,O72, ,669 or 62 $40 per cent. Ex-
| penses average 40 per cent, or $6s2,
| showing losses and expenses to be w.
| 754,7S7, or a net loss to the business
| in Colorado of $40, ,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. IL
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 confiagrations like
those that visited and destroyed Grip
pie Creek twice and Victor.
The Governor, as quoted above, Ia
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,
629.45; balance. $339,370.55, omitting
entirely any allusion to expenses OF
500, 900, most OF which Is spent in the
state for taxes. commissions, travel
ing and loss adjusting expenses.
1t Is a 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 companies-the number OF mu-
tual companies that have failed being
beyond computation.
1t is also fact that fire insurance
companies do not pay any losses or ex-
penses. They are simply clearing
houses for the collection and distribu-
tion OF the fire insurance tax. They
put up capital for carrying on the busi-
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-
MUM payer pays the entire cost
Every item Of cost is added to the rate.
ha
such facts as these, will undoubtedly