, 1901-01-24
FIRE INSURANCE IN COLORADO

bthfe-dIS
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 busl-
ness in this state are by law required
to paw into the treasury two per cent
in excess of the premiums annually re-
ceived over losses and ordinary ex-
penses incurred within the state. Inc
estimated income from this source for
the present biennial period is Sl9b,6OO,
or s97, 500 per annum. The actual re-
ceipts for the last two years exceeded
$2l5, 900. This means that the receipts
of the insurance companies from policy
holders are annually over $4,000, OOe 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
raj tax throughout the union is
over three per cent. An increase OF
one per cent on insurance receipts Will
give an additional $780, 900 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 s5,O0O,-
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 a
tremendous drain Upon IL people.
The estimated premiums on fire in
rance paid by the citizens of Denver,
from April, 1900, to December, 1900, is
500. 900; losses by fire, sS60,629.45;
balance, s339,37O.55."
Where the Governor got his figures
or his ideas as to the law is unknown,
and his deductions make a 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 hat 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 81 EOS, 295. Losses paid were
81 ,072, 500 or 60 $40 per cent. Ex-
penses average 40 per cent, or 1852, lis,
showing losses and expenses to be ST.
754, 1877, or a net loss to the business
in Colorado of s49, 1872 during that year.
The law taxing profits las been chang
ed and now the companies pay a 2 per
cent tax on gross premiums, which in
cludes taxing losses and expenses. 1t
is safe to say that expenses average
3 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 f~orty-three per cent leaves
49, 4 IA ploAl Va UNI bSA pei SCDl
which is not high, considering the
hazardous nature of the business and
constant liability to CONGREGATIONS like
those that visited and destroyed Grip
pie Creek twice 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,
629.45; balance, 1899, $40. 55, emitting
entirely any allusion to expenses OF
1901, 600, 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, n hat there have
retired or failed over three hundred
stock comprehensive number of mu-
tual companies that have failed being
beyond computation.
1t is also a fact that fire insurance
companies 10 not pay any losses or ex-
penses. They are simply clearing
houses for the collection and distribu-
ton of the fire insurance tax. They
put up capital for carrying on the bust
ness. The policy holder must pay he
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.
The public, when enlightened as to
such facts as these, will undoubtedly
see 1t to their advantage to let the laws
OF supply and demand regulate the
cost. Competition will, as it has al
ways, hold the cost down to a safe
minimum
Use for Ape Refuse.