North Park union., 1901-02-01
FIRE INSURANCE IN COLORADO

i
R.x.rhabis rgurss In Governor
x....r,-ssys conp.niss Are Taxing
nv. uul,,.s Aa..sliy Out ea ts
.....-nn p,auctioas Thoroughly
lsading.
Ths message of Governor Thomas
to the Legislature. while an aoie ooeu-
ment In many respects is convinclns
in the fact that his figures a. 10 Tio
Insurance In Colorado are paseo upon
,nyormation 10 erroneous as to be actu-
ally ridiculous.
We quote from the Governors "es-
sage: .,,,,r>,ra.
The insurance companies doing ous'.
,..s IN this state are by law required
to nav into the treasury two per cent
IN excess of the premiums annually fe-
ce,ved over losses and ordinary eA
penses incurred within the state lne
estimated income from this source aoI
the present biennial period u $lso'oov'
or ss7 500 per annum. The actual re-
c.,nts for the last two years exceeded
so16 600. This means that the receip's
Of the insurance companies from pohcy
holders are annually over $6.OOo.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
nroht. in Insignificant am reliably
informed that the average specinc IN
.ur.nce tax throughout the union Is
ovsr three per cent. An increase OF
IN. per cent on insurance receipts Will
give an additional 100000 to the state
for the next two years. and the aodeo
burden to the companies will be scarce
ly perceptible."
In another part Of the message the
Governor writes:
"I 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 a
tremendous drain upon our people.
The est mated premiums on hre IN
surance paid by the citizens OF Denver
from April, 1900, to December. 1900. Is
100000; losses by fire, $3So.6Zs'4a'
balance, 1899 9,370.55."
Where the Governor got his hgures
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
/ ~
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
$l,072,669 or 62 $40 per cent. Ex-
penses average 40 per cent. or 36s2, ,1lS,
showing losses and expenses to be $l,-
754,7S7, or a net loss to the business
in Colorado OF 1892 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. II
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 hnd 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 ant
constant liability to confagrations like
those that visited and destroyed Grip
pie Creek twice and Victor.
The Governor. as quoted above, Il
evidently at sea as to profits when ht
says the estimated premiums on frt
insurance paid by the citizens Of Den
1900. are 100000; losses by fire, $780,,
62s.45; balance, 1899 9.37055. omittint
entirely any allusion to expenses O
1901, 900. most Of which IS spent In tn,
state for taxes, commissions. travel
ing and loss adjusting expenses.
1t is solemn fact that through com
petition, adverse legislation, and lossei
and expenses the business of fire insur
ance has not yielded one-half OF on,
per cent net profit In the United Statei
for all surviving companies for thu
cycle Of 20 years, and that there hav,
retired or failed over three hundred
stock companies--the number Of mu
tual companies that have failed beinl
beyond computation.
1t is also a fact that fire insuranc,
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. The,
put up capital for carrying on the bust
ness. The policy holder must pay tn,
entire bill, and no matter how ap
parently burdensome the legislation 1,
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 t.
such facts as these. will undoubtedl,
see 1t to their advantage to let the law
OF supply and demand regulate tn,
cost. Competition will, az. 1t has al
ways. hold the cost down to q SAT,
minimum