Rocky Ford enterprise., 1901-01-25
FIRE INSURANCE IN COLORADO

Five Aiiiiions AauuAiiy Out 81 shs
rstats--His Deductions Thoroughly nis'
leading.
Tho message OF Governor Thomai
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"
Tho 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-
ceIyed over losses and ordinary ex-
penSes incurred within tho state. The
estimated income from this source for
the present biennial period Is &is5.6oo.
or 397. 800 per annum. The actual re-
ceipts for the last two years exceeded
$4,000. This means that the receipts
OF the insurance companies from policy
holders are annually over SS.0oo.o0e 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
suranee 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 pcrecptIbic."
In another part OF the message the
Governor writes:
Il have referred to the states enor-
nous insurance business. Over $1,000
600 in excess of losses and expenses
are paid annually to these companies.
by far the greater part OF which are
foreign. This tribute constitutes n
tremendous drain upon our people.
The estimated premiums on firc in
surancc paid by the citizens OF Denver.
from April. 1900. to December. 1900. Is
100000: losses by nre. 35Go.629..5:
balance. 1888. 9.31o.55.'
Where the Governor got his figures
or his Ideas As to the law is unknown.
and his deductions make n very untrue
and unfair statement when he attempts
to figure from the amount OF taxes
paid the apparent profit. rs he even
eliminates the item OF expenses.
The facts arc that for 1899. the las,
year Of Official reports at hand. the
total premiums paid for firc insurance
for all companies combined. In Colo
rado. were $l.7o5.2?5 losses paid were
3l.o72.6ss or 62 $40 per cent. Ex-
pcnscs average 10 per cent. or Sss2.ils
showing losses and expenses to be 81
75i.,s7. or n net loss to the business
in Colorado OF Sis.ise during that year.
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
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 forty-three per cent leaves
an apparent profit OF only ten per cent.
which is not high. considering the
nature of the business and
liability to confiagrations like
those that visited and destroyed Clip
pie Creek twice and Victor.
The Governor. as quoted above, 10
evidently at sea rs to profits when he
says the estimated premiums on fire
Insurance paid by the citizens Of Dem
yer from April. 1900. to December,
1900. are 100000: losses by fire, $780,
629.45; balance, s339.37O.55. omitting
entirely any allusion to expenses OF
1901 900. most OF which is spent In the
state for taxes. commissions, travel
Ing and loss adjusting expenses.
1t Is n 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
Tor 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- I
ton of the fire 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-
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.
Inc public, when enlightened as to
'uch facts as these, will undoubtedly
see 1t to their advantage to let the laws
ot supply and demand regulate the
cost. Competition will, as It has nj.