The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1902-04-22
ON THE OTHER S|DE
Figures by a Well Known In
suranCe Man.
he Figures Out That the Insurance Companies
in North Carolina Are Not Making
Much Money.

To the Editor: My attention has been
March 9Th that seems an injustice TO the
insurance companies. Your figures
for the three years, 1898, 1899
and 1900, taken from the insurance
reports are misleading. Premiums given
are gross, reinsurance paid other COM
panics not deducted; while losses are
net. All the reinsurance is placed III adj
mitted companies, these reinsurance
premiums are included in the depart
ment reports twice. The eighty com
paDies doing business in North Carolina
pay an average of s., 900 or more 4 year
each for reinsurance of excess lines,
about $166, 600 per annum total. De
Quoting this $500, 900 for three years from
your total of So. 500, 600, We have correct
total Of three years premiums only So
900. 600. The expense of conducting an
insurance business, Gncluding commits
sicns to agents and taxes, which is over
half the total), is about SO per cent for
the United States. In sparsely settled
States expenses are of course greater
than IN States that are thickly pOpulat-
ed. The expense in North Carolina Will
average 40 per cent, more than three
fourt4ls of which is paid to the State and
it's citizens, for licenses, taxes, agents
commissions, travelling and adjusting
losses. This makes losses and expenses
for the three years s., 100000, leaving a
net profit of $3.50, 900; $1,100 per year for
each n1pa an average profit of little
Owe eight per cent on premiums writ
TON No other business is done on so
small a profit. Tn margin Of profit in
North Carolina for sixteen years ending
January /, 1901, was only one and one
fifth per cent. The total profits made
in North Carolina by all fire insurance
companies for the sixteen years was on
ly $I36. geo so far for tho thirteen years
preceding 1898 they actually lost 1923
100 We have had no great connagrations
in the State, but have a dozen cities
whore a great fire would wipe out all
possible profits for twenty years to
come.
That our laws are good IS true, and as
a result rates or dwellings,, churches,
schools and public buildings are about
thi1ty per cent less than in any other
State in this section. The average rate
in North Carolina is about fifteen per
1cIIt JtSS nan chS III N'''
For the five years ending January /,
1891, the insurance companies made a
greater percentage Of profit in Connec-
ticut, Florida, Louisiana, Massachu-
sets. Texas. Vermont, Wisconsin, Iowa.
Maryland and Utah, than in North
Carolina. Some Of these States have
better laws than ours, yet the same in
crease was made in each that was made
here.
The suggestion that enough homo
companies be formed to carry the bulk
of the business is hardly practicable.
Fire insurance profits are 50 small and
the business (urIess written in small
lines over a great number of States so
hazardous that capitalists could not be
induced to organize any large number Of
local companies. The classes on which
rates have been increased-stocks Of
merchandise, frame store buildings and
special hazards not protected by auto
matte sprinklers-could not be written
by such companies over a term Of years
at the old rates, except at a loss. The
great bulk of property in the State
dwellings,. household furniture, brick
store buildings, private barns and
stables, office buildings, schools,
tIlGttIIFo, IbSI'itdiH, I'll PNciI1 pC4iAi-4C@'
all buildings in course of construction,
cotton. naval stores ard all special haz-
ards protected by automatic s%prinkle5
are exempted from the increase. This
increase was not the result Of the Pat
terson fire alone: the great fires at OF
taWa, Jacksonville, Hokoken and Pat
terson in the past two years have shown
the companies that such disasters are
possible al any moment, anyW mere: and
that the meagre eight-tenths Of one per
cent profit made on fire insurance in the
United States and Canada during the
past ten wears. viii not provide suffi-
cicnt reserves to care for such fires. They
have therefore made a necessary increase
only on the few Improbable classes,
such as any prudent merchant or manu-
facturer under similar conditions would
make on the goods he sells.
4 few DAYS after the great Jackson
willie fire | was in the office Of the Caro-
lima Insurance Company at Whining
ton. and talking 10 Secretary Willard,
asked him how he felt about it. He re-
piled that if such q fire occurred in Will
mington there would be nothing left of
the Carolina Insurance Company. The
same IS true of the Greensboro, Raleigh,