The Montgomery advertiser., 1902-12-10
l@@sssSzSssass,s@SsSASsssS7sSZA,sY,Ss
Letters to the Editor.
Some Thoughts on Fire Insurance.

| Editor The Advertiser:
 Answering a recent request from a lead
 lhg lire insurance official, asking my l opinion as to Alabama for ways and | means by which Insurance companies may
 safely continue to do business in Ala oama, after striking of a part. if not all or the za per cent increase in rates re- centiy promulgated, l beg to answer | through your valued columns by saying that from my way of viewing the matter
 there are two ways" and one ''meahs"- | l would say two ways to be amended.
 and one means to be applied through
 which this important change may be ae- | All who are conversant in the workings or Ire insurance must freely admit that | the cause of the recent universal in- crease in rates was due to a universal l increase in fires including a period of years dating as far back as 1892 I will | not tthis juncture attempt to exhibit Tor the ten years period the amounts of premiums collected from the people and the losses sustained from fires, suffice | 1t to say the percentage of losses to pre- miums rece.vcd in Alabama by many com panies would make interesting, if not un- pleasant. reading for the insuring busi- ness world, because many large and
 respectable fire companies during this period. in closing up their various fiscal years work in Alabama. have been forced to write with red colors those fatal words TO Balance" on the credit side of their books. These facts are business history and now l am asked for my opinion for
 It's remedy, or In other words, invited to
 become a member of this important Ways and Means Committee" as one might term 1t.
 I norder to arrive at a reasonable con- clusion by analyzing conditions, we must all agree that there are but two classes
 or losses to contend with: First, the honest fire-one which occurs without the
 direct or indirect knowledge or consent
 of the assured. We will pass over this
 class of losses without comment for the
 premiums on this class of business can
 take cars of themselves.
 second, the dishonest fire, and with this class of losses I mainly deal in arriving
 at q solution for the adequate reduction or ire Insurance premiums by two ways"
 and one means"
 In my opinion, a combination of causes
 exist. the effects from which we have this
 class of losses. l will not in this letter
 attempt to deal with but two of the main
 issues leading to this class of fires, and
 1t may not be amiss at this juncture, how
 ever startling it may seem, to assert that
 the fire insurance companies themselves
 are Tn part responsible. For instance:
 the ire insurance companies are making
 a grave mistake in cities. towns and
 vicinities. for encouraging the placement
 or more than one agent or agency for
 each $o.OOO in premiums written. It Is >not amiss to state here that In this
 amount of premiums written there is only
 the scant living for one agent amounting
 to $750 a year Now when various com
 psnies willfulIy establish two and fre-
 quehtly three agencies at the same point
 to ciaIaor in sharp competitor over the
 pitiful sum Of $500 or say s6.O00 in pre-
 miums. the dangerous temptation pre-
 sents itself more than once each year to
 some one, if not all of those agents to
 write more insurance on various proper
 ties than its insurable value would cor
 rectly sustain. Hence you will observe
 the above reason Is patent, for the local
 agent IS human, not divine he notes from
 day to day the scanty income derived
 rom an amount only sufficient to sustain
 one agent which is in the scrambel for
 business, divided between two, and some
 times three agencies, and in a competing
 fight to make an honest living the fatal
 temptation is thrown before him. He is
 asked to place & 100 insurance on "a S3.6(D
 Hltlding which is say ten years old. In
 the face of his needs he fails. human-like
 to resist the temptation and his company
 is thereby endangered hy placing its policy. written for an excessive amount into the hands of it's legal holder who may
 also be tempted. This building burns
 the inusrance adjuster comes to settle the loss, and after ascertaining the facts that S2,To0 is the insurable value of the
 building not taking into consideration the natural depreciation of building for ten years age. to be very liberal. he tenders course is correct, only to be refused by the policy holder. and now the company has to repudiate the good business judg- men @ of it's agent and go into the courts to settle the little $300' difference, or walk up and take its medicine like a little man, which latter case 1t usually does. This is one case in the category of dangerous causes of fires of Ques- tionaole nature which. if properly correct ed, would materially reduce the high rates made necessary by thousands of dollars of questionable fires adjusted and paid off in questionable methods.
 There is second material cause ne- cessitating excessive rates and the fol- lowing facts. however unplea sant 1t may seem to the reader or startling to the company. are true nevertheless. It is d deplorahle fact that there are agents untrue 10 the trust reposed in their judg ment. It makes very little difference with the interruptions agent, when he can see a dollar of commission in it, whether risk be good one physically or bad one morally. When the unscrup- ulous agent knowingly writes a had nor, al risk, he is guilty of misdemeanor to his company; but If this risk burns and also destroys the residence of an adjoin- ing neighbor, he is not only d traitor to his company but morally he is also gull ty of arson for he is instrumental in the burning of the adjoining neighbours dwelling.
 Now if all the companies would weed out from their agency force all of these interruptions pimps, there is no doubt in my mind that the successful end will have been as nearly perfected In the matter of cheap underwriting as will ever be attained. In the foregoing, l have outlined correction fin the two imporant ways of fire underwriting, and now shall apply the means"
 As an underwriting aP,ent of eight years undivided experience and twenty years of careful observation, I have come to the conclusion that the laws gov erning fires insurance in most of the States, and especially in Alabama, are too loose and vague. The insurance com missioner of Alabama should be clothed with plenary powers to thoroughly ln- vestigate every fire which occurs with ed to settle or offer to settle any insur- ance claim within fifteen days from the date of the fire unless before that date the insurance commissioner, after thor ough investigation, informs the company involved that the claim Is without ques- ton and then it may be paid off mme- 1 diately. By carefully studying the insur- | ance laws of the various States find that | the State of North Carolina in the year 1898, and as amended in 1901, enacted the | Willard bill. part of which reads as | follows: Every insurance company | transacting business in this State, upon | receiving notice of loss by fire on prop | erty in North Carolina, on which it is lia- | ble under a policy of insurance, shall ! forthwith notify the insurance commis- | sioner thereof, and no insurance upon any such property shall be paid by any com pany until one week after such notice.'
 I am recently informed by Hon. James R. Young. the insurance commissioner of that State, whom 1 have the honor to know in person, that <he above law has had a most wholesome and gratifying ef- feet, that since investigations have been turned solely into his supervision the fires of questionable nature have greatly reduced and likewise insurance premiums fn q reduced l