Omaha daily bee., 1902-04-06
EXCESSIVE FIRE INSURANCE RATES.

bltrary advance of % per cent in fire
insurance rates upon all mercantile risks
in this city and state will not only have
the unqualified approval Of merchants
and manufacturers, but Of all classes OF
citizens.
The proposed advance in insurance
rates cannot be justified on any rational
grounds. According to the official re-
ports filed with the state auditor during
a period of seventeen years, from 1888
to 1900 inclusive, the aggregate amount
collected in premiums from insurance
buyers Of this state exceeds SOS, 900, 900,
while only a fraction over $12, 900, 600
has been returned in payment of losses,
leaving over $15, OOO,OOO of surplus to
pay agency commissions, expenses and
dividends.
The average rate of premium to each
500 risk during that period was $1.5S,
while the average ratio of loss for every
500 risk has only been ca cents, an
average loss ratio to premiums of 42.6
per cent, leaving 57.4 per cent Of the
premium receipts for expenses and
profits. Computed by the standard fire
insurance charters, the average yearly
profit of the fire insurance companies
on Nebraska business for a period of ten
years over and above losses and ex-
penses was Is per cent On the basis
of the universal mercantile schedule, a
premium rate that will yield a profit Of
8 per cent above fire loss and legitimate
expenses, Nebraska has contributed 10
per cent toward the losses and expenses
incurred in other sections of the coun-
try.
From a strictly local standpoint the
proposed advance of % per cen on mer-
camille risks is equally indefensible. In
October, 1893, the fire insurance under
writer's ordained a fat increase of 20
per cent on Omaha rates on the grounds
of an insufficiency Of the water supply
and inefficiency of the fire department.
After a protracted fight a reduction Of
10 per cent was made in 1896 on bust
ness risks, while the former advance Of
20 per cent was dropped On dwellings.
That left the mercantile rate 10 per cent
above the rate of 1893, Notwithstanding
the fact that the fire risks have materi-
ally decreased by reason of enlarged
water supply, increase of the freight
ing force and improvements of fire ex-
tinguishing apparatus. There has also
been a marked decrease of risk by
reason of the extension of the fire limit
and the erection of fireproof and semi
fireproof buildings In the place Of fire
traps.
The discrimination to which the I'M
derwriters have subjected their policy
holders west of the Mississippi river is
utterly inexplicable. Official insurance
loss in the eastern and middle states has
been much higher than in the western
states, and yet the premium rates ex-
acted in the eastern states are much
lower. The western states have for
years paid an average premium rate far
In excess of the average rate for the
country at large, while the New England
and middle states have been receiving
their insurance at much below the gen.
eral average, although their loss ratios
have been much higher than in the west.
In the year 1900 Nebraska's loss ratio
was only about so per cent of the New
York ratio, yet its average premium rate
was nearly 100 per cent higher. While
policy holders in the western states dur
ing 1900 were paying an average rate Of
$1.63 the policy holders in the New
England states paid $1.OS and the policy
holders in the middle states paid an
average rate Of only S3.5.
The most striking exhibit of the rank
injustice about to be inflicted on Omaha
is shown by the ratio of premiums to
losses in New York City and Omaha.
In New York City in 1900 it required 80
per cent of the premium receipts to pay
the losses, while in Omaha it required
less than 80 per cent. Yet New York is
exempt from the % per cent advance
In rates, while Omaha is made subject
to the increase. From any point of view
the proposed advance is not only ex-
cessiYe, but almost extortionate.