The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1902-04-20
ON THE OTHER SIDE
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
called to an editorial in your paper of
March 9th that seems an injustice to the
Insurance companies. Your figures
for the three years, 1898. 1899
ard 1900, taken from the insurance
reports are misleading. Premiums given
cTe gross, reinsurance paid other COM
panies not deducted; while losses are
net All the reinsurance is placed in adj
mitted companies, these reinsurance
p. emiums are included in the depart
.rcnt reports twice. The eighty COM
pa1iee doing business in North Carolina
pay an average of $4,000 or more year
each for reinsurance of excess lines,
&hcut $166,000 per annum total. De-
ducting this $500, 900 for three years from
your total of $3,500,000 we have correct
total of three years premiums only 49,
900. 900. The expense of conducting an
insurance business, Gncluding commits
sicns to agents and taxes, which is over
nale the totaD, is about SO per cent for
tho United States. In sparsely settled
States expenses are of course greater
than in States that are thickIy populat-
Cd. The expense in North Carolina will
acreage 40 per cent, more than three
fourths of which is paid to the State and
its citizens, for licenses, taxes, agents
commissions, travelling and adjusting
los ses. This makes losses and expenses
for the three years 81, 100000, leaving
ret profit of $3.50, 900; $1,100 per year for
each company, an average profit of little
over eight per cent on premiums writ
ten No other business is done on so
small a profit. The margin of profit in
North Carolina for sixteen years ending
January 1, 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
~ $i36, 300 so far for the thirteen years
preceding 1898 they actually lost Sl23,-
700 We have had no great confiagrations
in the State, but have dozen cities
where 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 on dwellings,, churches,
sche OILS and public buildings are about
Thirty per cent less than in any other
in North Carolina is about fifteen per
cent less than any other southern State.
For the five years ending January /,
1901, 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 home
companies be formed to carry the bulk
of the business is hardly practicable
Fire insurance profits are so small and
the business (unless 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 term of years
at the old rates, except at loss. The
great bulk of property in the State
dwellings,, household furniture, brick
store buildings, private barns and
stables, office buildings, schools,
churches hospitals, all public buildings,
all buildings in course of construction,
cotton, naval stores and all special haz-
ards protected by automatic sprinkles
are exempted from the increase. This
increase was not the result of the Pat
terson fire alone; the great fires at OF
tawa, Jacksonville, Hohoken and Pat
terson in the past two years have shown
the companies that such disasters are
possible at any moment, anywhere; and
that the meagre eight-tenths of one per
United States and Canada during the
past ten years, will not provide suffi-
cient reserves to care for such fires. They
have therefore made 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.
a few days after the great Jackson
VILE fire / was in the office of the Caro-
lima Insurance Company at Whining
ton. and talking to Secretary Willard,
asked him how he felt about it. He re-
piled that if such fire occurred in Will
mington there would be nothing left Of
the Carolina Insurance Company. The
uTzz - y "A