The Birmingham age-herald., 1903-03-27


 companies have a perfect trust. While the companies have an understanding as to insurance rates, the same as other well-regulated branches of business, with regard to prices, there is no rule to pre- vent any company writing any business that 1t may select at satisfactory rates. The article says that rates are double what they were a year ago. The remark Is prefaced by saying, according to prominent local insurance agent Now. while I have no means of knowing who this refers to, I do at the same time know that such is not a ract.
 Reason for Advance.
 lowing to heavy losses and a failure to collect sufficient funds to pay them, about one year ago, all the companies in the fire insurance business with capital to pay losses agreed that there should be flat advance of 25 per cent to make up the average necessary to pay losses and prevent companies going Into the hands of the receiver. This agreement does not apply only to Birmingham and Alabama, but to the entire countrywide United States from Frisco to New York. This has been applied ever since 1t went into effect in order to meet the immense fire waste all over the country.
 Recently companies and managers have been discussing the advisability of removing the 25 per cent increase from this class of hazards, Information sheets are out. and if it Is found practical to do so without serious injury to the com panies, 1t will doubtless be done. Had the prominent local agent referred to the fire tables he would have then found that out of about forty-four millionaire companies doing business in the United States there is less than ten that have made any money in fire underwriting in the past ten years, and of this small number there is not one that I now re- member which has made clear average of over per cent on the business. In- deed I feel that I can truthfully say that there Is no business requiring the amount of capital, labor and skill that is so poorly paid as fire insurance companies.
 Many Companies Lost.
 "Out of over 700 companies doing busi- ness in the United States there are about sixty represented here and, out of this number ten do not belong to any organ ization which controls rates, or forbids them writing at any rate they desire Referring to the business of Alabama for the past year it will be found that many of the companies writing in the state lost from $10O to $25O for every $1OO of premium received, while the average loss for all the companies was 63 per cent of the premiums received. Add to this 35 per cent, the actual expense of putting the business on the books (and this does not include the state, county and city taxes) and it will be found that there is 9S per cent of the income of the companies paid out, leaving the state county and city taxes to pay, which will average over per cent. This, then leaves companies a net loss of per cent on the business taken as a whole for the state of Alabama.
 q want to say in conclusion that if the insurance business is a trust it is one that has so far failed to pay those who manage it respeotible dividend on the capital expended, and after an experience in the business of A years l am free to say that the prospects for making money by fire insurance are not what they used to be.
 "The total losses in Birmingham last year from fire were S51,00O while the re- ceipts from the city were only $2S3, 900. The receipts from the entire Birmingham district were only $42i, ,OOo."
 MT. Dearborn's Remarks. The following letter was received yes- terday:
 To the Editor of The Age-Herald:
 The article appearing in your issue of the 26th instant on the subject of insur- ance rates is accredited to a prominent local insurance agent If his prominence Tn any way compares with the intelli- gence revealed he should be at once looked up by the insurance trust and given dominion over affairs more in keep ing with his marked ability. All success ful trusts are now lying awake at night looking for those who possess a high or der of talent in their respective lines. About a year ago." said he, there was a general disorganization among the companies throughout the country. Some of them began to take business below the current rate, and there was SO much of the cutting of rates that at the end of the year very few companies could de- clare dividends"
 This prominent member should never have disclosed to the public that such Reorganization once prevailed as to show an underwriting loss to the companies, and as a result of it no dividends could be paid. This is calculated to discourage local talent from gathering itself to- gether and compiling wisdom and other valuable assets upon which to base and formulate new local insurance com panies. which serve as protection to the people against those heartless monopo- Hes, which are ever seeking to cut rates and make money for the stockholders.
 Each year throughout the country there are organized goodly number of mu- tual companies, some with actual cash capital and some without, and each year sees a new set of praiseworthy and es- timable citizens become benevolently as- simulated. retiring from the field with valuable insurance experience concealed about their persons This is as it should be, and happily for the protection of fu- ture generations, is no permanent dis couragement to the reputation of the same cheerful industry.
 Our lamented friend, Bill Nye, tells that he once made a summer trip foot back over the tracks of a railroad sys- tenn for the purpose of getting views of the water tanks, and that he saved enough money while out to take the same trip the next summer. and so it Is with the erstwhile defenders of the dear peo- pie. They gain yearly by experience, and the next year there are others
 A. R. DEARBORN. Birmingham, March 2s. 1903.