The San Francisco call., 1906-06-24
FIRE INSURANCE ON TRIAL.

The short-sighted policy of certain fire insurance
companies in delaying settlement OF San Francisco
losses has dragged the whole institution Of fire in
surance up for investigation and trial. Everybody
from the mechanic carrying a $Ioo policy his
handful OF furniture to the banker whose interest
in fire insurance runs into millions IS asking him
self: Is fire insurance on a business basis? Is il
sound?
The situation in San Francisco establishes one
OF two things namely, either the fire insurance
companies are able to pay just losses and will not
or they cannot pay. In the first instance they
write themselves down dishonorabe and dis
honest, with ability because of cunnngly worded
policies to avoid just obligations or to harass
creditors into inequitable compromises. This is
sufficient to rule them out OF the. business world
On the other hand, if they cannot pay, these com
panies, that have boastingly written insurance in
millions in every large city of the civilized world
confess that one great fire has undone them has
toppled the whole institution of fire insurance into
ruins more hopeless than the mass that covers the
burned district of San Francisco.
The whole world is gradually awakening to the
situation the most extraordinary in the history OF
modern business. Emperor William of Germany
for example above all careful of the business in
terests OF his subjects, is known have agents at
work inquiring into the condition of German COM
panes and the stability of the institution of fire
insurance itself Already there are hints of Gov
ernment fire insurance for Germany, along some
what the lines of the New Zealand expert
ment None can tell what other European states
have agents secretly at work the problem forced
upon the business world by the lodging losers of
the San Francisco fire.
In America the movement is even more pro-
nounced than in Germany. The Credit Mems
Association, which covers the whole country and
IS enormously interested in fire insurance is
known to have experts at work watching develop
ments in this city. These experts are not only
going TO report whether this company is sound
that is honestly conducted, but on the status
OF the institution of fire insurance as whole In
a word, whether 1t is safe 10 extend credit where
fire insurance figures as an asset.
The bankers, roo, are giving evidence that they
are looking askance at fire insurance methods.
Again, no narrow but a broad business view is
taken. The Bankers Association of the State OF
Washington, for example, has requested of the
State Insurance Commissioner that he furnish it
with list OF the companies lodging liabilities in
this city, the reasons they give for not paving.
and, above ALL could they pay if they would
Where local bankers are interested in insurance it
is said the companies are paying dollar for dollar
for the banks, large lenders on insured property.
could pinch the neck of the institution of insurance
creditors go unpaid, although doubt very graft
flying to the bankers and policy-holders who are
thus getting their money, cannot but arouse the
contempt of even the benefciaries, contempt that
begets fatal distrust The banking world can be
counted upon to go to the root of the insurance
problem. Bankers do not like to deal with either
institutions or men who pay only because they
have to.
The several States are also interesting them
selves. Idaho, Nevada, Utah, Oregon and Wash
ington all neighbors of California are to nvesti-
gate insurance The larger States of the East, too,
are becoming interested. They have reason to do
50. There is scarcely policy-holder in New York
or Chicago or New Orleans who can at present
say what his policy is worth.
For all this the insurance companies are alone to
blame. Their course has created universal opinion
that something is radically wrong with the whole
Institution of fire insurance. This has led to de
mand for close scrutiny Of the fire insurance busi-
ness, its revenues and its methods By the inves-
tigation fire insurance as at present conducted
must stand or fall This cannot but result in
establishing fire insurance on sounder basis. a
great good for the world but at enormous cost for
San Francisco