The Somerset reporter., 1906-07-12
Insurance Rates Advanced


ent mon h and applying to policies writ
ten to take effect subsequent to that
date, 20 ceuto is added to the Insurance
rate previously paid on property in
Skowhegan within the area bounded as
Beginning at the juno lion Of East
Front and Mechanic streets, north
erly on Mechanic and continuing in
a straight line to the Kennebec RiV-
er, easterly on river to point oppo.
site the end of High street, nortber-
ly TO junction of High and Water
streets, westerly on High to Court,
northerly on Court to Leavitt, west.
erly on Leavitt, continuing In a
straight line to Middle, southerly on
Middle continuing in straight line
to Alder, easterly on Alder, West
Front and East Front to corner of
Mechanic 1t. at point of beginning.
1t should be understood that this Is
not an advance of 20 per cent but is an
addition of 20 cents to the rate pre-
viously prevailing, which will equal 20
per cent where the old rate was 81 on
the hundred and will be more or less
than 20 per cent in just the proportion
that the former premium was greater or
less than 81 for every hundred dollars
of insurance. To illustrate: II policy
holder was previously paying 80 cents
per hundred for the protection of his
property. he will now pay 81 per hun
dred, which will in that instance amount
to an increase of Is per cent over the
old rate; or. if policy holder was pre-
viously paying 81 per hundred, he will
now pay 81 20, which is an increase OF
10 per cent. Certain classes of factory
and railway property in this area are ex-
empt from the advance but they repre-
sent a comparatively small proportion
of the total. With the circular from
the New England Insurance Exchange
which promulgates the new rates is sent
to each local insurance agent a
carefully prepared blue print illustrating
the area affected. 1t is annouced that
this is simply in conformation with a
general advance in rates applying to
what is termed the Conf gration Area"
of every city and town throughout the
country, the places in Maine thus far
rerated being Augusta, Bangor, Bath,
Biddeford, Lewiston, Auburn, Portland,
Rockland, Skowhegan and Waterville
1t is also understood that schedule of
requirements will soon be sent to Show
hogan which will name certain changes
and improvements TO be made in our
system of water works and fire depart
ment, and that when these are done the
advance just now announced will be re-
moved.
In general way the Insurance com
panies argue that the increased rate is
necessary to maintain their surplus at a
point sufficient to afford the public prop
er protection and that the new rates are
really in the interest OF the property
holder rather than dictated by them
with q view to anything more than
reasonable profits. Insurance officials
call to mind the fact that the Chicago
and Boston fires resulted in the failure
of so per cent of the companies then do
ing business in America. The compan-
les accepting the lesson from those con-
hagrations have since maintained a sur
plus to meet such emergencies. From
this ii occurs that at the Baltimore fire
no insurance company failed and that
from the San Francisco fire, which
equals the aggregate of the losses in all
OF the three great fires above mention
ed, more than 81 per cent of the COM
panies have remained solvent and such
failures as have occurred are such that
the loss will fall on the stockholders in
the insolvent companies rather than on
those who bold their policies. The
companies claim that they have not
avera ed to make more than 4 per cent
annual, on their invested capital dur
ing the past 90 years and that, with the
late stupendous conf1agration 1t is ab-
solutelv necessary that the rates be ad
vanced, It alone with the view of at
fording them profit that will permit
them to remain in the insurance business
but to guarantee the adequacy of in
surance protection.
The claims of the companies as to in
creasing losses, small profits from the
business, desirability of a substantial
surplus, are in the main correct, and
therefore have basis for their argument
but If they reason from them to the con
clusion that there Is consequent justice
in advancing the rates in the smaller
towns and cities we must certainly de.
muir. What appears to US to be justice
in the matter is given elsewhere in this
issue under the heading us The Burden
Ours?'