New-York tribune., 1906-05-08
FIRE EXCHANGE SPLIT.
a COMPANY WITHDR4WS
Others Nay FOEIOSO-Disqgreemert
OUer Paying San Francisco Losses

Efforts 70 adjust the losses and v,r,o4er+ ~, -
serves OF the various Insurance companies as .
rssuIt OF the San Francisco disaster. have no,
only reuted in a split in the New York Fs-o
Insurance Exchange. but seem likely TO bfins
about tangle in the Insurance world that viii
net be Strengthened out for long time.
The Continental Insurance COMPANY thror,,,
Henry Evans. its president, has served notice -
'ss withdrawal from the exchange, and II 4
practically certain that the WIlliamsburgh Citv
q which Marshall S. briggs is the head. win do
she same. Further Withdrawals are likely ana
nay result in the entire disruption of the Fx
change, which has been a trust in the sense thai
a has maintained an agreement as to rates and
commissions. which all the companies doing
business in this city pledged themselves not TO
Tiolate
AZ Ghe monthly meeting OF the Exchange, 20 be
ssld af II a m. tomorrow, there IS likely TO be
some lively discussion. Those opposed to the
increase in rates and decrease in commissions,
ruf through at the special meeting on Friday,
vii push their argument that the action was
Illegally taken. Cecil p shaIlcross, president OF
fhe Exchange, declares he viii be able to show
nat the meeting was regular IN every partic-
ulaF
Il was learned yesterday that some of-the
companies hope to BE- able 10 take advantage of
a California state law. which they believe Mil
relieve them of paying any of the losses by fire
or otherwise on contracts which had The earth
quake clause in them. There were two forms
Of contracts used in San Francisco the stand
ard" FORM which did not except damage done
By earthquake and others. which excepted loss
from that cause. There a section Of the Civil
Code OF California reading:
Where e reril is specially excepted IN a con-
tact Of insurance, loss which would not have
occurred but for such peril is thereby excepted
although the immediate cause OF the loss be a
peril which was not excepted
WILL LAY LOSSES TO EARTHQUAKE.
Some companies intend to set up that the con-
hagration was directly due TO the earthquake
which set ruins on FIRE and broke the gas and
water mains. Therefore they will refuse to pay
fire losses from fire on contracts with the earth
quake clause
This law has been upheld by the courts"
said the president OF one Of the larger COM
panies yesterday. In justice TO our stockhold-
ers and other policyholders we cannot undertake
70 pay losses 10 which We are not legally liza
bic. About 60 per sent of our contracts con-
tained this earthquake clause"
An effort was made to ascertain just what
percentage Of all the contracts in San Francisco
contained the earthquake clause, but the esti-
mates varied all the way from 10 to 80 per cent
The president of one Of the companies said
yesterday:
There is such a thing as equity in law, and
public sentiment will not allow the courts to
construe that law in such way that companies
can get out Of their fire losses simply because
the fires We're indirectly due 10 the earthquake
We. Of course. viii not pay losses caused by the
earthquake. but where a building was damaged
slightly from that cause and then burned, we
will pay the full loss. less that caused by the
shock. OF course. il viii be tremendously diff
cult task TO adjust the various losses. but II
and will be done
On account Of the different stands taken by the
various ompanies, in addition TO the difficulty
Of proving just what caused the most damage
% q particular building, the litigation growing
out q the disaster is likely to last for years
The whole situation is also greatly complicated
by the fact that majority of the companies lost
al their san Francisco records. and many of the
Insured lost their policies. One Of the Cedar
street companies received word from its repre-
sentative last night that only two companies
saved their records. The communication also
said that the difficulties in settling up the losses
seemed almost insurmountable in some in
stances.
SOME COMPANIES DISREGARD RISE
Although they are not saying so publicly. there
are several companies in addition TO the Cont
mental and the Williamsburg, which have not
put in force the increased rates adopted by the
exchange on Friday. It IS possible that the in
crease may be rescinded at the meeting to-rnor-
row because. as some argue, il would be folly
for the other companies TO try TO enforce in
creased rates when several large companies were
writing at the old rates.
SIr briggs Of Williamsburg City, would not
say definitely that he would retire, but added
Eith a smile:
Mr. Evans. Of the Continental. gave thirty
DAYS notice on Saturday Of his intention to
ure from the exchange. According to agree
ment, one member having given notice Of his
Intention 10 retire at the end of thirty days,
any other member may retire at the same time
By giving five days notice.
The thirty days are up on June B. and any
other companies have until June / TO make up
their minds 70 retire.
ir- ShaIlcross. president of the exchange,
called meeting Of representatives Of about
two dozen companies yesterday. They went over
The situation carefully, but Mr.. Shallcross re-
fused 10 discuss the conclusions for publica-
ton. He said all the members Of the exchange
he had talked to said they were satisfied with
the action taken on Friday.
Nr. Evans, discussing the reasons for the
Ethdrawal Of the Continental, said yesterday:
II rate advances are made that cannot be
justified by the hazard incurred, adverse legis-
lauon IS sure 70 result, and in a very short
ene the companies banded together to
Jam" through these advance rate resolutions
throughout the country viii be at one anothers
troats and rate cutting will be the order Of the