New-York tribune., 1906-04-20
INSURANCE HARD HIT.
MAY CRIPPLE COMPANIES.
EDperts Pstzzled as to Damage Done
by Earthquake.

S Ae@
Reports that fire had destroyed nearly all the
buildings in San Francisco. received by insur-
.ance men OF this city yesterday afternoon. ere,
ated much excitement Opinions Were freely ex-
pressed that the loss by flames in San Francisco
would be the greatest known in this coun-
try, IL not in the world. II believed that
sthe losses in San Francisco would reach $500
eo0QG00 and that many American and foreign
fire insurance companies would be crippled seri-
/. ously
Opinions differed among the insurance men
AZ 20 whether the companies would have to pay
1osses buildings which were burned after
being partly demolished by the earthquake
Some OF the insurance said that all policies
had clause which provided that the policies
should cease the moment buildings fell. while
Others said policies written in San Francisco
had a special clause. in conformity with a Cali
1ornia state law. providing for the payment of
damages in case Of earthquake.
There is no doubt in the minds of all the in
.surance men, however, that the companies VIII
; have 70 pay losses on buildings to which the fire
spread after the earthquake over and that
the chief loss in the destruction of buildings
which were not damaged by the earthquake. 1t
is said too that there will be difficulty in decid-
ing exactly what buildings fell before they took
fire.
Many insurance brokers in this city yesterday
afternoon were at work transferring insurance
New York property from companies which
were suspected Of being crippled by losses in
San Francisco 10 companies of unquestioned
stability. They gave notice, cancelling policies
issued by the companies believed TO have San
Francisco risks in excess Of their net assets.
and asking for the unearned premiums in such
cases. At the same time they replaced the in
surance with other companies.
Officials Of insurance companies in this city
said yesterday afternoon that they could not
tell the amounts Of the losses in San Francisco
and they would not know until full reports from
their agents had been received Several OF the
officials said the companies would pay losses
promptly as they did in case of losses by the
great fire in Baltimore.
The New York manager of the North British
and Mercantile Fire Insurance Company received
q cable message from the London office in the
afternoon authorizing him 10 draw on the Lon
don Office at sight for the entire amount Of the
conpany's losses in san Francisco He was in
structed also TO subscribe $1,000 for the COM
pany TO the general relief fund
STATE MAY START INQUIRY.
Several insurance men Of the city expressed
anxiety 10 know if the State Insurance Depart
\ ment would start inquiry TO ascertain if any
N Noompanies doing business In New York are
~
inquiry 1t was said. started Immediately
after the Baltimore fire, and resulted in the pro-
" lection Of the public, in the Of more than
company whose resources had been i'm
! paired. A prominent Insurance man OF the city
SAID 10 a Tribune reporter:
. It seems TO be the feeling among insurance
rnen here that the fire loss in San Francisco. TO
say nothing OF other parts of the State of Cali
fornia IS likely 10 exceed the fire loss Of Chicago
he aST 1ncS hat
occurred in any confagration. The losses at
that time were about Sl20O009G0
I DO not know what there may be in the asser-
tion that the California statutes make fire in
surance companies liable for loss directly occa-
sionee by earthquake cannot think that cor
rect. For a good deal longer than The life OF
the average insurance man the condition of all
! FIRE insurance policies has been in substance
what is expressed in the New York standard
policy. follows:
: "H building or sny part thereof fail. except
as the result Of fire. all insurance by this policy
such building OF its contents shall imme-
81 distsy cease"
So, If building or any material part of II
was shaken down by earthquake that building
was from that instant practically uninsured
and II the ruins caught fire the companies lost
nothing by IL; but if a adjoining building
which did not fall building. no matter how
ruins OF the fallen building, the fires thus caused
are covered by the policies OF the fire insurance
companies. AS ! understand IT, the fires which
have been sweeping great sections of San
Francisco have been mainly OF this nature and
s therefore the losses 10 the companies must be
enormous
j have no means Of estimating what those
losses are except such The Tribune or any
otber newspaper can derive from Official sources
Take. 10 begin with, the premiums written in
San Francisco on San Francisco risks for tho
year 1895: estimate that the average rate OBJ
tanned for the entire business i per cent
which, I'm my mind, is very judicious estimate;
companies had hundred times as much at
risk as the amount OF premiums that they took
lThus, II a company took $4,000 in premiums
you may estimate that its entire risks in the
city of San Francisco were 81 00O. 900 and with
this formula any newspaper man may figure
out the amounts at risk OF all the companies
that appear ia the list Of those transacting bus-
ness out there. OF course, OF the COM
paries, and generally the larger ones, reinsure
some portions Of their business but IL would be
q very large estimate 10 that any Of
them reinsured more than one-Quarter.
j do not hesitate TO say that this fire has
teinly wrecled number OF American and
European composites. and | fear that this time
the wrecks are not entirely among the smaller
and unimportant companies.
Taking as basis the premiums written in
San Francisco on property Of that city in 1905
= raS figured SAy>stSsdsy that the total risks