The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-05-08
SPLIT IN INSURANCE TRUST.
CONTINENTAL REFUSES TO RAISE
RATES AND GETS OUT.

In this city over the recent action OF the Fire
Insurance Exchange in raising the rates on
all risks in Greater New York and vicinity
from 10 to rs per cont, and cutting down
the commission OF brokers,
Il is asserted that the resolution hiking
the rates was not adopted In accordance
with the agreement on which the exchange
was founded and that snap tactics were
used in putting it through at tho meeting
on Friday. As a result Of the action Of tho
exchange the trust nay be disrupted and
competition may again be established for
fire insurance business in this city. The
Continental Insurance Company. one OF
the largest and strongest In the United
States, has formally withdrawn from the
exchange and other companies are ex-
pected to follow its lead. The Co~ntinental's
announcement was made through Henry
Evans, its president. 1t was as follows;
The Continental NSre) Insurance Com
pany Will not be bound by the resolutions
adopted at the special meeting OF the New
York Fire Insurance Exchange. held May =,
1909. action taken at that meeting being oon-
trary to the exchange agreement. Business
viii be accepted as II no such meeting had
been held.
This means that the Continental, which
has the largest surplus 81 any fire insurance
company In the country, will take risks at
the rates In force before tho San Francisco
disaster. It's announcement caused no
end OF a stir among the managers and OF.
ficials Of the other companies. It Is known
that many Of them sympathize with the
stand taken by Mr.. Evans and q lively ses-
don Il looked for at the meeting Of the ex-
change tomorrow. It was reported that
among others the Williamsburg Fire In
surance Company would withdraw. When
asked about the matter Marshall s. briggs,
the president, said:
can that / wish to say upon h subject
tsthis: After one company has given notice
that it will withdraw in thirty days any
other member may withdraw at the same
time by giving five days notice. That Is
according to the agreement, and 1t means
that we still have twenty-five days to con-
eider the matter
About a dozen members Of the exchange
held a protracted conference yesterday In
the headquarters Of the New York Fire
Underwriters Board In the Mutual Life
Building to talk over the situation and to
prepare for the emergencies that may arise
In the meeting tomorrow. Nobody pres
emit was willing to disclose in detail what
took place. One of the members said they
got together merely to decide upon the
brand of cigars the fire insurance men
sho Nd smoke. He finally admitted that the
main subject under discussion was the effect
the withdrawal Of the Continental would
have on the future Of the exchange. He
said that the opinion seemed to be almost
unanimous that the exchange would go
right on doing business just as though the
Continental had never been represented
In the body.
The introduction Of the resolution raising
the rates was brought about by the San
Francisco disaster, the object, as stated,
being to build up the reserves Of the COM
panies which were hard hit in the fire fol-
lowing the earthquake. In stating the
position Of the Continental President
Evans said:
"We believe in a rate that fairly COM
pensates our stockholders for the rsk the
capital and surplus belonging to them run,
with a further profit Of not owe 8 per cent.
for the building up Of q conflagration fund,
which of course would under the American
method of making statements become q
part Of the 80 called net surplus
After saying that the profits Of the COM
Da0V III lIIGdttI NOV 1othb iiiSo chO
ton of the Fire Insurance Exchange were
more than 12H per cent, the maximum
that should be earned, Mr.. Evans con-
tinued:
aOur city confagration lines are carefully
watched and we are prepared TO pay any
legal claim that is made upon us as the
result of loss under hazards covered by
our policies. We do not believe that 1t is
wise or proper to penalize property owners
in New York or elsewhere now paying ade-
ouate rates because Of an unusual loss due
primarily to an earthquake in San Frau
cisco, and we shall oppose to the extent OF
our ability the taking Of such ACTON In
New York and other cities or sections OF
the country where the rates are now ade-
quate.
"The companies as a whole have In the
present situation the opportunity OF the
century to put the fire insurance business
on a stable and businesslike basis, winning
the good will and the confidence OF the
public. If, on the other hand, rate ad-
vances are made that cannot be justified
by the hazard incurred, adverse legislation
Is sure to result and in a very short time
the companies NOW banded together to
Jam through these advance rate resolu-
tions throughout the country will be at each
others threats and rate cutting will be the
order of the day.
An official Of one Of the big fire insurance
companies here said yesterday hat he had
received information from an authoritative
source that practically all the contents OF
the vaults Of the insurance companies at
San Francisco had been destroyed and that
D~-e would be endless confusion in the ad-
ssgoment Of claims. In cases where both
us individual policy and the records OF the
ompan issuing it had been destroyed the
courts would have to be resorted to TO set
tie the claim, and cases Of this kind would
probably lead to endless litigation.
Il am also informed continued this
official, sthat the Eastern managers and
officials Of the. fre insurance companies
involved In tho San Francisco disaster
have no conception Of Ia actual amount
Of losses they win be called upon to pay.
Most Of them think they can cut down their
losses 80 per cent. through the falling
buildings clause tn their policies. ! am
reliably informed. however. that the earth
quake damage viii not amount to more
than . per cent
IN. N~.st-~-t.t Cnrnpanv apnorroAd