The Tupelo journal. (Tupelo, Miss.) 1876-1924, 1909-09-24
THE SUITS AGAINST
INSURANCE COMP pAN|ES.

/ favored company in Tupelo proceedings
: has Just reinsured all its Southern bus.
) mess in the Westchester which is chare
ed with being board company. The
field proved Improbable and they de
cided to confne their business to Other
states
) There is no business more difficult te
manage successfully than that of fire
insurance. More companies have failed
than have succeeded and only one sur
wives in Mississippi, and | believe the
chances of its continued life are as
good as any company in the world
Life companies have experience tables
and adopt uniform rates. If fire COM
panies avail themselves of experience
and two of them reach the same con-
clusion, they are accused of being a
trust.
Since the Merchants Union was or
ganized the people of Mississippi have
lost thousands of dollars by failures of
the Atlantic Birmingham, the German
of Freeport, the Mississippi Home, the
Trades of Chicago, the Southern and
the Ohio German, to say nothing of the
Mississippi Fire whose losses all fell on
its own stockholders. 1t is a remark
able coincidence that all of these were
so called independent. They disregard
the experience of old and successful
companies and fou1ished for a time.
Their statements were all approved by
the insurance commissioner, 1t is not
claimed that no independent company
is good, but that any company that dis
regards certain necessary principles in
underwriting is treadine On dangerous
ground. One company doing business
in this state has more than fifty times
its combined capital and surplus at
risk in one CITY, This company is also
favored by not being prosecuted. The
risk IS all right as long as there is no
serious fire, but the fact that loss of
two per cent of The amount at risk in
one city would bankrupt a company,
looks more like gambling or trusting to
luck than insurance.
The geat Chicago fire in 1871 broke
seventy companies, nearly or quite all
being independents. For years after
wards, those who experienced by the
fire would not accept the policy of a
cut rate company as but of that clss
paid as much as Is per cent: of their
losses.
1t is regretable that people do not
give more attention to the principles Of
fire insurance. There ought to be in
Mississippi today several good compan-
les capable of carrying all the risks in
the state except where large values are
concentrated. The money made, if any,
would be kept at home and we would
learn much about the question that we
can never know by looking, en- one side
only.
Healthy competition is good in all
lines of business but reckless and un-
ressrined competition in fire insurance
works harm. 1t creases expense, in
creases fires and as necessary result,
increases the cost of insurance, Twenyt
1 years ago, companies doing business in
the loss rates was much less in proper
ton to- premiums. The total premiums
were under 100000. Now they are
four times that Have values increased
four fold? If companies during five
year period make more than a legiti-
profit. rates are too high. If they make
nothing, they are too low. For the
years 19O4-0 inclusive, the companies
have lost.
In speaking Of board" compaies,-
have reference to the action of COM
panies in states that permit and en-
courage boards. A majority of states
do and they have the lowest rates and
tho companies, as rule. make money
| A systematic conduct Of business re-
duces expenses and losses.
H. M. STREET.
/ I'm this issue we publish the