Lower coast gazette., 1910-04-16
SATURDAY, APRIL 1G, 1910.
Fire Insurance in Louisiana.

people Of Louisiana have paid out over four NIL
lions of dollars for fire insurance and that only
about two millions Of dollars have been paid OF
fire losses. Fire insurance, under reasonably
normal conditions, has always been considered a
very legitimate and generally a very profitable
business. That it is profitable is indicated by
the general experiences Of the last year, when,
however, may not come every year, but during
all the years the business has been more proflt-
able than many other businesses in which our
citizens are engaged. A careful inquiry into
the causes that have led to the decay and eX-
~tinction of practically all of our home insurance
companies develops the fact that when these
companies made any money the first effort or
all concerned was to get a months extra pay
because Of the good business done and then to
secure an increase in the salaries. In this way
the profits of the business were held down and
vet they were generally sufficient to pay fair
dividends, but the stockholders insisted on get
ting as large dividends as could possibly be had
with the final result that all of the profit was
exhausted for the reasons herein before stated
and no surplus accumulated and no preparations
made for any disastrous fire that might occur
later on.
In the eastern states, where fire insurance
has been made the subject Of much study, for
a long time it was early perceived that a consld-
cradle surplus should be held by every company,
in order to make it possible to pay good, fair
dividends all the time and at the san time to
be ready to meet any emergency losses Of an
unusual character. In 1871, when the great
Chicago fire occurred, it was found that nearly
every insurance company involved in the losses
At that time had surplus enough or capital
enough to pay out. Very few of the companies
! failed and those that paid out, although they
exhausted their capital, We're doing such an ex-
their capital was Immediately subscribed over
again and the business went right on.
Since that time, however, there has been a
gradual extinction of our home insurance COM
panies and an invasion of this territory by the
foreign companies with the evident intent to
occupy it as entirely as possible. To secure and
perfect their opportunities, efforts were made to
procure legislation such as would destroy the
smaller companies and permit the organization
of new companies, making it more difficult to Go
an insurance business than to do a banking bust
ness.
1t is a recognized fact that banks are fdu-
ciary institutions and they are institutions
that ought not to fail under any conditions of
prudent management. Practically every bank
that fails has been mIsmanaged. On the other
hand, insurance companies are created for the
purpose of taking over certain risks and if this
be done within given lines and the company
fails, no reflection can be made upon anyone, as
the business is hazardous at the best. Our leg
islature did not seem to regard this, or at least
the promoters of the insurance bills in the Lou
iSiana legislature seemed to have some motives
that were urged upon them by outside influences
and directly at variance with the interests of our
home capitalists and at variance with the inter-
ests of the state. Legislation was had to the
effect that a fire insurance company could not be
authorized with a less capital than $500, 600, of
which some thirty odd thousand dollars should
be on hand when the company began
business and all of the rest of the money be
paid in within one year.
~ IL pclllllSSlUle u UcSlu a UdlhllS UuSlucSS
with a capital of $40, 900, and yet the banks are
presumed to take care of the money of the peo-
pie, a sacred trust. The insurance companies
are created simply for the purpose of paying an
indemnity to the people who lose by fire and if
the company itself is destroyed by the character
of losses in the risks that it takes, and those are
taken within the limits ordinarily allowed by
the law, then such a failure would be entirely
honorable. All this, however, made no impress
sion upon the legislature in Baton Rouge and
the hundred thousand dollar law went into oper-
alton and in the meantime eastern capitalists
bought out some of our companies, others were
liquidated entirely and today New Orleans, a
city with a population between three and four
hundred thousand people, stands with fewer in
sutance companies of its own than any other
like city in the United States. The present
legal status of insurance in this state has been
brought about by the intervention of the great,
moropolistic foreign companies that have deter
mined to exterpate the home companies if they
49,