New-York tribune., 1911-02-25
RATE WAR NOW THREATENS
Fire Insurance Exchange by One
Vote Saves Brokers' Bacon.
Rejects LOW COMMISSIONS
Turns Down Proposal Of Eastern
Union-Method Of Regula-
tion Endangered

The Fire Insurance Exchange met yes
terday afternoon. and rejected py one 'o'e
the proposal Of the newly constitu'eu
Eastern Union to reduce the rates or cofh-
n,issiop maid TO brokers. This one dissent
inc vote among the large number cast was
that of the London Assurance Corporations
ard under the rules of the exchange, was
as effective as II fifty had been cast
against the measure. Local insurance men
were wondering last night what possioiy
caIamjtous effect this action might nave.
The Eastern Union comprises a majority
Of the companies doing business III the
Eastern and Middle states. and these COM
panies I'm turn make up majority oil the
membership OF the Fire Insurance Ex-
change Of New York city. The Eastern
Union, on its organization, several months
ago. adopted a rule reducing the rates OF
commission paid to agents. and also to
brokers in those cities where the brokerage
system obtains. But in New York the Fire
Insurance Exchange had already fixed the
rates of brokerage with the provision that
they could he changed only by unanimous
vote Of all the members present at meet
ing held for the purpose Of voting on the
question.
The exchange has a rule also that, fol-
lowing the withdrawal of one member. the
rate agreements cease 10 he operative.
After the failure of the exchange yester-
day to adopt the Eastern Union rule with
regard To brokers commissions threats OF
withdrawal were heard from some Of the
members Of the exchange who are, also
members Of the Eastern Union This would
result In a rate war, 1t was freely pre-
dicted, that would crowd number OF the
smaller and weaker companies 10 the wall.
The Eastern Union. i'm promulgating the
proposition to lower the rates Of broker
age also voted that the companies In the
union would refuse to support any local
associati ton that failed to adopt it's require
ments But it seems incredible to many
underwriters that the officers and man
ayers Of these companies will break rp
what has been universally conceded To ne
the most efficient local fire insurance asso-
citation for the regulation of the rates OF
brokerage and methods that has ever ex-
listed in the world. The legislative invesu-
eating committee after going Thoroughly
into the methods Of the exchange. recently
reported very distinctly in its favor, in
cited to do so partly by a memorial ad-
dressed 10 II by n large number OF mer-
chants and real estate owners.
The question the underwriters were ask
ing themselves yesterday was whether the
Eastern Union would recede from the re-
duirement that the New York exchange
must adopt lower rates of brokerage 'r
whether the exchange. Al another meeting,
would he able TO produce the unanimous
vote necessary for the adoption Of the
union rule They pointed out that the lat
ter might he accomplished II the union
would rescnd it's rule reducing the com
missions paid agents and cutting In two
their share Of the profits.
The representative Of tine London AS
surance Corporation. who cast the one
vote necessary for the rejection Of the re-
duction was overwhelmed with expressions
of gratitude from as many brokers as
could call at his office in what was left ~
the afternoon or could get n chance at the
telephone leading into it. 1t was said
there might have been other votes In the
negative If they had been required for the
defeat of the motion. but tho representa-
tive Of the London company was hailed "s
the one man who had saved the brokers
bacon.
The exchange voted to appoint commit
TOE consisting of two officers Of New lork
companies. two managers OF foreign CONF
NAMES and two officers Of companies W
other states to see what measures could
be adopted 10 save the exchange.