Omaha daily bee., 1911-04-30
FIXING RATE ON FIRE RISKS
How Agents Get at the Right Charge
to Make.
DEAN ANALYTIC SYSTEM IN USE
Charges Made for Features that In
crease Liability 60 Loss and
Credit Given for Those
of safety.
DEAN ANALYTIC SYSTEM IN USE
pY FRANK n. b. MARTIN.

up from a schedule, which takes into con-
alteration such things as the construction
of the building. the occupancy and ex-
posures. The schedule provides for Ger
tain charges where hazards exist and the
elimination or modification entities the as
sured to a corresponding reduction in the
rate.
The evolution OF schedule rating is an in
terestinR one. Not more than twenty-five
years ago II was the custom for eight or
ten representatives from as many insur-
ance companies TO make town-to-town
visit and establish the rates for the in
dividual risks in each place These men.
after going through a building and sizing
up the conditions and nature Of the stock,
exposures. etc. would put down sep
aratey each his own estimate Of what
proper rate would be, and the final rate
promulgamated was the average Of these
rates. Naturally, this method was one
which could not be considered as being
systematic, but II served its purpose for
a number of years, until someone thought
Of making up a survey Of a risk and at
taching certain charges for defects in
building construction which contributed to
the fire hazard, also exposures and occu-
pancy, and giving credit for superior fea-
lures or elimination Of hazards; in other
words. grinding out the rate by some
mathematical formula.
First Surveys Were Simple.
The first surveys of this kind were sim
pie affairs, but in the course of time
improvements and experience brought out
q long string Of schedules. each more com
plicated than its predecessor. Nearly all
Of them started with a basic rate Of 81
In the case Of brick buildings and charges
q
Is cents and 20 cents were added depending
on whether It was a charge for excess area
or floor openings and the like. The last
Of these mercantile schedules were applied
IN this state up to 1905. About 1901 A. F.
Dean OF the Springfield Insurance COM
pany, a man who had given the subject
of schedule rating much thought. advo-
Gated a change in the method of rating
which was then in general vogue The old
mercantile schedules had not given the
satisfaction they should and oftimes pro-
duced inequalities in rates TO which 1t was
difficult to reconcile the assured or to sat
isfactorily explain.
How Dean Proceeds.
Mr.. Dean, in his analytic system for the
measurement of fire hazard, has departed
from the idea of fixed charges almost en-
trely and based his principles of rating
on the fact that fire hazard is a COM
pound OF related parts and each part Is
az amenable to the law of average as the
total composed of all parts In construct
ing his basis schedule he necessarily Sc
lects certain features of hazard as sep
arabic and attaches to each a charge;
while to the residue, consisting OF unana-
.liEable parts, he attaches a lump sum and
calls 1t the basis rate. There is no in
trinsic difference between the charge called
basis rate and the other charges. except
ing that IL includes all things too OBJ
scure, Indefinite or unimportant to sched-
ule. The basis estimate under the Dean
schedule depends upon the height Of the
building. the higher the building the larger
the basis charge. All other charges for
occupancy and structural defects are per-
centages of the basis rate. The principle of
RELATIVELY is thus maintained. This sched-
ule was tried experimentally for several
S'ars proceeding the San Francisco fire
and found to give very uniform results
Since the San Francisco fire 1t has come
Into general use throughout the middle
west, supercedlng the former mercantile
schedules. 1t will only be a matter of
time before It is universally used also in
the eastern and Pacific departments.
Working of the system.
Without going into the details of the
schedule there are certain points which
are interesting TO note where improvements
can be made which will help TO reduce the
Insurance rate.
II frequently happens in buildings that
there is brick division wall with open
ings in. In some cases some OF the open
ings can be bricked up and those open
ings which are absolutely necessary can
be materially cut down. and Furthermore
certain hazardous work or material can be
segregated In one part OF the building cut
off from the balance of the stock by the
fire wall, thus greatly reducing the fire
rate.
The schedule requires that the parapet
walls on four-story buildings and over
shall be thirty-six inches high; on build
ings under four stories In height parapets
should be eighteen Inches high Deficiency
IN height or thickness is charged for.
skyIights Are Costly.
There is quite heavy charge for sky
lights unless same are made OF metal
frames and wire glass, or ordinary heavy
glass properly protected by a heavy wire
screen strong enough TO keep fire brands
from falling on the glass and breaking
through. Skylights can be so equipped at
moderate cost and eliminate the charge
which is made
Floorway openings are charged for at
the rate OF per cent for the first opening
on each floor and l per cent additional,
up to double the charge for each addi-
uonal opening These openings consist
principally OF stairway and elevator open
ings, light shafts. chutes belt holes etc
Such openings provide ready means for
the spread of fire, The charges can be
eliminated by trapping the elevators and
stairs with automatic traps. Stairways are
sometimes boxed in or enclosed and doors
TO close automatically installed,
n electric motors are used a charge de-
pending on the nature OF the work carried
on is made, unless the motors are Of the
Induction variety or else encased in an
asbestos or metel-lined box THIS last ex-
pedient is often adopted to remove the
charge.
charge Is always made for the use OF
gasoline when kept in ordinary cans, For
a small sum a safety can OF one-galion
capacity. approved by the underwriters
may be purchased. the use Of which Will
eliminate the charge.
what Gains Credit.
Among the credits given are the follow