New-York tribune., 1911-10-26
HEED INSURANCE WARNING
/ ability Companies are Forming
Exchange to End Rate war;
,7lb PER CENT COMMISSIONS
Revised Rules to Govern New
Body Expected To Be Ready
by Next Friday.

Tho liability insurance companies DONG
,,einess in New York are busiiy engaged
earning 4 brokerage exchange on lines
,i,,ilar 70 the fire underwriters exchange
- mill themselves out Of the rate war
~ cot into after the warning they re-
.,tvo6 a year and a half ago that they
must reduce the cost OF doinS business.
Meetings have been in progress at the
oaiccs of the Casualty Insurance Exchange.
a, No g. William street for the last two
yaeks. and by Friday it Is believed that
,hf anal rules governing the new exchange
,su he announced. \ set of rules was put
ont a month ago. br; the brokers found
,her1 so unsatisfactory thet new ones had
10 he made
The new rules provide fiat commission
~ pcr cent for al brokers writing LA
byutv insurance. This is an average cut of
Of. per cent on commissions. hut & is an
soualizaticn Of commissions varying from
Ig'y per cent to 80 per cent. and it means
saving 10 the companies OF approximately
20, 90 a ycar in commissions.
4 couple Of years ago and for thirty
wears preceding that time brokers writ
sc liability insurance had received a COM
mission averaging = per cent, while some
~ the larger brokers got rs much as 20
nor cent The liability Insurance business
bo-sn 10 assume hig proportions about ten
Years ago, and It has new eretrn 40 that
the annual premiums approximate from
t,ono no 10 $1,000 90, while it is cstimat-
I'd that I'm the next i've years at the pres
ent rate Of growth they will reach $i75,-
0NcdO
Two years ago the insurance departments
~ several states began 10 take a very ac-
tive interest in liability insurance Super
i,eepdent Hotchkiss of this state was
ore If the leaders in the reforming of the
business. At dinner Of state superintend-
.nts Of insurance held In this city warn-
,ne was issued to the liability insurance
companies that they must reduce the cost
~ doing business and put themselves in a
sounder condition. or the states would or
gsnize liability insurance companies under
their employers liability laws
The result Of this warning was a general
cut I'm commissions and a consequent rate
war among the companies. Last summer
the rate war was ended by the formation
of the Casualty Insurance Exchange Of
New York. that takes in the liability COM
panies doing business in New York and
half a dozen surrounding states.
This exchange fixed premium rates and
made them uniform among all the COM
ranies belonging 10 the exchange, but
brokerage commissions still remained more
or less chaotic Some brokers still received
their . nor cent or so per cent commits
sions. while others were cut &c 49, per cent
and oven 10 10 por cent
This led q month ago to the formation Of
the brokers exchange, as an outgrowth OF
the Casualty Insurance Exchange. and
The makins of a fiat commission rate Of
~ rer cent. Only four Of the liability
Insurance companies have not gone into
The conference orsanized in the summer or
.rto the new brokerage exchange. They
are new companies that are still in the
position or having 10 reduce rates and pay
higher commissions i'm order 10 get busi-
ness One Of them expects 70 be in pO-
,itlon 10 Join both tire conference and the
brokers' exchange by the first of the year,
while the three others intend to join as
sacr as they can work up sufficient busi-
ness