The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1914-06-23

DtIltNe fh9f any 4
reduction that spossible in the ex-
pense Of conduct and mana cement of
the nre insurance business is neeli-
slpie, and that any saving in the cost |
must come from a reduction in the
uhlxed charge, the fire loss. This un-
hHed charge during the period from |
1900 to 1912 inclusive in North Caro-
Ina ranges from 43 per cent to II
per cent of the premiums paid, and
averaged for the entire period of Is
years nearly 81 per cent to be exact.
sos per cent. All this to the 40 per
cent expense item n You have only
. per cent left for margin. Out of
tnat sum margin has to come some
thing for the stockholders whose cap
ltal IS staked in the business as in
demnity against loss, something to
MAINTAIN n legal reserve or unearn-
cd premium fund. and something for
the inevitable rainy days which hive
never yet failed to come now mad
then in the fire insurance business.
mat margin, instead of being too
large, is too small, if fire insurance is
10 be the absolute indemnity which it
ought TO be and if capital is to con-
tinue to find an inducement TO in
Vestment in the business of fire insur-
ance. capital is stunning the fire in
Surance business in North Carolina
today and this has been it's attitude
towards it for ~>several years. 1 be-
lleVe that a ~nanCie would find the
organization of a fire insurance com
pany in North Carolina the most diff
ficul task in all the range Of business
organization. People are not going
to subscribe to the capital of new in
surance companies in this State as
long as there is 10 demand for the
stocks Of the companies we already
have. This attitude of indifference
on the part of the investing public
would not exist if the fire insurance
business was a bonanza as some seem
to think, or if there was q liberal or
even sufficient margin in it. During
the last 20 years there have been or
ganized in North Carolina eleven legal
reserve fire insurance companies.
OF this number only seven remain to
tell the tale. This represents a NOR
tality Of over SO per cent, about six
times as great as the mortality of the
banking business, and affords some
explanation of the reason why capita
is not falling over itself in NORTH
Carolina to get into the insurance
business. l believe hat the banking
business as well as other established
lines of business in North Caroline
larger profits and more rapid accumu
, lations than the fire insurance bust
ness.
In view of the unusual mortality O
fire insurance companies and the un
usual risk to which the capital in
! vested in that business is subjected
the profits and the surplus accumula
tons in the fire insurance bushes
: should as a matter of business Jus
n tice be allowed a wider margin tha1
in any other business; for the elemen
t tai law of business is, the greater III
hazard, the greater must be the mar
cir In this presentation l have con
fined myself to the underwriting rec
ord of North Carolina, because 70
: the of this investigation,
h AXE it that it is immaterial that in
t surance rates to the South ar
+ greater than ours and that rates t
0 the North of us are in many instance
g7 less than ours, SO long-as our fire los
record covering a period of Is year
d leaves SO slender a margin for the SAT
conduct of the business. for we car
not expect rates which our own rec
e ord Ices not justify. no matter wha
S rates obtain elsewhere. One of tn
C companies which / have the manage
ment of operates both in Virginia an
h North Carolina. During the last tie
years hat company's average loss ra
ito has been 4O.7 per ent for vi
: ginia and 53.2 per cent for Mort
e Carolina and this difference in fave
y of Virginia will amply explain any Iii
tie occasional apparent discrepancit
le in the Virginia and North Carolin
SIS rates, which may have been disco,
le cred. AS a matter Of fact, outside (
10 the valley and blue grass sections
IS Virginia where the record for loss,
S. has been unusually favorable for
l. long term of years and where tt
rates are correspondinSly favorahl
es the Virginia rates are no less in tt
It. average than our rates here in Mort
II Carolina and al occasional apparel
or exception to that rule does not effe
nj in the lest the accuracy of that stat
eS lnent.
RcIuc. Rates by Changing COnditio,
b Which Uayc IRE dnced th.. Rates.
De While the record Of the fire inSc
ne ance business in North Carolina shoy
for itself that the business cannot
rk conducted successfully under prese
e. conditions at less than the prevailil
to rates. | believe that those rates c.
if be reduced by changing those cond
O. tons which have produced those rat
and that such a change viii produ
that reduction. II a incere. hone
Ii effort is made in that direction
e the State and the. Insurance comp
p MES alike cheaper insurance rates W