The Washington herald., 1915-10-10
Fire Prevention and Insurance.

Yesterday was Fire Prevention Day, set aside
10 impress upon property owners the extent to
which they can reduce fire waste by precautionary
measures. The annual fire waste in the United
States averages about S25o,oooooo. The purposes
OF the agitation to reduce this fire waste bill
to a minimum, and thus relieve the prudent
property owner OF the necessity for insuring
against the careessncss of the imprudent at rates
heightened. first by the mprudcncc of his neigh
Dor, and second by monopolistic rate agreements
between fire underwriting agencies unregulated
by the State.
The accomplishment of the first purpose is a
matter of education and disciplinc-cducation to
teach the property holder what constitutes fire
hazard and how to rid the community of such a
menace to his own and his ncighbors property. and
discipline by legislative enactment to convince the
needless that they cannot wantonly ignore precau-
tionary designed to protect not only their
own but their ncighbors' property
Washington is remarkable example OF what
general carelessncss in fire prevention show
During the year OF 1914, fire insurance companies
local. domestic and foreign, doing business in the
District OF Columbia assumed fire risks totalling
SI42 o63 3ooo received premiums amounting to $685.
40, and paid out in fire losses $459,657. Practi-
cally two-thirds of the premiums turned back
cra conflagraton, but small tires-fre waste
largely from carelessness and ignorance.
This situation resulted in the action which
Washington property owners even or
ganzing against-the sudden increase in rates
through an agreement of all companies doing bus
mess in the District. The necessary
10 the business OF the fire companies, and it had
its advantages the public in that while the in
crease commenced at horizontal rate, conSidera-
ton was given in the form OF lower rates tor
special precautions against fire the part of the
pocyholdcr And every special precautlon taken
with view to procuring lower rates for fire in
surance lowers the general fire hazard OF the COM
munity and consequently the fire waste
But the advantage to the public lies, primarily.
in the fact that the insurance companies arc
offering this premium upon fire prevention, but
that rates being written scientihcally-and
scientific rate-making be accomplished by a
disintercsted agency with better results to the
public.
Washington premium holders complained Bit
terly because of the almost horizontal increase in
rates. What the Supreme Court OF the United
States thinks of the method which employed
in the case OF Washington may be judged from
very apt quotation from recent insurance de-
cision:
w may venture 10 ODSeINc lndl INC pllSC
OF insurance is not fixed over the counters of the
companies by what Adam Smith calls the hig-
Cling of the market, but formed in the councils
OF the underwriters promulgated in schedules OF
practically controlling constancy, which the ap-
pcant for insurance is powerless to oppose and
which, therefore, has led to the assertion that the
business of insurance is Of monopolistic character
and that it is illusory to speak of liberty of
contract
The quotation is from the majority decision
in the case OF the German Alliance Company
against the superintendent of insurance of Kansas
The decision OF the Supreme Court upheld the
validity of the Kansas statute giving the State
superintendent OF insurance authority to regulate
rates. and the underlying reason for the decision is
found in the above quoted passage.
To sum up: Public education and discipline
eliminate fire waste from ignorance OF ordinary
fire prevention methods Scientific writing
places the weight OF the fire loss upon the property
owner who because OF the nature of his risk the
inadequacy OF his fire prevention measures, carries
the greatest fire hazard Public regulation insures
that such scientific rates shall not be monopolsti
callv prepared and based horizontal not justi
fed by fire losses and fair percentage of fixed
and overhead charges in the insuring company