The Leon reporter. (Leon, Iowa) 1887-1930, 1915-07-08
State Regulation of Insurance Rates
and Rating Bureaus.

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regulating fire insurance rates Is eff
fectivc, it will be illegal for agents to
rebate premiums charged, or discrim-
mate in rates between individual
risks of Same hazard and class.
The law requires insurance COM
panies to apply the rates and sched-
ules filed with the state insurance
department by rating bureaus which
construction and occupancy. Proper
survey of their buildings by applica-
enabled to remedy defects in con-
struction, reduce the hazard and
know exactly the reduction that will
event the rate finally fixed by the rat
ing bureau is considered discrimina-
tory or unjust, the law provides for
an appeal to the insurance depart
ment of the state, which is authoriz-
ed to investigate the same and fix
rate which is not discriminatory or
unjust, said action being subject to
court appeal by either party interest
ed.
The new statute was recommend
ed by the National Convention of In
surance Commissioners, which spent
several years investigating fire insur-
ance conditions throughout the cOun-
try.
The problem of an equitable ap-
portionment of the necessary contri-
buttons of those who join together in
payment of fire losses has long per-
picked the insurance world and vex-
ed the insuring public. Public senti-
ment has changed from regarding
fire insurance as wager on the part
of the owner that it would burn, to
the recognition of the fact that the
fire premiums merely constitute a
common fund for the payment of
losses. From the latter point of view
any discrimination in the common
contributions to be made to such
fund, is necessarily unjust.
Insurance rates must be made by
companies, without regard to Occu-
pancy hazard, physical defects or loss
experience, or by rating bureaus
which survey the risks and take into
consideration the elements above
named, or by the state. Under the
new law the second named method
will be employed and the state insur-
ance commissioner given the regula-
ton and supervision of the bureaus
and the rates.
Those county and state mutual as
sociations which do not write mer-
camille risks arc Lot affected by the
rating features of the law, but in all
other respects the law is applicable to
them. The law prohibits any devia-
ton by agents from the rates as filed
with the insurance department. Com
panies are not required, however, to
charge and collect bureau rates and
competition is not restricted, in that
any company is allowed to file vari-
alton from their schedule on fifteen
days notice, providing the same rate
shall apply to all risks of like kind
and hazard, thus preventing the in
fluential property owners securing
concessions in rate or by rebates not
allowed the general public.
The application of this law may
cause some friction and misunder-
standing until it's conditions are fully
understood While it will mean re-
duction in the rates on some proper
ty, it will undoubtedly increase the
cost to those who have heretofore
benefited through favoritism and re-
bates. But an equitable division of the
concessions heretofore allowed, and
proper credit for improved cOnstruc-
ton and fire protection, will mean a
reduction in the general cost of in
suranGe.
No one would return to the outlaw
ed system of preferential rates for
transportation. No one now regards
! it legitimate to take rebate or pass
or frank. The old methods of favor
itism in transportation are outlawed
forever, and will never again be toll
Grated by the public A similar evo-
luton in the relationship of the
in progress and beneficial results
have already been realized in some OF
the states.
The law will encourage the correc-
ton of defects of construction and
the cleaning up of the premises, Sc
curing to the owner credit in his
rate, thereby placing premium upon
precautionary methods in connection
with the custody of property and the
conduct of business. 1t will cause
more thorough inspection of risks
and result in a cutting down of fire
waste. Lower rates Tor lire insurance
can only be guaranteed by lessening
losses.
The motives of the commissioners
who have recommended this legisla-
ton in the several states, were to
place fire insurance upon an econom-
ic basis wherein the rate would cor
rectly reflect the loss experience, con-
struction and occupancy hazard. 1t
was expected that rates might be
equalized as nearly as the degree of
hazard will permit and all policy
holders treated alike.
The new law is such long step
toward equitable conditions for the
large and the small policy holder and
the companies, that spirit of fair
ness and cooperation should assist in
its successful operation.