Arizona republican., 1915-12-03
RATES NOT EXCESSIVE BUT REDUCTION OF FIRE LOSSES
 WILL GUT INSURANCE COST

 dence property are the same as those ! in Tucson ana Douglas, while those of Bisbee are about 8 per cent higher. In California cities the exposure charges are almost identically the same as | those of Phoenix.
 The base rate for business property i in Phoenix is S1.OO, with certain charges and credit for exposure. occu- i pancy, etc. The Phoenix rate is II per | cert lower than in Tucson, Douglas or Prescott In California cities the base rate Is the same as in Phoenix, but | there is somewhat greater discount l for fire protection. In Pasadena and | Redlands the credit for fire protection i Is practically the same as that in | Phoenix.
 l The Phoenix fire insurance rates are seen to be somewhat higher than in | California, but lower than in any other city in Arizona. There are several reasons why the rates are higher than 1 in California.
 Cost of Doing Business
 IL costs more to do business in Ari zona than in California, owing to the size and proximity of California cities. 4 special agent can cover in Los An gcles alone a population double the entire population Of Arizona. where distances between towns are 50 to 125 miles Necessarily there must he some difference in the insurance rates Co cover tbis greater cost of doing business.
 Volume of Business and Ratio of Losses
 The volume of premium income in California is much greater than in Ari- zon1- Tn 1914 the premium income in California was S1G.OO0. 900, with loss ratio of 40 per cent. In all of Arizona the premium income was SS6O.GO0. with losses incurred Of 60 per cent. Cali fornia sustained a 20 per cent lower loss ratio. with a volume of business nineteen times as great. Phoenix paid premiums of s100.00O and sustained l losses of approximately $135,0O0 or q loss ratio Of 135 per cent. The cost of doing business is approximately 42 per cent So that the total net losses iE the Phoenix business for 1914 are great. From 1910 to 1914 inclusive, the losses in Phoenix exceeded the premi- ums. The Arizona Fire Insurance com 1pany, which is able to better choose its risks than a foreign company. had a loss ratio from 1910 to 1915 inclusive of fO.S per cent and so far in 1915 close ] loss during this period was 8 per cent, SO that while lower rates have been en- ioyed than in the rest of the state, Phoenix has not made so good a show , ing.
 In the western states the rates have been reduced during the past twenty years. The average rate in California for 1915 is 9 per cent less than of ATi- , zona. Excepting the San Francisco Corflasration. there is no state which shows SO high a loss ratio per Sloo of / risk written during the past thirty five ,-ears. as that of Arizona.
 Ii is obvious that some higher rate in Arizona is justified. It is further , obvious that no decrease in Phoenix rates is justifiable. We recommend that no attempt be made to secure bower rates this year However, the i conditions in Phoenix have changed so 1s to make it certain that the loss ra . rio will be materially reduced hence
 forth, SO that it is probable that re- ductions can be affected a year or two hence. We therefore recommend that an active standing committee be ap- pointed to endeaVOr to further reduce the fire losses so that a good record may he secured. The fact that Phoe- nix losses per S100 of risk are greater : than an average of the state. and that the ratio of losses per $100 of risk in Arizona is higher than in any other state in a country the extent of fire J losses is national disgrace. should be sufficient to arouse the people of Phoe- nix to energetic efforts to better this condition. We therefore desire to las, . before you. certain facts concerning conditions in Phoenix, and to suggest an aggressive attempt by the chamber of commerce to have the recommenda tions herein contained fully carried out Building Restrictions
 ,. The building restrictions in Phoenix have always been lax No adequate r building ordinance is even now in ef- . feet, so that buildings have been erect : ed which create local conflagration : hazards. The proposed building ordi- y nance is far better than any previous
 ordinances. but this has not been P passed by the city commission. While l a building might be erected in any l section of the special fire district in . such a manner as to get the lowest Q possible rate, the fact that it would r. be exposed by other buildings not hay
 ing proper fire walls would detract
 from the credit it would have for per  D in the rates on mercantile properties D can only be brought about by general - improvement in the cons ruction ot e the risks. Of course. it will be impos f sible to condemn even the poorest oi
 these buildings but certainly steps | should be taken to insure against ad-
 ditional buildings of that character
 eing erected. We therefore recom-
 mend that the city commission be re- Y quested to pass the proposed building ' ordinance immediately, embodying cer- , tain slight changes which we suggest
 The frame porches in the specia
 fire district are d great fire menace 5 and fire communicating factors. This
 applies to both front and rear porches h Regardless of the opposition that vii y be met. an ordinance should be passed T to require the tearing down of frame
 porches in the special fire district