Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-08-30
CHARLES A. HExAMER
On Rlslnq Insurance Values


MANY business men. by failing to keep
A'A track Of the changes in values both of
real estate and merchandise which they keep
stored in their buildings, are running the
risk of heavy loss in case Of fire, is the
assertion of Charles A. Hexamer. secretary
of the Philadelphia Fire Underwriters AS
sOciatiOn.
As Mr.. Hexamer puts it. "The failure of
many business men to follow appreciation
of values and make their insurance pre-
miums accordingly is likely to make them
involuntary self insurers.
'In other words the business man who
is not cognizant Of the change in values due
to changing conditions. or. being so. does not
act upon it, is likely to find himself. instead
of being covered by insurance, facing large
financial loss. If he should be unfortunate
enough to have his establishment burned.
"Thc underwriters association and insur-
ance brokers individually have constantly
warned business men Of these changing con-
ditions and Just how they were reflected IN
fire insurance liability, and yet many OF
them have failed to heed, Either they do
not realize their risk, or else they prefer
to take it rather than pay heavier premiums.
II can remember two comparatively recent
cases where just such neglect cost wv"
prominent business men heavily. one OF
them had loss of more than S2OO.OO0 and
the other lost. over and above the insurance
which he collected. about SlSI ,OOO.
Advances and Insurance
"yalrcs have more than trebled in the last
ten wears and they have doubled since the
war. A well known builder tells me that
the cost of constructing buildings has aC-
vanced 60 per cent during the last year
All these advances reflect themselves proper
tionately in tho insurance.
Fire insurance must be based on replace
ment value. In other words, If a man in
sured his building and stock for SlOO 900
few years ago, in order to be covered 1t
would be necessary for him at least to double
his insurance in tho intervening period.
According to the law. in order to avoid
any discrimination in rates. it is necessary
to figure on 80 per cent of the total value
of the>prOperty to be- insured as basis TOR
computing rates In cases of blanket in
srrance this is raised to 80 per cent.
''Now it is not obligatory for the business
man to insure for so per cent as tn" co
insurance plan requires. but this must he
regarded az II standard ratio. He may in
sure for smaller percentage, but OF course.
wouIG be charged at higher rate than til"
standard amount or il he chooses to lnSur"
for the full 100 per cent, his rate is de
| creased.
',Thc way values are changing these days,
tho average business man should keep in
nretty close touch with his insurance broker
| ;f hp woulG be ON the safe side and avoid
| posSible loss.
Merchants Taking Risks
The bait which makes many business
men gamble with heavy loss iS the feeling
| Tint values will decline later and their in
| srrancc rates will then be smaller. Those
| conditions could be met when they ar
riynd but, in the meantime, the man 81
| gambling il taking heavy chance.
! ..Nany business men who were holding
| goods for higher prices, particularly, ran this
| risk Another thing which has aggravated
| thts condition has been the transportation
| situation. which has held many goods in
| warehouses; when they should be on their
| way to their ultimate ,cOpSumers. MANY
| others have been awaiting developments in
| The fall and have been holding off changing
| their insuranc" rates.
| "IndicatiOnS are that our premiums will
| increase abort 10 per cent during the pres
ont wear. which will mean premium total
of SI2 600 600. So far this year this city
| hos had a total loss by fires of four and
a half million dollars, and this will probably
reoch six millions by the END of IN" ycar,
| "Thr loss Of insurance companies then
| h,s been 30 per cent of their premiums,
IThe exuensc ratio of the fire insuranc" bust
ness ~ about 10 per cent. Fifty per cent
nf the balance must be reserved as sinking
frrJ for loss by conhagrations, which will
| Leave lust ) per cent dividend for the stock
holders
Ia about 40 per cent. so that this ~ has
be,A~ slightly above normal. Mihcclphia