The New York herald., 1921-08-31
NAN you visualize the distrust
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lent almost to panic-that would
have followed the San Francisco con-
llagration Of 1906, with its unprece-
dented loss, had it not been for the con
iidence Of the people, everywhere, in
the good faith and financial integrity
Of stock fire isnurance companies?
During three days time that disaster
wiped out insured property values
greater by some sixty or seventy millions
of dollars than the aggregate surplus Of
all the stock companies then licensed
TO do business in California!
Was this confidence Of the people
misplaced? No. AS stated in one Of
the earlier Sketches, the company
failures were negligible and stock
holders promptly responded to the call
for the restoration OF depleted capital
and surplus Golfers.
Stock fire underwriting, quite as
much as if not more than banking, is
dependent on the confidence Of the
public, and that which destroys con-
fidence works almost irreparable dam
age, so insidious is the progress of
calumny and so difficult is it to over
take and refute.
Until fire comes a policy contract
seems of but little Importance and often
is tucked away and forgotten. Hence
il is Of first Importance that those who
buv fire insurance to protect their
property interests, and assure the peace
of mind which leaves them free to
prosecute their own business affairs,
should have nothing but the best the
market affords. Any form other than
''stock" fire insurance puts the policy
holder in the insurance business him
self, with all its hazards and response
bilities, and merely creates for him
new liability; not relief from one already
existent.
In the public conception, all branches
and classes Of companies are too often
Jumped together, even though they
have nothing in common and are vastly
different in organization requirements,
methods, practices and operation. The
impression exists only because they are
all called insurance companies"
Let me divide the groups Of COM
panies first into those indemnifying for
ID property damaged or destroyed; (2)
accidents and injuries to people; (3)
failure in surety or fidelity; and a.
death, naturally or accidentally. They
are known broadly as fire and marine,
casualty, surety, and life insurance
companies. Again these are subdivided
into classes-stock and mutual.
Each branch, and each class in each
branch, is governed by separate insur-
ance statutes of the several states and
in every case, except life. the reserve
requirements for stock companies are
the highest and their standards of sol
vency the most rigid. In life insurance
alcre-an entirely distinct service and
with no relationship whatever TO other
branches-both stock and mutual COM
panies are required to reserve under
identical standards.
This explanation is made in answer
TO inquiries that have developed since
the publication Of these Sketches was
undertaken. ] am, Of course, speaking
only for stock fire insurance companies
and am trying to make plain that few
principles and few statutes applicable
to other branches properly could be
applied to them. The functions and
emergency requirements in our branch
and class are peculiar to US alone.
You viii have observed in these ar
ticles, Of course, that no attempt has
been made, except by mere reference, to
touch upon outward and visible services
of fire underwriting such as the adjust
nnent and payment OF fire losses. Yol
meet that every day, and know all about
it. | can say, however, with the GER
tainty OF expressing no more than exact
truth, that every stock fire insurance
company seeking the confidence of the
public earnestly desires to pay its losses
promptly and honestly and in accord
ance with the policy provisions. The
honest man has nothing to fear, ever
as every legitimate company will gladly
assist him in getting his just due when
loss comes.
The policy contracts issued to you.
which guarantee indemnity for loss to
the property specified, are more for
your protection than ours. For many
years these contracts have been pre-
scribed by statutes OF New York and
many other states both as to insuring
conditions and restrictions, and TO size
Of type. They are STANDARD Policies
in fact as well as in name, the pro-
visions for our common protection hav-
ing been clarified by court decisions
until there is no doubt Of their Intent
Before loss occurs, az previously
stated, policy OF fire insurance seem
ingly is OF little Importance but after
that event 1t becomes a document Of
great value. Then the contracts TO
which the stock fire insurance com
panies put their names and guarantees
are, TO all intents and purposes, sight
drafts within certain contractual limita-
tions, of course. but still sight drafts
upon the makers in favor Of honest
claimants. These guarantees are
backed by capital, surplus and the
statutory reserves previously explained.
They constitute Insurance within the
full meaning Of the word, that Is, 10
make safe.
JOHN 3. MORTON