New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-07-20
Conaagration Lessons-Pre-
ss1iuna Rate on the Down
Grade--Cost Not Increased
During War Period-Service
Back of Indemnity
First Of Series Of Eight Sketches TIE
Z Second VA Appear in The Tribume
4 in the Near Future.l
ADVERTISEMENT

Manhattan or Brooklyn iii the New
York City of today
Those who are responsible for the
taures of the great stock fire insur-
ace companies constantly ask that
DIGESTION of themselves as they keep in
G heir minds fairly exact figures show
gesssng the amount of liability which
would result from an uncomfortable
Is.
New York has more fireproof build
<SS-:sgs ihan any other city in the world.
SsSsfo us they mean fire barriers dividing
the city-lnuch as do frcproof division
wills in some manufacturing plant.
r-----l-he ordinary blaze is .smothered before
j, has chance to assume alarming
proportions, and yet conhagration so
great as to startle the world is always
- r. possibility. | am not an alarm
-rrfss and therefore wish to emphasize
~ the fact that there would have to be
'sssr.sinost remarkable conspiracy of I'M
vs@.ward fate and circumstance before
such disaster could sweep New York
MBlt-well, that's our biggest problem,
Esust the same, in New York as well as
ineevery other city in the country
1t has been my privilege to observe
ton days that followed the Civil War
to the present when we are reacting
.tIom world struggle that was for the
2 9prctection OF our very existence. 1t has
bccn pride and satisfaction to me
to know that alone of all the great mod
~sAf egn business agencies, fire insurance
So companies have not increased the cost
80 Of their services to the public in this
period of high prices When the war
.. .a 'tisas on and we we're all readjusting
ssursrlves to the higher costs of living,
73sga temporary surcharge was made, but
Sss.s chat increase OF cost was only 10 per
al neent and it remained in force only
3ano4 few aonths Ours is not a business of
Vsroaiinne Hate results and take risk
today but our profit, if any, may only
.4is, BE- dc crmincd in the distant future.
The average cost of fire insurance,
mr. however, is rot only lower now than it
oosxovas before the Great War, but it kept
'9e Oh going down during the war when
.s..s.ssverything clse went up from 50 per
-sts4ceAt to 500 per cent. Perhaps your
- own rate did not change, but it is still
true that the average cost was low
- cred. That, too, in the face of de-
fifw sand unprecedented in the history Of
"df Tie business, due largely to the enor-
.sesooplous increase il values. Fire insur-
,sies'ance at least one business where
4- tEmand did not make fer extortion or
,5uooovercbargc when the pressure was on.
: s.s5 1.-THE fire that gave birth to fire insur-
afcc as business occurred in London
~, befO
time, but I have observed at close
rang, the results from the Chicago Fire
III 1871, followed by the Boston con-
fagraton of 1872. Disastrous as they
were to the companies of that day.
tie economic effect was small COM
y TAgcd with the destruction in three
g..Jsys' time of $s5o,o00,o 900 of property
ii San Francisco in 1906.
Do xsyou recall what happened in
i9}7--the year after the San francisco
fret Was there not pane that tested
us al? Such enormous shifting of
values could not be made without a
severe reaction and the economists told
rs that the prime factor was the sud-
4 den withdrawal of over $500, 1000, 600
from investment by the stock fire In
surance companies to pay their losses
III San Francisco
5ass5 Maybe this is a good moment to
sspoint out that fire insurance only in
IDENTITIES; it does not restore Tha,
money paid out in San Francisco came
s.sr.~1ro,n capital and surplus funds of stock
SsyASc insurance companies and from the
U1rsckcss of their stockholders. To pay
/ sa-il losses there the companies had
70 cash in on their prime securities.
Farther they had to call into their
Business about $90000,00 of new
i 1aoney as result of that one con-
fagration. Despite all this the fatai-
-sses among companies occasioned by
that catastrophe were negligible COM
ss<uaEsred with those following the earlier
+ 15hieago and Boston conhagrations
S%hen wildcat banks and wildcat insur-
NJ ance companies were numerous. There
ARE few of that type in existence today
the insurance laws of all the states are
TOO rigid and the public supervision is
& "A too close.
81 The later conhagrations mentioned
are only three of a score or more dur
lag my lifetime each of which has
caught its lesson. Their combined effect
has been TO lower the average cost of
- dsre insurance to you! Sounds like an
Il absurd statement, doesn't it? And yet,
literally, it is true. Conhagra tons
have taught us to urge you to erect
s&eter buildings and adequately to safe
ara theih from hre by every APP
Proved mechanical device, and by
~. cleanliness and careful management,
u the induccment being to give you heavy
- credits in your premium rate when you
ssollow our counsels. Today no architect
of any great structure would dream of
uqbeginning his plans without consulting
the men behind the whole rating sys-
snnAem of fire insurance-the engineers
8 .syho specialize for us on how to pre-
Went and extinguish fire and how to
build to resist ERE.
All this is back of the modern science
ssssh rating in FIRE insurance whereby
;wEW4ae insured practically fixes his own
SS9Yremium rate and in which his state,
xSss1etional and, city conditions have an
sa5snportant bearing. Matchmaking is the
misunderstanding end of the business of
stock fire underwriting.