The Washington herald., 1921-05-29
LOOSE METHODS
OF UNDERWRITERS
RESULT IN LOSSES
Heavy Amounts Allowed
Encourage Crooks,
Dealers Say.
NEW LAW PLANNED
cars Dumped in River to Col
lect Policies, Reports
Indicate,
NEW LAW PLANNED

Forced by the increase OF lnsur-
nee rates during the past ie"
months, the automobile manufac-
urers and dealers are again
nE their attention TO the neeo toI
IN insurance company TO care iol
motor cars and trucks, similar u
he one launched four years ago
At the office of the Nstional Au-
omobile Chamber Of Commerce IN
Sew York. il was stated tnat tne
oose methods OF accepting risNs'
,verEenerous coverage ana over
tve and overhead expense on the
part Of insurance companies, haa
.esulted in their requiring rates
rom which the only relief lies In
he furtherinE of plans for mutual
companies and for dealer organiEi-
ions which are now actively under
consideration.
Result OF Rates.
There are some 100000 motor
rehicles in this country" said Al
red Reeves. general manager OF
he National Automobile Chamber
,f Commerce, "and a. decreasing
percentage are taking out insur-
lnCe DcCAneC Va
moral hazard receives no constdera-
ion. A burglar just out OF jan
1 yets the same rate as a respectable
E:itizen.
The amounts allowed on large
ind trucks almost encourage their
,eing burned up or destroyed to be
'eported as stolen.
I'VE hear many times Of legislH-
! lion TO force everyone, to take
bond on their car on the ground
hat it would prevent accidents,
Such action would make accidents
more frequent because II would
shift the responsibility of the driv-
.r.
Leads to Danger.
1T would be OF more help in pre-
venting accidents IL no owner was
permitted to carry liability insur-
lnce and no car was equipped with
Z horn.
"A sedan Insured new last year
.or dre, transportation and theft to
he amount Of s2.soo. AZ a cost OF
s33-so. has just been renewed at a
Dst of SIS, and Is now covered for
S2.5oo. The policy holder in this
Ease Is displeased at the amount OF
he premium and surprised at the
kmount Of the coveraEs, as ne
you'd gladly take $4,000 for the
ar.
AT the same time we read. with
n the last few days. OF several au-
omobiles being found in Lake
Erie, near Buffalo, where they had
been Intentionally dumped. another
b New YORK Say and a half dozen
p an old quarry in Illinois.
Light on Costs.
These facts undoubtedly throw
great light on the high cost of
automobile insurance. and it Is evi-
ent that the methods Of writing
rdinary hre insurance on buildings
nd furniture without actual
knowledge of the value of the
property insured. will not do at all
pr automobiles. MutuaIs are
Driving in all territories which con-
net their business at much less
Expense. control their losses to a
reater extent and make some ef-
prt to know the responsibility OF
heir client
1T is very well to say that one
no uses the mutual assumes a lia-
ility. but this is losing force from
Rperience TO the contrary; divi-
ends of from IS per cent to 50 per
ent compared with standard rates.
ave for long periods been received
n premiums By their policyholders.
Percentage of LOSSES.
According to figures given out
131 insurance companies the
Re and theft premiums received by
hem in 1920 amounted to s74,472.-
30. The losses paid amounted to
2.935.74s. 1t would be interest
g to know the proportion Of these
|sses that went to reimburse such
psts as noted above.
Surface indications certainly
pint to urgent necessity OF scru-
nIzing this moral hazard.
New Plan Proposed.
Manufacturers have fors ONE time
udit the plan whereby under
riters instead OF grouping cars
c0rjinE to list price - determine
miuns. nave assigI ei the sev.r-
makes of cars to groups using
rtain features Of design and con-
ruction as a guide to the under