New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-08-17
ADVERTISEMENT
GIVING A THOUGHT
TO
FIRE INSURANCE
Fair Rates Make Sound Indem-
nity-Co-ordination Not q Trust
or Monopoly-Costs Reduced
and Discrimination Prevented
Voluntary Agreement TO Restrict
Profits.

rF1fh Of a Series e Eight Sketches
ferrous prsa A H. s w , Bs Maacd on
The T,,bune = Ns ..','r week :" e "p'''' :"
NJ OF in a boastful spirit but
y with deep satisfaction it may
be STATED, I believe, that nc
business has played larger or more
generous part in the economic de-
velopmcnt of the United States
than stock fire insurance, and eve,
since coordination for the purpose
of rating was accorded public ap-
provas and given widespread legis-
lative endorsement, achievements in
Safeguarding America Against Fire
have been signally successful.
1t is to the public's interest to
pay a fair rate for fire insurance
and to get the best possible indem-
nity-that which is as nearly certain
as human foresight can make it.
Poor or uncertain insurance is
worse than none at all. This series,
therefore, has been specific in it's
references to "stock" fire insurance
companies, which are those with
paid-in capital stock, adequate re-
serves (required by the laws of the
several states), and surplus accu-
mutations held to make your indem-
nifty the more certain-the COM
panies that are regulated by the
most rigid laws, whose standards of
solvency are the highest and whose
measure of security for your pro-
lection under all conditions is the
greatest.
In introducing this sketch mention
was made of the marked development
that has followed public approval OF
coordinated effort. The modern sys-
tenn of fire insurance rating, into which
the loss experience of 95 per cent of
the insured property of the country is
now gradually being injected, can in no
sense be classed as trust or mo-
nopoly. Our business, today, is con-
Quoted to prevent discrimination be-
tween insurants, to keep down the cost
OF the service to the public and at the
same time to offer immediate induce
ments in lower rates to those who
safeguard their property from fire
thus giving them voice in making
their own rates.
In the old days all rating was done
by officers and field representatives of
the companies themselves, but in later
years the work has passed into the
hands Of trained men, experts, indepen-
dent in large measure from both
stock companies and agents, because of
the intense competition in the business
between the various companies and
their representatives in every hamlet
village and city in the United States
No other result could be expected
Just how rating is drifting away
from direct company control is told in
the report of the Illinois Legislative
Commission appointed to investigate
the whole subject. "'The work of con
structing basis schedules" the report
says. "instead CT being performed by
secret conclaves Of underwriters them
selves under star chamber methods, as
the public has been led to believe, ap
pears from our testimony to have
passed out Of their hands almost en-
tircly into tho hands Of trained OK
perts. The testimony shows that fire
companies have little or nothing to d,
81 h. inn NO ,,l
scheduie-makcr in FIRE insurance toda,
occupies 4 position analogous to tina
OF the actuary in life insurance. He il
expected to deal with fire hazards b.
analysis and classiicatons of elemen
tary parts
Coord nation among companies to re
duce costs and proven. discrimination
between lnsursnts; schedule rating
subject to basic review by the State i
desred and adequate insurance t
value. a point touched upon briefly i
previous sketch these clcmentals,
contend. together with a limitation o
the maximum distribvtable profit to
realized on the net transactions of tn
COMPANIES. form the safest and sanes
method yet devised for the cconomi
administration Of any business of
ouasi-public character. This, indeed
in the present day basis on which stoc
fro insurance companies are operat
ing
Our agreement with the Nations
Convention Of Insurance Commiss ior
crs TO limit the profits to be derive
from net underwriting operations wa
Effected last spring after years of negt
.,ations. II is based on fivc-year ave-
ages, defines connagrations and cover
also the relationship between states
all factors Of vital Importance.
Under this system there is ntcn'
and healthy competition between tf
upward o. three hundred stock con
panics doing business in the Unite
S'ates With every incentive to kee
down their expenses. CT course II
bczt managed companies will make II
most money. whiic the cost Of FIRE il
\ eurancc TO The public az II whole, c
pressed in rates, is limited by defni
agreement.
Probably no other business in II
World Of the magnitude Of that tran
1ctej hy stocA fire insurance cor
v1rlet las c0tered into voluntal
agreement % limit the profit on it's n
oror3tion9 70 only 3 per cent, with
additional 3 per cont (for your great
rec1fity] to be applied to the accum
'a:ion Or "conHsgratica reserve fund
which can be drawn upon only in eve