The New York herald., 1921-08-07

OF all the forty-eight States that little
do escapes them. All is open to .s
publ in sworn returns, printed in State
reports. The worst is always set on ia
cold type. New York and Massac aQ.
setts were the first States to estab v
public supervision. Now all States hsve
officials, usually called "superintende
Of insurance" or commissioned Of n-
surance," 10 enforce their insurance laws.
| Our Offices, records, bookkeeping l-
| all transactions are open TO the SCRUTINY
Of any and all of the commissioners sli
the time, and at our expense, of course.
Only few years ago examinations OF i.
surance companies were very burds7s
some, as well as expensive, and turtle
more greatly interfered with Office r5a-
tine and the bookkeeping that is such ia
essential part of our business, Here IA
National Convention of Insurance Co..
missioners has co-operated to bring or icr
out OF chaos by instituting what i
known as Convention Examination J,
or examination by several States at ose
time, the results Of which are genera.
accepted by all other States.
Common sense must govern ire unc
writing as it must govern every OF
business. 1t is easy enough for n.
chant to say that he took in SIoo,o3o
last year and that as he paid out oaiy
$4,000 he made $4,000 profit. N.1
often go to the wall on that formula sa3
yet it is the one most frequently ri.
applied to the business Of stock fire
suranee companies. In other wo 3,
your merchant who is not deceiving ! f
self takes an account Of stock by nal ~
an inventory and finds out whether 3e
has made a real profit or whether he aas,
after all, only a tr dc balance up5a
which there may be profit or loss in Tie
future.
Sto K fire insurance companies accept
thousands of premiums during given
month covering policies issued to terrni-
nate in varying periods Of time--say in
one, three and FIVE years TO make it sim
pier, and indeed these peri DIS do embrace
the bulk Of our aeceptances. Now We do
not at once "earn" all these premiums
received. The first month we earn only
oac-twelfth Of the one year premiums,
one thirty-sixth of the three year pre-
miums and one-sixtieth OF the five year
Or. miums. The remainder We are re-
CURED by law to set aside as liability
for unearned premiums"
In other words the premium you pa d
is ours b cause we have issued ag nsr
it our obligations (policies) to inder niiy
you against loss by FIRE, but we ca s7s
use all these premiums in our busi g,
for We have not earned" them as :,
though our liability continues OF Ct tss
until the premiums are all earned. 41
offset our expenses which we inct
handling, inspecting, passing upon X
recording all these premiums OF ye1g
which come to US from agents ,-T,1
brokers-expenses that are very hea -
We draw on our surplus funds contrib q
by stockholders, secured from ar s-
ciated investments, received as int -ss
or gained from our business transac 51s
"a surplus maintained for your gre
protection and to Civ you greater
fdencc in our business integrity
financial responsibility.
This process is repeated over and
again, month by month and yea
year, liabilities being established ag fs
our new premiums as ccived, anc rhc
learned" premiums coming out tAe
liability account with the methe Sal
approach Of the termination Eve cas 4.
"cxpiration'D of the various pol ;.
All the while we are dischargine
losses against contracts (policies)
standing so that what is left in the c
Of time-and believe me il is -a6k
enough for such a hazardous busin
belongs to us. II is at last "earnec
II is my Eopc that \ have oeen AZ
xnlain this rather intricate subje at
the earned and the not yet arnce
call them "uncarned'D premiums
have been so much discussed OF lat
Many years ago when laws were alia
introduced to establish liabilities e
yet earned premiums, some comp
were handling their business on Y
come and outgo basis--as was the
chant / described to you who wa
taking an inventory-and we're n'
for inevitable failure. Today, tor
safety, the law is fisidly applied
stock fire insurance companies
failures are negligible.
What with the proper handling
,articular account nd il is one
heavy expenses Of our bus ness II
can be checked readily by exam inr
commissioners 10 see that il sat she 9t
rieid requirements Of lsw; what
keeping our funds invested ~ as = oR
serve the laws Of all the States, ana AlaH
with all the other requirements
we arc called upon to meet, whi
could not be held that We are super aeA
too much. il is fair to say we arc a.
v;sed amply for your protection az eA.
own good.
John B. MORTON.
Pre-. se8
~ -@Dv@ DE