New-York tribune., 1921-05-27
e Opens
On n. Y. Fire
Risk Board
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'(consnued from page eneS
profit" but Mr.. Best mildly character
lied it as 'unrevealed profit" The to-
tai reserves set aside by the ten lead
ing companies for 1920, declared Mr.
Best, was about $19I0o0,o00, the So
called "unrevealed profit" amounting to
about 100000
Mr.. Untermyer here argued that the
companies had no right to distribute
this S10,000,00o among their stockhold-
ers, but could have used it to reduce
the rate OF premium paid by the public,
and this is what should have been done.
he insisted.
The amount of business done in New
York in 1919, testified Mr.. Best, was
about S10,000,0o0, representing a real
property value of about SIS 5000, 900.
The profits were substantial in recent
years. he added, referring to the Globe
ana Rutgers Company, which he said
had earned more than 200 per cent
on Its capital investment in five
year period from 1915 to 1920 This
company, organized in 1899 with a
capital of 100000. had up to 1919
earned more than S19,0o0,000 in divi-
dends and assets. The Home Insurance
Company, organized in 1853 with a
capitalization of 100000, has earned
$4,000 900 in dividends and assets,
whlle the Continental, organized the
same year with similar capitaliza-
ton, has earned $23, 100000.
In connection with the operation of
the Fire Insurance Exchange, it was
disclosed that agents were prohibited
from dealing with any but exchange
members, and that mutual companies
were included in the prohibitions. II
was a rule, too, that all insurance had
to be written through agents or brok-
ers, who usually obtained 5 per cent for
their services.
Rule Relaxed Recently
Within the last two or three weeks.
1t developed, the exchange has relaxed
Its rule as TO the admission of mutual
companies, the latter being now taken
into the combine on condition that the
mutual firms must not distribute their
proflts among their polcyholders. This
Mr.. Untermyer said, was mere canon.
Hage concession, depriving the people
OF the state Of the real benefits of the
mutual companies. 1t was testified that
mutual firms turn 20 to so per cent of
tnelr premiums back to policyholders
In the form of dividends, and that the
competition afforded by these concerns
was the cause of the strenuous opposi-
ton of the stock companies. As gen
eral proposition, it was testified that
mutual companies paid 20 per cent
dlEldend to insurers on a premium
rate charged by stock companies pay
ing no returns whatever.
Lincoln R. Welch, president of the
Fltchbnrg, Mass, Mutual Fire lnsur-
Snce Company, testified to the trouble
ms hrm IS having in getting reinsur-
ing service in this city and in the
states of Georgia, Alabama. North
Carolina, Florida and Virginia because
OF the stock company combines In
these districts. He said they paid
their policy holders back 25 per cent
of their premiums.
Frank Bishop, secretary and manager
of the Pawtucket Mutual Fire Insur-
ance Company, said his firm pays back
70 per cent to its insurers. He also
told OF the difficulties his firm had in
getting into the New York field. but
said they were admitted three weeks
ago following the activities of the
Lockwood Committee, and then only on
CONDITION that the firm stop the return
ing OF dividends to policyholders in this
dlstrict. His company, however con-
tinues TO pay dividends to people out
side the jurisdiction of the exchange.
Constructive Suggestions
The following constructive sugges-
tions were offered by Mr.. Best in the
course of the testimony as means
of eliminating the evils in the busi-
ness as result of which the citizens
of the state are forced to pay $50, o,000,-
600 more than they should:
The law should be amended to require
supervision of rate fixing, the insur-
ance companies now making their own