The Columbus dispatch. (Columbus, Miss.) 19??-1922, 1921-02-27


under Uniform supervision and are re-
quired to meet uniform statutes and
uniform standards Of solveney. They |
are also required to meet uniform re-
quirements as to reserves, surplus,
taxes, etc, and as we have seen in
our first article the classifieations, as
set out in the schedule by the engi- /
neers and actuaries, if accurate, must
be uniform and the premium charges
computed thereon must also be
uniform if any degree of accuracy as
to equitable rates is preserved.
The fact, however, that carriers Of
the same class do not compete against
each other in the sense of undertaking
to sell the same policy on the same
individual risk without respect to the
classification of such risk is in no
sense an argument that no compete
ton exists between them. The COM
petition is not on the rate direct, but
on the matter of improving the class
rating of the assured's risk so as to
take lower rate in accordance with
the schedule.
In other words, carrier does not
say to an assured, you have policy
ol your building for which you are
paying my competitor $50 per year
If you will cancel his policy, ! will
sell you one just as good for $40 per
year."
If the policy contract were a suit
of clothes, and the insurance agents
were merchants selling such merchan-
disc. the above would be the form
which their competition would take.
Fire insurance protection, however,
cannot be sold after this fashion, for
the reason that the selling price Of
protection against loss by fire is not,
and cannot be, determined in the same
way that the selling price of suit of
clothes is determined.
The insurance carrier does say to
the assured: "You have policy on
your house for which yeu are paying
$50 per year, which is the correct
premium on your risk as 1t is now
rated; but | can suggest some mex
pensive changes that will improve your
rating and which will entitle you to a
premium rate of $40 per year in ac-
cordance with the schedule of CLASH
fications.' He then begins to point
out certain extra hazards, such as
metal flues, brick-on-edge flues, de-
fective wiring, etc, or one or any num-
Der of other things, and very soon he
has the risk from his competitor, and
the assured is paying a much lower
rate.
Thus determined competition con-
J stantly is going on between carriers
of the same cless, and the same ref
! erence to the files in any insurance
, department will be sufficient to con-
: vince any man of the existence Of this
competition; and not only Of its ex-
! istencc, but Of the relentlessness of
!. the warfare that is constantly going
on between carriers of the same class
in their efforts to take from each
: other certain lines of business.
. dare not say that such competition
: as is constantly going on between
these carriers can not be found be-
tween merchants, druggists, bankers,
7 doctors, lawyers, nor any other class
of business or professional men doing
business in this country; and since
this competition finds expression in
an effort to improve the class rating
of the individual risks, it should be
clear to any reasonable man that such
! competition Guild not exist but for the
existence of the methods of classify
ing and rating the risks. 1t should be
equally clear, therefore, that rating
and classification Of risks is essential
to, rather than destructive of, compe-
tition in the business of fire insurance.
THE BUSINESS OF FIRE IN
SURANCE is OF THAT NATURE
THAT 1T COULD NOT BE CARRIED
ON WITH ANY DEGREE OF SAFE.
TY, EITHER FOR THE CARRIER
OR THE ASSURED, WITHOUT A
CLASSIFICATION OF THE RIGKS
TO BE COVERED.
So that in order to maintain sound
: business methods the premium charge
must decrease as the rating of tie
risk improves, and | give it as my
deliberate opinion that THE MOST
DISASTROUS THING THAT COULD
, BE FORCED UPON THE INSUR-
ING PUBLIC WOULD BE TO FORCE
THE ABANDONMENT OF CLASH
FLYING AND RATING FIRE RISKS,
which would inevitably result in rem
dering it impossible to SO compute a
rate as to require each assured to pay
only his pro rata Of the fire loss, plus
his pro rata of the legitimate cost in
cident thereto, in proportion to the
character of his risk.
The abandoning of the effort to
classify properly and rate properly
the various risks would result in vest
ing insurance carriers with the arbi-
trary power to impair their solvency
, of the same class and the same ref
then to recoup by doubling up on
another class Of assureds. 1t would
also leave the insuring public at the
mercy of INSCRIPTIONS takers who
would be left free to impose upon
them any character Of flim-flam
insurance.
There would be no such thing as an
effort to determine scientifically in.
surance rates, and consequently the
insurance agent, however unscrupu-