The Washington herald., 1921-06-12
MUTUAL INSURANCE
PLAN FAVORED BY
MOTOR CAR MAKER
Loose Methods and High
Rates of Underwriters
Pointed Out.

NEW YORK. June 11.-Forced BY
the increase of insurance rates DUR
ing the past few months. the auto
mobile manufacturers and dealers
are again turning their attention to
the need for an insurance company
to care for motor cars and motor
trucks similar to the one launched
four years agog
At the ONCE Of the National Au-
tomobile Chamber of Commerce. In
New York. it was stated that the
loose methods of accepting risks
overgenerous ooverage and overhead
expense on the part of insurance
companies haev resulted in their
requiring rates from which the only
relief lies in the furthering of plans
for mutual companies and for deal
er organizations which are now ac-
lively under consideration
Complain Of High Rates.
There are some 100000 motor
vehicles in this country" said Al
fred Reeves, general manager of the
National Automobile Chamber of
Commerce, "and a decreasing per-
centage are taking out insurance
because of high rates. The moral
hazard receives no consideration. A
burglar just out of Jail gets the
same rate as a respectable citizen.
The amounts allowed on cars and
trucks almost encourage their being
burned up or destroyed to be re-
ported as stolen.
We hear many times Of legisla-
-
bond on their car on the ground
that 1t would prevent accident. Such
action would make accidents more
frequent. because 1t would shift the
responsibility of the driver.
1T would be of more help in pre-
venting accidents II no owner was
Permitted to carry liability insur-
ance and no car was equipped with
a horn.
"A sedan insured new last year
Tor nre. transportation and theft to
the amount of $500, at a cost of
1880. has just been renewed at a
cost of s55. and is now covered for
s2'5oo. The policy holder in this
case Is displeased at the amount of
the premium and surprised at the
amount Of the coverage. as he would
gladly take $4,000 for the car
Cars Intentionally Destroyed.
AT the same time we read, with
in the last few days, of several au-
tomobiles being found in Lake Erie,
near Buffalo. where they had been
Intentionally dumped, another in
New York bay and a half dozen in
an old quarry in Illinois
These facts undoubtedly throw a
great light on the high cost OF au-
tomobhe insurance. and il Is evil |
dent that the methods of writing |
ordinary fre insurance on buildings |
and furniture, without actual |
knowledge Of the value Of the
property insured, will not do at all |
for automobiles. Mutuals are thriv-
ing in all territories which conduct
their business at much less e1-
pense. control their losses to a
greater extent and make some ef-
fort to know the responsibility of
their client.
TT Is very well to say that one
who uses the mutual assumes
liability. but this is losing force
from experience to the contrary:
dividends Of from IS to so per cent.
compared with standard rates, have
for long periods been received on
Oy InelE policy nOlQerS-
According to figures given out
by 131 insurance companies. the fire
and theft premiums received by
them in 1920 amounted to s74.472,-
$50. The losses paid amounted to
s42.s35.74s. II would be interesting
TO know the proportion Of these
losses that went to reimburse such
costs as noted above.
Faxor Mufu.I pt..
Surface indications certainly
point to urgent necessity of scruti-
nizing the moral hazard.
Manufacturers have for some
time studied the plan whereby un-
derwriters. instead of grC uping cars
according to list price to determine
premiums. have assigned the sew
eral makes Of cars to groups, using
certain features of design and con-
struction as guide to the under
writing risk. While undertaking to
follow any suggestions along this
line, however. they fail to see how
the total insurance bill to the pub
lie can be reduced in this way to
any appreciable extent. and the
makers are convinced that insur-
ance would have offered a much
greater sales resistance than it has
were IL not for the relief offered
lower rates from mutual
t.-hf l.