The Birmingham age-herald., 1923-11-20
SOLD AT \ LOSS r IRE INSURANCE
Julian Says Rates High In Alabama On That
 Account
Interest in the new rulings on col-


 Interest in the new rulings on col- lections for fire insurance. an- nounced recently by Frank N. Julian, state superintendent of insurance, spread rapidly when 1t was known policies must be paid within 60 days of signing or renewal.
 MT Julian and heads of insurance agencies have received innumerable questions about it, with tho result that the superintendent, at the re- quest of II. G. Seibles, president of the Birmingham Fire and Casualty exchange, has analysed the subject in an interview given Charles L. Candy, member of the exchange,
 One of the first things brought out is that for every dollar collected in Alabama by fire insurance com panies they had to pay S1.o7. MT. Julian gives this as the chief reason for the high fire insurance rates in Birmingham ard elsewhere in Ala bama.
 Mir. Julian, among other things, said:
 "In 1922, the citizens of Alabama
 
 classes more than $2S,000, 900. Of this amount S7,S47,76S was paid for fire insurance beverages and lines of insurance incident thereto. The fire insurance companies paid losses for the year of S4,423, 692.
 "The premium dollar paid to fire insurance companies in this state in
 Pct. Losses .................. 5S.S Taxes, state and municipal. ... so Agents compensation approXi-
 mately .................... 175 Inspections, adjustments, engi-
 neering, home office and all
 business .................4.. 25.o
 Total ................ .t...s.... 1o7.S
 "It will be observed that for each dollar paid by the citizens of this state the fire insurance companies were compelled to pay $1,073 for the business. That seems to me to be the answer to why fire insurance rates in Alabama are high. The prime fac tor in our high fire insurance rates is the burning ratio of Alabama; in fact, the burning ratio of America. In this country last year the fire toll exceeded $500, ,00o, 900, or an average of s475 per capita.
 q have been frequently asked why the necessity for the recent ruling holding the local agents of Alabama to a 60-day credit period in the matter of collecting premiums. It may be pointed out that the ruling is nothing more nor less than an em- phasis of the laws that have been on the statute books of this state for at least quarter of a century.
 The Alabama law provides that no insurance company or agent thereof shall offer or allow any valu- able consideration, or inducement whatever, in the matter of insurance contracts unless the said considera- tion or inducement be specified in the policy contract of insurance (Section 4579 of the Code). Certainly longtime credit is a valuable con sideration, and certainly long time credit may be used as an induce ment for securing insurance. It IS plain that the term of credit cannot be specified in the policy contract of insurance.
 When the local agent, extends 60 days credit to the assured he is cer- tainly giving ample opportunity for the assured to meet the obligation; the local agent, generally speaking, must remit his company promptly at the end of GO days, and the failure U mendous expense on the company in the matter of collecting past due balances and in accounting. There fore. the ruling is based First, on the law and second, on an idea that the elimination of collection expenses will tend to reduce rates. The cti- zens of Alabama are urged to give their earnest cooperation to local agents in the matter of enforcing insurance laws, and by so doing they will help put the business of insur- ance on a higher plane.
 "I would lilSeTto again caution the citizens of Alabama not to buy in surance in companies not qualified to do business in this state. l par ticularly desire to caution the citi- zens of this state regarding the purchase of insurance through unau- thorized brokers. The law is very plain, and should a citizen of Ala bama-buy insurance from an unae- thoriZed company and loss occur, and the unauthorized carrier should, for any reason, refuse to pay such a loss, the claimant would be with out recourse through the state courtsr- as service of process could not be secured upon an unauthorized foreign company.
 eff the people of Alabama would place all lines of their insurance only in those companies Wnlcnf come uHueF the supervision of the general in surance laws of the state. and not In those few concerns which operate under special legislative exemptions. a citizen would soon learn that in- surance is conducted upon perhaps tho fairest basis of any big business in~ America.
 Tt occurs to me that a business man would not, under any considera- ton, place his funds in a bank To- cated without the state, such bank making no statement of its finan- ciaI condition and being under no supervision of the state; yet when a man places his insurance in unau- tnorized insurance companies the Alabama Bureau of Insurance has no means of ascertaining, other than hearsay, the solvency of such un- authorized company. Licensed insur- ance companies must, under the law make sworn statement of their financial condition at least once a year, and they are, at all times. sub ject to examination by the state su- perintendent of insurance.
 FRANK N. JULIAN, Superintendent of Insurance, State
 of Alabama"
 a number of young people and their chaperones are expected to attend.