The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1925-11-05
FIGHTS AGAINST
HIGHER RATES
Commissioner Smith OPP
poses Increase in Fire
Insurance Rates.
ON FARM PROPERTY

Madison, Wis. - "a, Higher
fire insurance rates on Wisconsin
farm property will be disapproved by
the insurance department unless both
premium and investment earnings of
the insurance company show a loss,
Commissioner w. Stanley Smith indi-
Gated today.
Mr.. Smith announced the following
opinion:
ITO secure official sanction for an
increase in rate on any particular
class of risks Gas in this application;
farm risks) showing should be re-
quired not only of loss in underwent
ing by comparison between earned
premiums and losses, but compari-
son of losses, with earned premiums
plus the investment gain, if any, de-
rived from interest earnings on the
premiums contributed for such par
ticular class of risks during loss
period OF sufficient average duration
such comparison still showing loss
with proper showing of economy in
overhead cost or expense of manage
ment would alone seem to justify ar
increase rate
will Save People Money.
The. opinion was designed to save
the people of Wisconsin thousands of
dollars in premiums. Il, was given as
result of the request for a con-
sideration Of an increase of rates on
farm risks, which, if granted, Com
missioner Smith said, would prac-
t;cally double the present rate on farm
property. The commissioners rule, if
followed, would apply to any increase
in rates on all other classes of risks.
tFire insurance companies insist
when they appeal for permission to
increase rates that the interest tarned
on the reserves set aside out of the
premiums paid by the insured-and
reported as "inyestment gains" shall
not be considered in determining
whether an increase in rates is justi-
fed, and that the investigation be
econfned to comparison of losses and
expenses to earned premiums, and
that interest earnings of the company
on the large part of the premiums
paid be wholly ignored" Mr.. Smith
stated.
Claims Figures Confusing.
/ "In recent request, that there be al
lowed an increase in the fire rates on
farm risks, investigation disclosed at
the insurance department that thir-
teen of the largest fire companies
all accepting farm risks-during. 1924
on their whole business, when making
such an above comparison, each and
all showed an underwriting loss" ag-
gregating over 10 million. dollars, yet
these same companies paid to their
stockholdesr- oyer Ia million dollras
in dividends and they were able to do
this because Of the business as a
whole, these companies during the
same period made Investment Gains"
of nearly Al million dollars, Still
there is the claim by the companies
that Investment gains" should not be
considered applications for an in
crease in rates.
Comparison made by the depart
ment of the experience of a mutual
company confirming it business
wholly to farm risk showed an under
writing loss, and Notwithstanding its
Investment gain" the company showed
a small decrease in surplus, and this
in a somewhat larger measure was
also the, result when the experience of
| this company was investigated cover
| ing a period of five years-but this
mutual company was charging its
policyholders only rs percent of the
stock company rates, and further
study of this experience disclosed
| that had this company charged the
same rates as the stock companies it
would have made an underwriting
profit on farm risks, and with rate
equal to SO per cent of the stock
rates it would have played even with
its investment gains clear profit to
increase its surplus and make refunds
or dividends to its policyholders.