Evening star., 1937-04-09
D. c. 0VERCHARCED
S10,0)0,O)D IN FIRE
RATES, SAYS MOOR
Insurance Premiums Held
Exorbitant by Superin-
tendent in Report.
INFORMATION CONTAINED
IN MESSAGE TO HOUSE
Item of 81, 800 Included in Supply
Bill to Employ Expert for
Adjustments.

Charges that fire insurance rates
IN the District are "exorbitant" are
| contained in report by ]. Balch
Moor, superintendent of insurance,
made public today by the House
Subcommittee on Appropriations,
which framed the 1888 District supply
! bill.
Moor prepared the report during
| recent hearings on the appropria ton
bill, and as result of the informa-
ton it contained, an item of s4,6OO
was added TO employ fire insurance
rate expert to adjust existing rates.
The report charged that from 1924
| through 1885 fire insurance policy
| holders were "overcharged" more
than sl0,000,00O.
1T is generally understood" said
Moor, that companies are required
by law to set up reserves equal to so
per cent of the premiums received
| against losses that are expected to
occur. AS rule, the State rating
boards actually figure that the COM
pany should operate with fair profit
on basis Of only As per cent of
| the premium received, allowing IS
per cent available for losses.
Under the liberal formula OF so
/ per cent for expected losses the
actual experience shown in
dlcates a liberal premium charge
over these II years should not have
exceeded sl6,714,76768. the actual
overcharge thereby amounting to
slo,276,679,34 during the period.
Percentage Of Loss.
Your attention is called to the
fact that the highest percentage of
loss occurred during the year 1880,
when only 1923 per cent of the
premium received was returned in
the form Of losses paid, this amount
being considerably below the per-
centage of losses which should have
been fairly contemplated.
Rates are usually calculated on
the basis of the previous ive-year
average, which, if applied to the
experience N the District, shows a
loss ratio of only 25.12 per cent,
meaning that out of every 500 paid
in the District during this period
only s25.l2 was required to cover
all losses sustained. These figures
undoubtedly indicate that the insur-
ing public of the District of Columbia
is paying an exorbitant rate for fire
insurance protection"
Central Rating Bureau.
Moor pointed out that all stock
fire insurance companies maintain a
central rating bureau which, on its
own accord, inSpects all risks and
calculates the rate that becomes es-
tablished for all member companies
of the bureau. Generally, he said.
mutual companies are not members
OF the bureau and either jointly or
severally fix an independent rate re-
gardless of the stock companies board
rate. This is done. he declared,
without any supervision whatsoever
by the department of insurance.
Moor cited excerpts from various
laws regulating the insurance busi-
ness and commented: 1T appears
that the superintendent is empowered
to go long way toward the regule-
ton of fire insurance rates in the
public interest if not under positive
specific provisions of the law. Such
regulation, however, if attempted,
cannot be expected to bring about
any reasonable degree of information
or equity to the individual policy
holder unless the basis of the ad-
minlstration is founded on a pro-
gram and procedure inaugurated by
a fire insurance rate expert thorough
ly capable of developing exorbitant
rates in certain classes and bringing
about an equal distribution of the
cost of carrying the insurance burden
as q whole"