OCR Text |
Show HAZARDS AND INSURANCE INSUR-ANCE RATES The general public l not sufficiently suffi-ciently familiar with the principles of fire insurance. Because tho business busi-ness ot'flru InBnroncc Is complicated and not undorstood It Is subjected to many unjust and uncalled for attacks Commenting on legislative interference inter-ference with the insurance Industry and attempts to have lnsuronco commissioners com-missioners make or regulate ratei, a prominent' Baa Francisco Insurance man cays: 1 'The community makes the hazards; haz-ards; tho hazard makes the rate. Hate Is tho cost of Indemnity. RoRcs vary with the hazard of different classes of property. "Tho law of the state provides that n fire Insurance company must, from premiums, pay losses and expenses, and must carry over at the ond ot tho year 60 per cent of all premiums received for annual risks, during the calendar year. "Tho rate, tho cost of Indemnity, Is made up from the hazard ot the risk assumed, plUB the expenses and reserve required by law as above. "Risks are classified by tho underwriter under-writer nnd an account Is kept with each class. "If, tho premium "be greater than tho Itotal of losses, expenses and re-sorvo, re-sorvo, the Insurance commissioner will pronounce n company Insolvent. "The prudent underwriter com- ' pares his own experience with that ot his follow underwriters, estimates Hhe rate for the future on tho experience exper-ience of the paBt, and adds a percentage per-centage for accidents that ought not to happen, but which frequently do. j "Fire Insurance rates are reduced by Improving buildings and flro departments, de-partments, decreasing the moral hazard haz-ard nnd lessoning expenses. "The moral hatiird Is Increased by valued policy laws over Insuranco! and tho certainty that courts and 'Juries will assist the Incendiary to collect his Insurance. "Kxpenses are increased by unfriendly un-friendly legislation and by unnecessary unneces-sary and costly supervision. "Tho conditions that mako up the prlco of' indemnity can bo changed by neither tho flat of the Insurance commissioner, the companies nor the insured. "If ratcs'charged by tho companies are too high, legitimate competition will, bring about a reduction. "The seikar for Information regarding re-garding tho profits on fire underwriting under-writing can learn much xby Interviewing Interview-ing men, leaders In the councils of finance, commerce and affairs ot itute, who havo Invested their money In nny one of the many hundreds of 'fire Insurance companies' that havi failed under present existing condition." |