Fire Insurance Rates and Methods

Walter C. Betts
1903 The Annals of the American Academy of Political and Social Science  
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more » ... out Early Journal Content at http://about.jstor.org/participate--jstor/individuals/early-journal--content. JSTOR is a digital library of academic journals, books, and primary source objects. JSTOR helps people discover, use, and build upon a wide range of content through a powerful research and teaching platform, and preserves this content for future generations. JSTOR is part of ITHAKA, a not--for--profit organization that also includes Ithaka S+R and Portico. For more information about JSTOR, please contact support@jstor.org. FIRE INSURANCE RATES AND METHODS In the spring of 1902, the price of fire insurance throughout this country suddenly rose 25 per cent. During the ensuing hubbub the fire insurance companies furnished ingenious explanations, and waited for the storm to blow over. For the remaining months of I902, alone, this increased charge for insurance produced about sixteen million dollars more income to the companies. This sudden rise in the price of fire insurance was due to the application by the companies of the old principle of charging "all that the traffic will bear." Evidences of commercial prosperity, displayed on all sides, could not but excite the cupidity of corporations manifestly in business for the benefit of their exchequer. A conclave of prime-movers in the insurance world was held, at which the formula was adopted that "the insurance companies, for years, having lost much money, it is imperatively necessary to raise rates 25 per cent and said raise goes into effect immediately." No esoteric meaning attached to the words "we are losi.g money. They were explained as meaning that the profits realized from the employment of capital in the fire insurance business were inadequate to keep that capital from flowing to other more remunerative industries. What are the facts of the case ? From the tables presented at the annual meeting of the National Board of Fire Underwriters on Mav 14, 1903, it is found that the paid dividends of the American joint-stock fire insurance companies combined have averaged from I860 to 1902, inclusive, not less than II.I4 per cent. Since 1892, the yearly averages have been as follows: Year. Per ct. Year. Per ct.
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