The Nonpartisan Leader Newspaper, March 16, 1916, Page 3

. missioner W, D. ~easti THE NONPARTISAN LEADER IN HAIL INSURANCE THREH - Farmers of North Dakota Pay Heavily for Protection; Present Law Encourages Graft and Injures Farmer When the government of North Da- kota has been Elaced in the. hands of the majority of its citizens the state will turn to the business of taking over one of the most profitable of businesses, a business which has drained out of the pockets of the farmers excessive profits for a score of years. One of the most important planks of the farmers’ platform, incorpgrated in the program of the Nenpartisan League, is adequate ‘hail insurance. The need for this measure is demon- strated by a review of the business of - the hail insurance companies during the last seven’years, and the. possibil- ities' of compulsory state hail insur- ance can be estimated by the degree of success already obtained by govern- ment hail insurance.in Canada and by this state even with its- present in- - adequate and limited state hail insur- ance. . WHAT COMPANIES. TAKE FROM FARMERS’ POCKETS For the years 1909-1914 inelusive the hail insurance corporations took out of North Dakota in premiums $6,775,863.60, every cent paid by farm- ers. The total losses incurred by these cqmpanie_s, for- which farmers were 2pald_, was in those years $4,658,- Reduced to a percentage basis these totals figure as follows: Part of premiums returned to the farmer for hail losses, 69 per cent. Part of premiums kept by the com- panies as commissions. of agents, ex- . pense of ‘adjusting losses and doing business and prefit, 31 per cent. The farmers of this state are paying an overhead expense and profit to the underwriters of 31 per cent in order to be insured against less by hail. The province of Saskatchewan, Can- ada, provides its farmers with a cem- _ pulsory hail insurance with an over- Aheatd expense of a little ever 3 per cent. The farmers in North Dakota get back less than 3L per cent of the money they pay out for hail insurance. ~ In Saskatchewan thegog'et back all they pay out except about 8 per cent. STATE DOES BUSINESS ON SMALLER MARGIN 2 The present North - Dakota = state hail insurance as first put in effeet in 1911 and amended in 1918 is not com- pulsory and it has not been a complete success. Provisions of the law pro- . viding for it and conditions under which it is operating are such that comparatively few farmers have taken . advantage of it; its risks are not spread over a lm;ateuitory, equaliz- ing losses, like risks written by the old line companies Yet, feeble as it is, the present state hail insurance is being operated at an overhead expense of enly 19 per cent, eompared with the 31 per eent overhead expense and profit ef the old line companies, paid by the farmer. In the five years the gresent state hail insurance has been in operation, including, 1915, it has cellected §173,- 373.96. in: premiums and returned to the farmers. in payment for lesses $139,620.95. The proportion returned to the farmer has been 81 per ceat. The old line companies have returned only 69 per cent. ; .OLD LINE COMPANIES TO INCREASE RATES - Large as the cost ef doing business nd profit of the old line, companies is —out of all proportion to the operat- ing expenses and profits of inary: - business enterprises—the North Da- kota insurance commissioner’s office napprised of the fact that this year the companies will increase the cost of insurance in the western part of the state.’ £ Gt ' “Insurance companies. are not re- quired in this state to file their rates with us”, said Dexuty Insurance Com- ustin, “but we have leayned. of the increase in hail insux- ance’ rates through the newspapers, which reported a New York meeting” of the companies writing hail in-~ surande. -t e el ‘The rates for hail insurance m the old line mrme:; § < ’has been: district west and south of the Mis- souri river. The rate there has been 8% per cent. That is the district in North Dakota where hail loss is the greatest.” With this . -increase in rates the fg.rmelfs may expect to see the mar- gin of profit and overhead expense of the old line companies materially in- creased this year, so that the percent- age of the premiums retained by the companies will be higher than 81 per cent, if 1916 is an average year in hail losses. v What are the provisions of the pres- ent state hail insurance law and why has the law been inadequate? The 1918 legislature made the. rate for hail insurance 30 cents per acre, BlG BT & Co. eommenced Casualty company. $3,085.18. in paid them to an . hack from the cempanies: BANKERS LEARN THE LESSON Bankers, of North Dakota discovered that they were paying: out - Iarge sums annually for burglary and theft insurance, while the losses the insurance companies had to stand on this score were negligible. In-; surance companies in 1913 collected in the state $17,162.42 as burglary and theft imsurance premiums and paid back im Bankers saw how they were being bled for these premiums and. what a fine thing the insurance companies were ganized their own mutual theft and burglar business in 1914 as the Nort! And se in 1914 burglary and theft insurance cost the bankers only premiums. No losses were paid by the mutual company but the hankers have not lost the premiums as ( line company. The fund created by the premiums collected in 1914 remains. to pratect hankers against theft and burglary in the future, and premiums for the mutual insurance will be small or nothing until some loss is sustained. This little lesson on how bankers organized ta save themselves the hig profits they were paying others for insurance is taken from the records. of the state insurance commissiener’s office. d also have a lesson for farmers. Will farmers take advantage of it as the bankers did? The following table shows what farmers have been paying out for hail insurance and what they have been getting BUSINESS OF HAIL INSURANCE COMPANIES Year— Preminms: Collected Lesses Incurred 1909 $ 968,278.,54 $ T44,279.85 1910 518,952.61 365,264.05 1912 1,138,784.11 726,275.34 1912 - 1,443,770.08 1,117,564.00 1913 1,079,813.62 . 500,109.01 1914 1,631,264.64 oo 1,210,939.17 ; s ¢ . .$6,775,863.60. ) $4,658.431.42 . Proportion of premiums returned to policy holders 69 'per cent * Proportion of premiums panie: 31 per cent _ kept by agents and-mm’ : | SASKATCHEWAN PLAN - e frenliosirrgaipnd g h'&aka:é“htm;fi si’i‘}mm'mt‘i& for which the farmer is protected in losses by hail up to $8 an acre. In- surance on a 160-acre crop therefore costs $48, for which the farmer has rotection up to a maximum of $1280 or 160 acres. The state rate is the same throughout the state. Old line insurance on 160 acres of crop costs _from $65 to $80, under rates that pre- vailed till 1916, with a loss maximum limit of $1000, In other words the state rate has been 3% per cent, the _ old line rate 6% to 8 per cent. In spite of this cutting of rates by the state the latter has collected an average of less than $35,000 a year in premiums in five years, while old line companies have collected in premiums in North Dakota an average of over losses enly $256.11. making out ef it, so they or- insurance company, whieh Daketa Bankers’ Mutual they w had they These . records armers ‘for protection against loss' - his at an ad- -} a million and a half dellars a year. In other words they have done about 45 times the business the state insur- ance has done, despite the fact that the state rates have cut the old line premium charge in ‘half., And the- state’s hail insurance business is fal- ling off each year, while the old line company business is increasing. HERE'S WHY STATE LAW HAS FAILED TO MEET NEED This condition can be accounted for ' in several ways. In the first place there is a realization among farmers that they have been given a makeshift in the present law. They believe that the state ought to insure every acre of crop in the state, collecting the remium as a tax against the land. E‘ailure to get what they wanted prejudiced them against what they got. In Saskatchewan, where state hail insurance is compulsory, 4 cents an acre covers all losses, and hail losses there are as extensive as in North Dakota. The fact that every acre of land must be insured spreads the los- ses over all the state, equalizing them. - For the last year for which figures are available Saskatchewan: collected, from the 4 cents per acre tax, $788,- 488.50, and of - this $651,224.97 was paid back to farmers for losses incur- red, the balance of the premiums pay- . ing all administrative expenses and leaving a small balance. The cost of administration was $3.26. per cent. ASSESSORS SHIRK TASK OF WRITING INSURANCE In the second place the North Da- " kota state insurance law places the - golicitation of the- busi duty of writing the insurance in the hands ef the assessors. ‘The latter are required to-ask each farmer when they are asscssiug wis p 2perty. in April how much state hafl insurance, if any, he wants. This plan puts the . iness for the . state outside the supervision of the ‘- duty to the already numerous duties . state insurance commissioner, who is alst . hail commissioner. It adds a of assessors. which they resent and - shirk, and it places the state’s agents - in a position where they are open to corruption -by. the old: line companies. .. State Insurance Commissioner W. C. Taylox-epenly charges that certain old line companies have. made asses- . Sors agents for old line insurance, the - companies paying a handsome -com- mission for business written for them by- the assessors. “Y haven’t pesitive, comeclusive evidence that- could be wused- in- court”, says the commissioner, “but ¥:kmow well enough that old line hail companies have not been abeve making: agreements with assessors. along this line, sa that ~many assessors fail or refuse to carrvy cut their duties and instead ‘secure business for the companies ... .or-else advise against state insur- ' ameer and -suggest te the farmer i that he-take out:insurance in the " * that the farmer will not -company the:assessor.is hoosting.” iTATE SOLICITS ‘BUSINESS T WRONG PIME OF YEAR _ The commissioner also points out out_hail "-insurance in April, the time of year when the:assessor calls. The farmer © doesn’t know at this time how much - -insurance, .if any, he wants to carry for that year and he waits till later and ‘'gives his business to the agent of the old line: company when he calls at a more oppertune time. .- These.drawbacks to the t vol- untary system of state hail:insurance placed the North Dakota plan under a fi'eab handicap at the start and it failed to do enough business and spread'its risks sufficiently to pay 100 cents. on the dollar the first year. - In ‘1911 the state department paid its hail losses-on a’basis of T0.per cent and ‘the: second year on a basis of only 65 - cent. Besides its other troubles state.hail insuramce now had ‘to meet the fact that it was not paying hlosses_ . in full’ and it hit the down grade ard. e Business, fell off in 1918 to half what it was in'1912; it fell off aBain in 1914 and agaim in 19156. In 1913, howeyer, it 88 eents. on the‘ doltar and: in 1915 it paid 76 cents. - INSUBANCE COMMISSIONER TAYLOR ADVOCATES THE oo “Frem : oi the standpeint: of compara- & under the Can- ~adian plan and these which have been ¢ realized _under.. the North Daketa scheme of state -hail i \ & { | e T ———— | il