The Nonpartisan Leader Newspaper, March 23, 1916, Page 5

P F & 53 x’fi ~hood. FIRE insurance rates never have & -been regulated by t_he state .in North Dakota. - . The fire insurance business, there- fore, has been a pretty good thing for the insurance companies in the 27 " years since North Dakota ‘became a ' state Rates have been high, losses by fire small and profits huge. : - The last legislature was aware of these facts and refused to take action. A bill to put insurance rates under the jurisdiction -of the state commissioner of insurance, similar to legislation ex- isting in other states, did not pass. The insvranee Jokby was too strong to overcome. : The state insurance department now is simply a bookkeeping department for the insurance companies—where they file their reports and have them tabulated.. That’s all the authority the commissioner has, except to collect fees from the companies for their privilege to do business in the state. The = insurance commissioner has just finished tabulating the business done by the fire insurance companies, other than mutual, in the state in 1915. That was a rather profitable year for the companies. : lected $2,503,436.46 in premiums for the 12 months, more than they ever collected in the state in a similar period. ° ‘They sustained losses by fire of only $1,060,871.17, the smallest in six’ years. In other words, 58 per cent of - the premiums collected in 1915 for fire insurance in North Dakota—con- siderably over Balf-—went to the com- panies. The balance, 42 per cent, went -to pay fire losses. This is a handsome margin on which to do business. NEAT PROFIT MADE - IN FIRE INSURANCE The universal ‘commission paid by the companies to agents for writing ‘policies is 20 per cent of the premium collected. = The -companies _and the state insurance department estimate it costs 10 per cent ‘'of the premiums collected to do business, .in_addition to the 20 per cent commissions paid . agents. That makes the total cost of doing business 30 per cent. Add to this 30 per cent the per cent of the" premiums returned to policy holders for losses incurred. The result is 72 per cent. There is a balance left of 28 per cent. That 28 per cent is the net profit of the fire insurance companies, other than mutual, doing business in North ‘Dakota in 1915, Nice profit, let’s grant. In round fig- ‘ures it means that the fire insurance companies copped off $690,000 in net profits for that year.. And remember, that doesn’t include the generous 20 per cent commission which went to agents. : : ; Yes, it was a good year for fire insurance — for the companies. It beats farming all to pieees.” But hark, ' the companies are saying you can’t take one year and figure their profit | and loss fairly. - It wouldn’t be fair. They insure every year and have bad and good years, according to the num- ber of fires which happen, and their profits should be figured as a whole, over a period of years. Very welll, there is mno objection to that. Let's - take the entire 27 years since state- - d. = The companies couldn’t kick on that. ' . TWELVE MILLIONS, NET, -’70 INSURANCE COMPANIES - ‘Since North Dakota became a state _ it has contributed $30,131,572.62. in. "-'jfe-?- Books of Cé ~ Show Fat Dividends; They col- . years- as ‘the p - Forby-six re; 1 been retain bg the como_?ames to pay B \ Does Fire Insurance Need Regulation? Old line fire insurance companies have been permitted to charge rates in North Dakota during the last eight years which have enabled them to. '/ collect premiums 46 per cent in excess of all fire losses, as the following . figures show: Year Premiums collected Losses ineurred .1908... ... $1,684,298.35 $ '966,347.52 e 1909... 1,908,642.57 894,423.29 1910... 1,897,349.65 1,135,838.06 1911... 1,800,117.07 1,161,138.65 1912, 2,257,885.64 ©1,210,094.44 1913... 2,256,024.87 1,202,332.83 '2,327,153.67 1,361,154.41 -7 ... 2,508,436.45 1,060,871.17 Total........ A 16,635,908.27 8,992,200.37 Per cent of premiums returned to pay fire losses........ 54 Per cent of premiums retained by companies.............. Does Fire Insurance Pay? ; The following are dividend statements of representative companies, showing also surplus, for recent years: d AETNA FIRE Capital _Dividend Surplus over all stocl liabilities ... $5,000,000 $800,000 $7,834,194 - 5,000,000 800,000 8,238,392 5,000,000 900,000 6,909,389 CONNECTICUT FIRE 1911............. $1,000,000 $190,450 $2,117,286 1912.. . 1,000,000 190,890 2,226,021 1913 . 1,000,000 - 930,000 . 1,322,408 GERMANIA FIRE ... $1,000,000 $200,000 $2,289,631 1912, - 1,000,000 200,000 2,613,814 ] -... 1,000,000 200,000 2,596,266 HARTFORD FIRE ; .- $2,000,000 $700,000 $7,819,707 1912... . 2,000,000 700,000 . 8,613,692 i ... 2,000,000 800,000 7,548,522 WESTCH‘ESTER FIRE $ 300,000 $120,000 $1,617,999 -300,000 120,000 1,415,915 300,000 . 120,000 1,278,771 «~ These dividends range from 18 stock. The size of the surplus of: is accumulated profits. ‘But”the companies didn’t use to make as'much as they do now in North Daketa, and the figures for the 27 years take :into consideration: the years when the profits were small, and years—panie years—like 1893, when the companies paid out_ in losses three times what they receiVed in pre- miums, and years like 1907, when the companies paid out for losses almost as much as they took in in premiums. But for the last eight years—what about: fire insurance companies for that period? ‘Would the companies consider it fair to take the last eight eriod -over, which to figure their profits? 5 t] figures for the years' 1908-1915 in- clusive: .« : b Premiums collected........ $16,635,908.27 Losses incurred. 8,992,200.37 Retained by companies 7,643,707.90 ~° This means;‘li\at 5cf;n-in’g' :l;itlasz _ eight years only 54 per cent o 7 :lttg'_premiums' collected by fire _insurance companies, other -than - mutual, in North Dakota has been . returned te the policy hylgiegrs to " cent, thére'fore,v has " pay losses. . agents,” cover e: cost doing busi- dividends. Besides “cent and allow- per cent to 93 per cent on the capital these companies is alro.remartabin These companies all do business in North Dakota and the'> dividends: are representative of those paid by all insurance companies. The surples Here are the. « Capital Dividend Company— stock © 1918 Aetna............... $5,000,000 $900,000:. Connecticut...... " 1,000,000 . 930,000 1,000,000 200,000 2,000,000 800,000 With the exception of the Connec- ticut dividend, these have been prac- tifa.lly the usual dividends for years of these companies, and the figures do not represent a particularly pro- fitable year. They are only a sample. The legislature was ‘given figures on a score of companies, showing, like .those given above, annual dividendsof from 20 to 50 per cent, and sometimes over that. Yet the legislature did not see . the necessity of regulation -of rates in North Dakota. States which do not actually super- vise and regulate fire insurance rates almost universally at least. require companies to file their rate schedule with the state insurance commissioner This enables the commissioners to see - that the same rate is always charged for the same risk and that diserimin- ation between individuals or localities are adjusted. In Nerth Dakota the asurance companies are not even re- quired to. file their rates. _CUSTOMERS’ ONLY APPEAL . ‘an appeal from the deeisi _ TO UNDERWRITERS’ BUREAU - Communities or individuals do have panies' regarding rates and adjust- _ ments, but-that appeal is to an-under-- . writers' burean ‘maintained by the " ‘companies at Minneapolis, known' as: the General Inspection company. This. then, . possible for the League to elect the . :latare: would not ‘be the laughing stoek that it -has.been in former years mpanies Writing'F ire Business Regulation Here insurance = department, averages 60 cents per $100 of protection given. Mutual companies—in other words co- ' operative companies — take risks in this state at 10 to 15 cents per $100 of - protection given, and are in fine finan- cial shape and paying losses at 100 cents om the dollar. The state law . permits the organization of what are termed ‘‘county mutual companies,” which are associations in most cases of farmers, organized to insure them- selves cooperatively. Charging a rate one-sixth to one- fourth the rate charged by the stock fire insurance ecompanies, 40 of these county mutual companies are doing a flourishing business in North Dakota. he number of these companies oper- ating is growing and they are in- creasing their business annually. As the people becoine educated to the high-class of protection they give and the low rates they charge more and more are turning to them and they may ultimately solve the fire insur- ance problem in the state, especially if the old line companies rates, de- -vised to cover the expense of big com- missions to agents and huge profits to the stockholders, are not regulated by the state. MUTUAL COMPANIES SHOW MUCH LOWER RATES The statement of the state insur-- ance commissioner regarding the busi- ness of these mutual companies in Nozih Dakola in 1915 is interesting, iy comparison with the statements of the old iine companies. These mutuals have apnroximately $58,000,000 of in- surance in force—about 28,000 poli- cies. They wrote 7598 policies in 1915, for a total of $16,619,463.75. Their total income in that” year—premiums collected — was $147,671.74, and the fire losses they incurred were $70,- 994.45, In other words, charging only a fraction of the old line rates, they paid all losses and made money. The insurance commissioner has ", just compiled’ for 1915 the report of another North Dakota mutual com- pany,the-Alliance- Hail association of Jamestown, which writes hail insur- . ance solely. Its experience throws. *+ Some light on:the hail insurance busi- ness. " It charges a flat rate of 6% per cent for insuring crops throughout the state, against rates that have ranged up to 8% per cent charged by the-old line hail:.companies. -And the old line eompanies will raise the rate for about a third of the state to 10 per cent this year, the insurance depart-. ment is informed. 'The Jamestown company wrote $3,327,061.62 worth of - isurance in 1915. . It collected $199,- 623,70 in premijums and paid out of this $157,807.05 in losses incurred. ~This ‘company, ' charging. substan- tially lewer rates; returned to policy holders a much greater per cent of the premiums-: collected - than the old line: hail companies did in 1915. The old, line. hail company statement for 1915, just tabulated by the insurance department, follows: . Risks written...... s $37,061,875.89 2,418,431.52 1;660,298.50 FARMER CAPABLE LEGISLATOR " —_— ) League Members Should Choose Best Says W. F. Stephens. - The need of educated men as legis- lative candidates is emphasized in a letter from W. F. Stephens of Gwim- mer, Sargent county, to the Leader. None without at -least a common « school . education. and some proven ‘business ‘ability ought to be named, he declares. ' : " “While not many farmers are col- have . lege of com- rofessors, he said, “still there are plenty of them who have as good educations as our business and pro- i men, or even better. With Asuch a class to select from our legis- when it was.customary to elect men ‘' who simply were vote getters, with . no. other qualifi fications. "I believe it ‘most capable hody of men which ever: