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Fire Insurance Rates

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Editor Colriir :-Our town istms to haví worktd itsclf into quite a Commotion over ñre nsurance rates. Kvcry now and then, someone has1 throujhthc papers, treated the ogents, managen and compames to a round of abuse because tliere has not been a general reduction of rateí. Only last weck, some anonymous writer said ín one uf tlie city papers, that "When Uie water worka were constructcd we were told that the ratcs would be largcly reduced, and that we should be amply remunerated for the tax imposed upon us for the support of the water works system. That is, in plain Knglish, that somebody guarantecd that the insurancc companics would stand the taxes for the wate works. Now, the companies neither made any sucli guarantce ,nor authorized any person to make it for them. If the writer took [that guarantee, hc ccrtainly did not exhibit his utual astutcness in taking security. The companies deny that authority was ever given to make the promise and that writer must look to the maller for his damages. If rates shall be reduced here, it will not be because the companies ever made such a promise. I do not wish to be misunderstood. I do not lay that there may not be a reduction in some rates' but I do say that if made, it will not be becausé the companies of the Union ever so promised to make them. What the companies do promise is this, that they will make a reduction in rates for every general or specific improvement that will reduce the percentage of fire hazard on each individual risk ; and that they have never refused todo I am in favor of low rates, a rate as low as can be made and be fair; that is, a rate that will pay the company reasonably for the risk taken. There is another thing that I am in favor of. and that is when there is a fair, square loss, that the company pay it without winning-, and that the agent see that it is done, or resign his agency. An agent should be fair lo hls company, and yet see that hij friends and neighbors are not swindlcd, either in rates or settlements. As everybody knows. fire Insurance, like other insurancc, is largeiy aflected by the doctrine of chances, and whilc it is impossiblc to predict what may occur, to any one individual risk, a reasonably fair estímate may bc formed that a certain percentage of a largt civen number in th# dffr. ent classes WlU burn. It is in accordance with this principie of average, that all insurance rates are fixed. As this average is obtained from sutistics resulting from observation and experiencc as applied to different classes of hazard, and different physical conditions, for more than a hundred years. so the ratc on any one risk arlses from the adding togethcr of the various percentages in which a building is liable to burn from the physcal condition in and around it, as shown by this average. It is always necessary to also add to this an unknown estimated quantity formed by the hazard of newly discorered agents, as electricity, jasoline, etc, concerning which, time has been too short to form a permanent classific;ition. But Üie greatest of all causes of fire, is the friction arisini from rubbing a $5,000 policy against a #2,ooo risk. It is in accordance with these principies that a íair ratc must bc iixed. By these principies, the rates here will bc either reduced or advanced. Out citizens seem to have forgotten that during a series of years, the agents here labored hard for a reduction of rates, and that by playing one company against another on individual risks, we were enabied to reduce the average rates considermbly below those of any other place of its size and condition in the state. This condition of rates existcd when the manager was appoïnted, and has been permittcd since, for the sake of harmony, rather than otherwise. Now, that a general de m and has been made for readjustment of rates, t is altogether likcly that it will result In bringing them to the laws of average, which I regret to say, I fear from information I have received, will result far diflercntly from what our citizens most desire. I hope my information is erroneous. There is an old saw. somethfng to the effect, that it is sometimes best to let well enough' alone. But while clamoríng for a reduction of rates because of water work, would it not be advisable to take the glass from the blind cye, and look fairly at other conditions? Several years ago the agents presented a petition to the common council, requesting the appointment by that body, of a committee to confcr with a like committee of agents to the end that certain improvcments be ordered in tlie construction of buildings, the enforcement of provisión for fire limits ana apparatus, and the revising and enforcement of buildlrg laws, for the purpose of obtaining a reduction of rates. We were assured by the companies, that with these improvements, rates would be modified. That petition, sir, received not even the courtesy of reference to a committee, but was contemptuosly laid on the table. Now, some of those who were theo officers, are talking loudest for a reduction. Now, at this vt-ry time when a reduction is asked, the council has disbanded the only firr company in the business part nf the city ; the building laws ara disregarded ; prohibition of frame buildings Ín fire limits ís disregarded ; and I am informea that nearly, if not all the hose couplers will not screw on to the fire hydrants. Neither are these deficientes all. You know of others. Geotlemen, if you wish your rates reduced, reduce your fire hazard, and you will surely get it, but to expect to get it with your fire hazard increased, and the loss in the city by fire in the year 1885, about three times as great :is in 18&4, is to ask an absurdity which no man of equal business capacity will grant, if he expects to meet his contracts. I hope, Mr. Editor, that you will pardon me for occupying so much of your space m this hastily vvrittcn communication, but I believe that some ross misrepresentations should be corrected.


Ann Arbor Courier
Old News