IS FIRE INSURANCE A BLESSING OR A CURSE?
On numerous occasions, and under various circumstances, we have maintained that over-insurance is responsible for a large proportion of the fire losses in this country. Insurance statistics put the loss by incendiarism at thirty-three per cent ot the total loss, and hold that nearly all incendiary fires are the result of over-insurance. We have been criticised somewhat severely at times by editors of insurance journals for holding the insurance companies responsible for so many fires, but underwriters themselves concede the truth of our statements. On a recent occasion we expressed the opinion that while fire insurance was unquestionably a blessing to individual losers by fire, it was a curse to the community, because an incentive to incendiarism. Insurance Commissioner Oliver Pillsbury, of New Hampshire, in his annual report just published, takes the same view of the subject, using almost the identical language that we did, and as he puts the matter officially, tersely and sensibly, we incorporate his remarks herein, rejoicing in having the testimony of so intelligent a witness in our behalf. Mr. Pillsbury says :
It will be noticed that the companies, in the aggregate, have not been remunerated for the indemnity allorded. Of course there are individual exceptions to this remark. It is no alleviation to say this State is not alone in its unfavorable record. More than $81,000,000 worth of property were destroyed by fire in the United States during the year 1881. Yes, destroyed is the word. Insurance companies may have repaid individual losses liberally, but they reproduce no property. Their function is simply to collect from the many, to indemnify the few. This is a great burden for the country to bear. Pure, unavoidable accident imposes no such burdens. It all fire insurance could be absolutely interdicted for a term of five years, I have no doubt the destruction of property by fire would be reduced to one-fourth of what it now is under present methods. Concern for the payment of losses receives much more attention than for preventing them.
Insurance companies discuss rates, rebates, and commissions. Agents are zealous and active to grant ail the insurance property holders are willing to pay for. Unscrupulous and crafty men contrive ways to obtain over-insurance, in order to sell out. Legislators invent schemes to tax and cripple the goose that lays the golden eggs. Jurymen lean to the largest payments, no matter how the insurance may have been obtained, and require stronger proof to convict of fraud and arson than tohang murderers. Insurance journals write puffs for weaklings, and in chorus chime their impotent assaults upon State supervision. All this goes on while but very little attention is given to the subject-matter of the prevention of the destruction of property by fire. People are permitted to go on constructing fire-traps and tinder-boxes, with their proverbially “defective chimneys,” and to mass propertv in localities destitute of the commonest protection, making no provision for emergencies sure to come. No warning voice disturbs these proceedings. There are no legal penalties against carelessness. Insurance companies are relied upon to cover every species of recklessness. It is true, insurance companies combine to offer large rewards for the apprehension and conviction of incendiaries, but they at the same time permit their agents to over-insure property, which is doubtless the occasion of more destructive fires than any other nameable cause. They offer rewards to detect criminals they invite to commit crimes. It may well be asked whether the institution of insurance, confessedly so essential to all business enterprise, is not in danger of degenerating into a curse instead of a blessing to society. In this view of the situation, ought not the line of discussion, legislation, and general effort and agitation to be turned in the direction of prevention, instead of vain attempts to cure the enormous waste?
The success of the manufacturers’ mutuals is due to the precautions insisted upon against fires. In the first place, they require that the property shall be fairly appraised. Then they prescribe certain rules to which the insured, or those seeking insurance, must conform. For instance, they require that every needless exposure shall be removed or remedied ; that raw and manufactured material shall be carefully stored ; that the heating apparatus and fuel shall he suitably guarded ; that oils for lubricating and lighting shall be properly kept and handled, and that suitable appliances for immediate use shall be at all litres available. Then they periodically inspect their risks, and if any lack of conformity to rules is discovered, it must receive prompt attention, or the policy Is canceled Thus, by vigilant measures to prevent the occurrence of fires, they are able to insure the most hazardous class of property for less than it costs to insure ordinary dwelling-houses.
It will probably be said, all these precautions are not practicable among the numerous small risks taken by insurance companies. Hut the companies nearly all insure hazardous risks where they arc equally practicable, and should be insisted upon as a condition of granting the insurance.
More definite instructions to agents by their companies, requiring a thorough inspection of the risks offered, with orders to reject in every instance where it is apparent that ordinary precautions are not observed or that over-insurance is sought, enforced by assurance of removal incase of failure to comply with instructions, would doubtless lessen the volume of premiums received, but would, in my opinion, lessen the losses to be paid to a far greater extent, and thus prove a saving of property.