You are reading a page from The Insurance Society, Trade
Magazine (1884)
Part of the American Term Life Insurance History Project
Term Life Insurance
January 1884
Insurance Society
Vol. IV No. 1
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Montreal, January 20,1884
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INSTTEA1TCE SOCIETY.
It is the intention of the present publisher of INSURANCE
SOCIETY to devote its columns entirely to insurance matters,
Fire, Life, Accident, Guarantee and Marine. .The discussion
of the numerous questions arising out of such a large and
important interest, and the supplying of the latest and fullest
information regarding their business to the thousands who
are interested in it, as officers or agents, are surely matters of
sufficient importance to require an independent journal
devoted exclusively to them. The publisher is convinced
that there is not on!y room for, but a positive need of, such
a journal, and therefore makes no apology for the existence
of the paper, but appeals to the Insurance Companies and
agents of Canada for continued and increased support as for
an institution of which they already know the value.
As regards the " platform " of the paper, it is hardly
necessary to say that it will continue, as heretofore, to deal
with all the varied interests of the business in a thoroughly
impartial and unbiased manner. Those companies which
are honestly managed and worthy of the confidence of the
public will always find in us a hearty supporter, but unsound
or dishonestly managed institutions will have no friend in
us. Any malpractices in the business will be promptly
exposed by us.
There has been no change in the editorial manage-
ment of the paper, and our old subscribers do not
need to be told that we will deal with such matters in a
fearless and energetic manner. We need only remind them
that during the past year we did not hesitate to stand out
and expose the rottenness of the Standard Fire Insurance
Company of Hamilton and the falseness of the statements
made by its officers, and this, too, for month after month at
A timt when nearly every paper, both in Canada and the
United States, which referred to the Company at all did so in
terms of the highest praise. The disastrous failure of the
Company confirmed all our statements, but so far as we are
aware no other paper raised a voice of warning to the public
till within one week of its closing its doors. The course
taken by us in regard to the Confederation Life Association
when assailed in regard to its " suspended mortality," to
the Provident Mutual Association, and other "institutions,
will also occur to our readers, and we have therefore no fear
of being accused of cither drowsiness or lack of enterprise.
We would like to again call the attention of those in the
business to the medium we offer them for expressing the
views they may hold. There are many reforms needed,
particularly in fire insurance, where united and immediate
action is necessary for the protection of the stockholders, and,
in fact, of the policy holders. Why should not the officers of
the variou- companies \SL\'S a friendly discussion of this and
other questions through our columns ? They would have
the satisfaction of knowing that their views would reach
every prominent insurance man in the country and be calmly
considered by them. Very often neither of these advantages
can be obtained in the hurried meetings in which such
matters are usually considered. We are convinced that
much good has resulted from the discussions which have
taken place in our columns in the past, and we are equally
satisfied that still greater benefits may be looked for from
this source in the future.
We close by wishing all our readers, if not too late,
A HAPPY AND PROSPEROUS NEW YEAR.
It is our intention to keep a Record of all the Agents in
the Dominion, and we will always be pleased to assist com-
panies to secure good, reliable agents, and agents compa-
nies. These services are, of course, rendered free of charge.
We may say that we already have the names of all the prin-
cipal Agents in Canada on our list.
If Agents who want Companies—or Companies who want
Agents,—will write us stating their wishes, we will do our best
to meet their views, and, if desired, their communica tions
will be considered private.
i MEASURE 05' DAMAGE.
In the December issue of INSURANCE SOCIETY, in the
I discussion of the subject of adjustments of lumber losses,
' we incidentally referred to the different measures of damage
4
INSURANCE SOCIETY.
JANUARY, 1884
in the event of loss, applicable to the several interests of the
manufacturer at the mill, and the merchant or jobber in
lumber at his yard; and we might have added also, as a
third party, with a still different measure, the consumer of
lumber, as the carpenter, cabinetmaker, and other wood-
workers, the respective interest of these three classes having
each a separate and distinct measure of damage when sub-
jected to loss under insurance.
Perhaps in the multitudinous and multifarious phases in
which questions present themselves to the fire loss adjuster
for solution in the discharge of his duty, none is more con-
stantly misunderstood—and hence misapplied—while at the
same time not one point in the many is more simple and
plain when understood, and at the same time more equit-
able to the assured, than is proper apportionment of the
measure of damage applicable to each individual case ; or,
in other words, the amount ofindemnity to which the assured
is legally entitled under the conditions of his policy.
The question next arises; what is indemnity, as measured
by the stipulations of the policy ?
We answer this by the following citation from that emin-
ent French writer Alanzet, (p. 172,) who says :
" Un principe general qui domine tout la matiere des
assurances, c'est que Ie contrat ne peut jamais etre pour
1'assureur une source de profit; pour lui, 1'assurance n'est
pas un moyen d'acquerir. Le seui objet que puisse avoir
Ie contrat est de lui assurer 1'equivalent des objets mis au
risque,'s'ils vi'en'nent a perir ou a souffrir un dommage."
Which, rendered into English, reads :
" A principle which dominates all matters of insurance
is that the policy can never bring to the assured a source of
profit; to him the insurance is not a means of gain. The
sole object that the policy can have is to insure to him an
equivalent for the subject placed at risk, should it happen
to be destroyed or suffer damage."
And Straccha, one of the earliest text writers upon Marine
Insurance (A. D, 1556), says : " Insurance seeks not gain,
but operates to prevent loss."
In accord with these recognised principles underlying the
insurance contract, fire underwriters agree to make good to
or indemnify the assured for all loss or damage that he may
sustain by fire upon the property at risk under the policy,
provided only, that the cash value of the property destroyed
or damaged, as above provided for, shall not exceed what
would be the cost to him, at the time of the fire, of replac-
ing the same, thus making the measure of his damage the
exclusion of profits upon the property lost. The amount of
the policy limits the extent of payment under any circum-
stances, but does not measure the damage; the minimum
of loss, within the sum of the insurance is the maximum of
the insurer's liability. The next question presenting itself
for solution as we proceed is: " What is Cost ? "
Cost,—to the consumer, the jobber or the dealer, is the
value in money or its equivalent paid for the possession of
any article of trade or commerce. To the manufacturer it
is the value for the raw materials, plus the expenses of labor
bestowed thereon in converting the same into the completed
article, exclusive of profit or interest on capital invested oi-
plant employed; and this without reference to the facj;
whether the article be patented or not. i
But cost of purchase or of manufacture does not always
represent value. Property may be worth more or less than
the actual cost. Mr. Bunyon says : ' If goods have risen
in value the payment of cost price would be no indemnity;
while, if the value of the goods had depreciated in the
market, or if they have been on hand for a length of time,
shop-worn or out of fashion, the original cost would be no
criterion of present value." To meet these emergencies the
policies stipulate for suitable deductions to equalize the
values.
Values, as the term is used in insurance, are of two
classes, viz., value in use, or the utility of an object for use,
and value in exchange, or the worth of an object in pur-
chasing other property. All adjustment values have this
signification.
Market value is the price at which property of any kind
can be purchased in " open market," from first hands, sub-
ject to the customary corn petition among dealers, and where
the purchaser has the option of buying wherever he may find
the best bargains, as opposed to the sale price for patented
or exclusive articles, for which the re can be no competition,
as they are not to be had in " open" m arket, and the buyer
is compelled to pay tha t price or go without them.
This market value, or sale price, includes, in addition to
cost, the manufacturer's or merch ant's profits and the factor's
commissions upon the sales, which are not subject of indem-
nity under an ihsurance upon the goods ; to be covered they
must be specifically so named in the policy, and paid for in
the premium.
( To be continued.)
THE CANADIAN PIBE UNDERWRITERS ASSO-
CIATION AND MUNICIPAL TAXATION.
Kingston, we see, is determined to collect a special tax
from Insurance Companies, as well as from some other
Corporations. As regards the former the movement is,
we think, ill-a dvised and foolish, as well as unjust. Upon
what grounds can they justify their action ?
So far as Kingston is concerned the older companies
have, no doubt, a vivid recollection of certain large sums it
was their ill fortune to invest there in payment of fire claims
in past years. Are they to be taxed for the privilege of
trying to win back their money ? We hope this imposition,
for we consider it one, will either be found illegal, or that
the civic authorities will at least exempt the Insurance
Companies. But, if neither of these desirable ends be
attained, then let the Companies use the legitimate means
provided by their Canadian Fire Underwriters' Association,
and, as a member has suggested, at once advance the fire
insurance rates for Kingston. As all the Companies are
included in this Association there can be no avoiding such
increased rates ; and we rather think before long the citizens
of Kingston will bring sufficient pressure to bear on their
representatives to cause the repeal of the obnoxious
impost. Kingston to-day ranks under what is known as
Tariff" C ;" write it down to " D," thus ranking with Belle-
ville, Trenton, Arnprior, etc., and then the Companies will
be able to collect the tax, and a little over, for " costs of
collection."
JANUARY, .1884.
INSURANCE SOCIETY
s
Ottawa and Kingston succeeding in this special taxation
business, will lead other cities, towns and villages to
imitate them, and the Insurance Companies would then
have to meet no inconsiderable additional drain on their
premium revenue. We rather think the Canadian Fire
Underwriters' Association will be equal to the situation, for
at the Annual General Meeting of the Association in Toronto
on the 23rd instant, this question of municipal taxation will
be considered, and, it" necessary, legislated on.
We suppose if a member of any civic corporation
imposing such a special tax were asked to show the reason-
ableness of the thing, he would reply that Insurance Com-
panies benefitted greatly by the waterworks, steam fire
engines, general fire appliances, police, etc., which his town
provided, and that they should fairly be asked to contribute
to the support of such costly provision. Now the Insurance
Companies have really no interest in the providing and
maintenance of fire appliances, for the reason that where
they exist they recognize them by a lowered rate, and
where they do not exist they recognize their absence by a
greatly increased rate, corresponding to the hazard. It is a
very popular error to expect companies to contribute directly
to the support of fire brigades, steam fire engines, etc.,
when, as soon as these are established in any place hitherto
without them, down go the rates, and we think such a result
generally constitutes a very handsome contribution, if the
figures could be shown. Besides, why should insurance
companies be asked to contribute to the maintenance of a
fire brigade, etc., for the protection of the property of those
who do not insure at all, and there are also a great many
whose property is only partially insured.
Again, he would refer to the large aggregate of premium
withdrawn yearly from his town by the insurance people.
That, would always be prominent in his mind of course, but
the aggregate losses of twelve years past or the possibility
of a large conflagration in the near future would not be so
prominent.
We hope the Canadian Fire Underwriters' Association
will not dissolve without unanimous, effective action being
resolved on, should this municipal taxation scheme be
pressed. We cannot conclude without referring to the great
convenience the Companies enjoy in possessing an organ-
ization such as the Canadian Fire Underwriters' Association
in working order, and ready to cope on the instant with any
threatened evil, and enabling them to act with the force and
emphasis that a united organization can always bring to bear
for the general weal. We shall refer to this subject again.
SUN LIFE ASSURANCE COMPANY.
There is no class of business so sensitive to adverse
criticism as Life Assurance The faintest breath of suspicion,
even though there be not the slighest foundation for it, has
an injurious effect on it. We are sorry, therefore, to see that
prominence has been given in a few of the daily papers to
the Sun Life Assurance Company, and the fact that it holds
some stock in the defunct Exchange Bank. We have made
enquiry, and find that at the time of the failure of the Ex-
change Bank the Sun Life held only $5000 of its stock, and
thus, even if the double liablity were called up, the total loss
is comparatively almost nothing to a company of the size of
the Sun. The loan of $20,000 on the stock, which appears in
the Government returns as existing on 3ist December, 1882,
was made to a wealthy broker, and was paid off in full
about the ist of April, 1883, long before any trouble had
been seen in conneciton with the Bank at all. There is
thus no foundation for the stories which have been circu-
lated. They are none the less to be deplored however,
for, with people who do not know the facts, they may do
harm.
We have watched the progress 01 the Sun Life year by year
with much satisfaction. It has been steadily and rapidly
gaining in size and strength, and it now holds a very high
position with the public as a prosperous and solid Canadian
life Company. The liberal course it has taken in regard to
the conditions of its policies, and the honorable manner in
which it has transacted its business, have made it deservedly
popular. The high esteem in which Mr. Macaulay, the
Managing-Director, is held, is the best possible guarantee
that can be given as to the carefulness and prudence of the
management; and from our personal knowlege of the officials
we certainly have no hesitation in recommending the Com-
pany most heartily.
"WHEN DOES THE LIABILITY OF A FIRE
INSURANCE POLICY TERMINATE,
STANDARD TIME?
A very interesting question has recently arisen among the
fire underwriters across the line, which is worthy of some
discussion, as the same points may at any time happen in the
Dominion,, the liability of the insurers in this case hangs
upon the time at which the fire occurred; and whether
such time will be measured by the " new standard," re-
cently adopted, or by the old standard of solar time. The
facts are as follows : A barn was recently discovered to be
on fire at 11.55 a.m., standard time, or 12.11 p.m., solar
time. One policy was to expire at 12 o'clock noon on that
day and a policy in another Office was to commence on
the expiration of the first, that is, at 12 o'clock noon. The
question as to which standard of time shall rule can only be
for the courts to decide, hence there is no discussion there-
on. But, under the supposition that the new time is to rule,
and the fire being first discovered five minutes before the
expiration of policy number one, the question is: What
would be its liability, would it cease with the moment of
expiration of time under the terms of the policy, or would
it be liable up to the close of the fire ?
As to policy number two, the question is: Inasmuch as
a fire had commenced upon the premises before the time at
which it was, by its terms, to assume the risk, is the burn-
ing building the risk it agreed to assume ? If so, what por-
tion of the loss is it liable for ?
Unfortunately, in the discussion of the subject, we can
gain nothing in the way of direct legal adjudications in the
Dominion upon the point, though we get some little light
thereupon, inferentially, from decisions made in England
and in the States where the principles involved have been
r|iled upon.
6
f^suRA^cS: ^cf^ty.
jAmjAitY, 1884-
In the matter of standard or solar time : While it is a rule !
of law that " the time must follow that at the place of the
contract," the question arises: Which is the " time " at
the place where the policy was issued, the new or the '
solar ?
The decision, as we have already said, will be for the
courts, but we venture the opinion that, inasmuch as the
" standard " time has never been legally adopted by com-
petent authority, it cannot be substituted, in the construc-
tion of contracts of which time is said to be the essence, by
either party to the detriment of another, as in this case. If
this be correct it settles the question by placing the loss
after the expiration of Policy No. one and the commence-
ment of No. two.
In the assumed hypothesis, however, that the new stand-
ard of time shall rule, the question of the liability of policy
No. one for loss after the time of expiration, as fixed by its
own terms, seems to be settled by the following judicial
decisions, where the same point, as to time, was at issue,
viz : There was insurance upon & ship for six months; three i
days before the expiration of the policy, it received its
" death wound," but by pumping and other efforts it was
kept afloat until three days after the policy expired,—Held
by the courts that the insurers were not liable, (i Term R.
260).
Another case where a policy upon a ship was to expire
December ist (no hour fixed.) On that day, between one
and two o'clock p. m., she struck upon a wreck, and
between two and four o'clock, next a. m; December and,
she sank, in consequence of the injury, and became a total
loss. Held—If the ship receive her death wound before the
policy expires, and it results in a total loss after the policy
expires, the insurer is liable only for a partial loss (Howell
v. Protection Ins. Co., 7 Ohio, p. i. 284); see also Lockyer
v. Offley, i Term R. 252.
The inference to be drawn from these cases is that the
liability of the policy ceases from and after the time fixed in
the contract, under any circumstances, provided only that
any interval of time occurs between the injury received and
its fatal results, or, in other words, that the injury was the
remote and not the direct cause of the eventual loss.
On the other hand, we have a case of fire loss, whence an
inference, seemingly more in harmony with the construction
of the policy as an instrument of indemnity, may also be
drawn. The point of dispute was that of time, when the
insurance would terminate under the terms of the policy.
The case was that of Isaacs v. Royal Insurance Co. (5 L.
R. Ex. 296), and is briefly as follows : A policy was taken
upon property for six months, from February i4th to
August i4th of same year,—no hour of expiration given.
Between 10 and n o'clock on the night of August i4th a
fire occurred upon the premises, causing loss and damage
to the amount of ^3,500. (No particulars as to the loss
in the report of the case.) Payment was resisted, upon the
plea that the policy expired at midnight, August 13*. The
Court held that the policy was in existence up to the last
moment of August i4th, and gave judgment for the plain-
tiff for the full amount.
The inference here is that a fire commencing between io
and ii o'clock at night could not, under ordinary circum-
stances, have destroyed $17,500 worth of property in the
brief period intervening before midnight; and, if there had
been any question as to the liability of the insurers for loss
occurring after that hour, some mention of the fact
would be found in the defence of the Company and the
dicta of the Court.
The difference between the two classes of cases is in the
fact that in the first case under consideration the injury was
continuous , hence fire was the direct and continuous cause
of the loss. The distinction however, is so slight as scarce-
ly to carry any force with it; and as the weight of authority
seems to preponderate on the side of the non-liability of
policy No. one after 12 o'clock noon we must so conclude.
As to policy number two : It is an insurance axiom that
where a policy is taken out to cover property in existence
at the time the contract is executed, though to lake effect
some days thereafter, such insurance is liable for any loss
occurring at or after the commencement of its currency,
although, as in the present case, the premises may chance
to be on fire at that moment. The only escape for the Com-
pany would be a stipulation in the policy providing that the
property was not on fire at the time of such commencement.
Policy No. two being a bona fide contract, its liability is co-
existent with its currency.
Policies Nos. one and two, being non concurrent, and
not co-existent, cannot be held as co-insurers ; each has its
own liability, that of No. one ceasing before that of No. two
comes into existence. Policy No. one will pay all loss oc-
curring before and up to 12 o'clock noon, and No. two, all
happening after that hour, within the amounts of their several
policies.
Just how the losses can be ascertained will depend upon
the class of hazard. It will be the duty of the insured to
present his proofs, distinguishing the liability of each office,
if he can. If not the adjustment should be a matter of com-
promise to the benefit of all concerned.
LUMBER LOSS ADJUSTMENTS.
An esteemed correspondent sends us the following, upon
the affixing of values on manufactured lumber at the mill,
which we publish as of interest to many of our readers :
HAMILTON, January 10, 1884.
Editor INSURANCE SOCIETY.
DEAR SIR,—I have been very much interested in reading the excel-
lent article in the December issue of your esteemed journal upon the
subject of trie correct adjustment of lumber losses, in the hands of th«
manufacturer; the more so, perhaps, because (he views therein ex-
pressed as to what you denominate " the measure of damage " to the
mill owner correspond closely to my own upon this subject, and the
reading of which called to mind a lumber loss that occurred in thi»
Province in 1880, the adjustment of which was entrusted to a party, »
who claimed to be competent to the task he had undertaken. But
when the adjustment papers reached the Companies interested, of
which there were several, their surprise may be better imagined than
described to find that the assured had been settled with for his loss
upon the basis of the selling price of the lumber at the mill, at which
rate the claimant would have been glad to have filled any amount
of orders from any body, for this selling price included his profits
upon the lumber above the cost!
The offices interested at first protested against the adjustment; but,
as is customary in such cases where there are several Companies
JANUARY, l §§4.
INSURANCE SOCIETY.
interested, some of the weak-kneed ones paid up rather thanTiave any
further trouble in the matter, so of course the others had to do the
same, you know, or run the risk of losing business. Our Insurance
Companies, and our loss adjusters more especially, are under obliga-
tions to vour journal for giving the manner in which lumber losses
shouldhe adjusted. However difficult the actual cost of the lumber at
the mill may be to find, something nearer the truth than the selling price
could certainly be reached.
Apologizing for thus troubling you,
I remain, respectfully yours,
1 W. S.
REPLY TO W. S. '
We are obliged to our correspondent W. S. for the facts
contained in his interesting letter, which seem to indicate :
that our article, to which he refers, has not been untimely.
Our only regret in the matter is thai we could not from the
nature of the subject, go any deeper into details. It is .
evident, however, that the adjuster having the loss referred
to in charge was ignorant of the very first principle of
adjustment, and that is that the insured should in no case
be permitted to make a gain upon his insurance; indemnity
to the amount of the actual loss to himself, and no more,
is all that he can be entitled to under any circumstances,
and this without including any consequential damage arising
as the result of the loss. W. S. will find the subject of
" Measure of Damages " under the fire policy fully discussed
elsewhere in this issue of INSURANCE SOCIETY, to which his
attention is solicited. We are glad to have our articles dis-
cussed, because discussion brings knowledge, and know-
ledge wisdom, which we all need.
THE INSPECTOR OF INSURANCE FOR ONTARIO.
In. recent issues of INSURANCE SOCIETY we have stu-
diously avoided reflecting strongly on the action of the On
tario Insurance Department, in regard to the Standard Fire
Insurance Company. We wished to give the Inspector an
opportunity to show that his office is not a mere sinecure. We
pointed out the condition of the Standard Fire Insur-
ance Company of Hamilton in issue afte rissue, without
reflecting, as we might have done, on his conduct, but
he took no notice of our remarks. We stated the facts
so clearly that the merest novice could see that the Com-
pany was hopelessly insolvent even at that time, but he
let it die a natural death, from being no longer able to con-
ceal its rottenness by even the thinnest coat of paint. All of
these things happened under his very eyes but he did not
make the slightest move to help the unfortunate policy-
holders ; we therefore consider it is high time for us to say
something as to the value of his department. In this article
we wish specially to point out how he has utterly failed to
comply with tlie conditions imposed on him by the laws
under which he is supposed to »ct.
The Ontario Act of 1879 (42 Vie. cap. 25) says : section
2)
2. The Inspector of Insurance shall visit the Head Office of every
such Company in Ontario at least once in every year, and sh^ll care-
fully examine the statements of the Company as to its condition and
affairs and report thereon to the Treasurer as to all matters requiring
his attention and decision.
!. A report of all companies so visited by the Inspector shall be
entered by him in a book kept for that purpose, with notes and mem-
oranda showing the condition of each Company, and a special written
report shall be communicated to the Treasurer stating the Inspector's^
opinion of the condition and financial standing of each Company, and
all other matters desirable to lie made known to the Treasurer.
Did the Inspector of Insurance communicate a special
report to the Treasurer, stating his opinion of the condition
and financial standing of the Alliance and Standard Fire
Insurance Companies as at the 3ist December, 1882 ?
Did he inform the Treasurer that the liabilities of the
Alliance exceeded its assets by $3,754.86—that the liabilities
of the Standard exceeded its assets by $4S(:>S4, and that the
expenditure of the Alliance had exceeded its income by
$6,281.10?
Did he state his opinion to the Treasurer about the value
of the " Agents' Balances" the " Bills Receivable" and the
" Miscellaneous " of the two Companies, which in the
aggregate amounted to $58,051.28, when recommending to
the Treasurer the amalgamation of those two Companies ?
Did he inform the Treasurer that the general Branch of
the Victoria Mutual was insolvent on the 3ist of December,
j 88 2, that its liabilities exceeded its assets by $11,025.84,
and did he express his opinion to the Treasurer about the
value of its assets ?
Chap. 161 Revised Statutes of Ontario Section 29 says:
2. All the debentures and promissory notes at any one time out-
standing shall not exceed one-fourth of the amount remaining unpaid
upon the same premium notes. (36 V. c. 44, s. 29.)
Did he inform the Treasurer in his special report that on
the 3ist December, 1882, the " debentures " and promissory
notes of the General Branch of the Victoria Mutual were
nearly double the amount remaining unpaid upon its pre-
mium notes ?
In February, 1882, an Act was passed by the Ontario
Legislature relating to the law of insurance. Among other
things it provided for the winding-up of insurance com-
panies, and empowered the Government to obtain accurate
and detailed information from the books of any company
undergoing the process of liquidation as to the state of its
affairs—it authorized the appointment of a receiver to wind
up its affairs—it made it imperative on any insurance com-
pany voluntarily proposing to go into liquidation to give
one month's notice thereof in advance to the Provincial
Secretary, the Inspector of Insurance, and by advertise-
ment in the Ontario Gazette to the public; it also pro-
vided for a return of his unearned premium to each policy-
holder ; and it made it imperative on the receiver to report
monthly to the Inspector of Insurance concerning the com-
pany, its receipts and expenditures, its assets and liabilities,
It is an excellent law, but recent events have shown that it
is simply so much waste paper.
On the 27th of November, last year, Mr. Laidlaw, for the
creditors, of the Standard, moved in Chancery for a winding
up order under the Dominion Act of 1882 (chapter 23, 45
Vict), and Mr. Justice Proudfoot granted it. The Com-
pany has by this course saved itself from exposure, for there
is nothing in the Act above referred to which renders a
[ provincial statement of its affairs, either to its shareholders,
; its insurants or the public, at all obligatory,—and Mr.
Livingstone, the Promoter and former Inspector, has been
' appointed the Receiver.
But what of the Inspector of Insurance in this matter ?
How did he allow a Provincial Company to be wound up
^! under a Dominion Act, and thus get out of giving the
required one month's notice. Why was he asleep to his own
INSU^ANC^ SOCIETY.
JANUARY, 1884.
dignity and the rights of his Province ? The interests of the
public,as a whole, he of course does not think worth any
consideration at all.
It cannot have been so long ago since he inspected the
books of the Standard, and how Mr. Crawford must have
hoodwinked him and Mr. D. B. Chisholm laughed at him!
Either his inspection must have been entirely superficial, or
the science of inspection is not one of his strong points.
Ever since the publication of the last annual statement
all insurance men knew that the Company was in
a moribund state, but he closed his eyes to the fact, and for-
got that he was Inspector. Is not the Ontario Insurance
Department worse than useless ?
While on this subject we would like to ask a Montreal
contemporary—which seems, like some others, to know all
about the Standard Fire, now that it has failed,—how much
the departed President of that institution had borrowed
from it, and how it is that INSURANCE SOCIETY was the
only Journal in the country, insurance or general, which
warned the public against a company which failed so soon,
and the creditors of which (notwithstanding the statements
of these Journals to the contrary), now that it is being wound
up, will hardly receive, we venture to say, much over 30 per
cent. of their claims? And how could any Insurance Depart-
ment let a company get into such a terribly insolvent position,
and,even then let it be wound up by a Dominion Court and
taken out of its hands, as has been done in this case?
UNDERGROUND FIRE INSURANCE.
What is known among fire underwriters as " Under-
ground Insurance," is the illegal solicitation of business and
the issuing of policies thereon, either directly by a com-
pany, or through an intermediary broker, not authorized,
by a compliance with the requirements with the laws of any
State, to take insurances within its boundaries. All insur-
ances thus taken are by the law made illegal acts, and,
further, make the company and the broker subject to
penalties upon conviction, while the insurance is held to be
so far null and void that no action will be entertained by
Court within the State against the insuring office. Unfor-
tunately, however, such companies being beyond the juris-
diction of the State no steps can be taken against them
beyond the levying upon any property that may chance to
be found within such jurisdiction.
On the other hand again, the law cannot prevent any of
the citizens of a State from going into another State and pro-
cure there all the insurance that he may desire/or his own
purposes ; but, if such insurance be obtained by a broker,
for a compensation, the broker becomes liable under the
law, and upon conviction should suffer the penalty. The
only penalty attached to the insured himself upon insur-
ances so obtained in offices not authorized within the State,
is that no suit can be brought for collection of the money in
the event of a refusal to pay.
The practice of " Underground Insurance," we regret to
have to say, is very common in the Dominion and
over the line among the American offices, much to
the detriment of those loyal offices and agents of both
countries who honestly comply with their respective laws
and pay their license fees, etc., like honest men. To such
an extent has this underhand business been carried that
the fire underwriters of the Dominion have become satisfied
that some more efficient steps must be taken to stop this
rapidly spreading, serious evil, by which not only are they
brought into illegitimate competition with these unlawful
operators, thus lowering rates and reducing their hard earn-
ings, but the insured himself is placed in a perilous situa-
tion by being induced to rely upon a policy the liability for
loss under which cannot be enforced by the laws of the
Dominion, because the company issuing the same is safely
beyond the jurisdiction of any of its Courts.
At the recent fire in Quebec, January nth, Mr.
McCord, a dry goods dealer, had $18,000 of insurance, of
which $6,700, was in the Exchange, the Mechanics and
Traders, and the Farragut, all of New York city, and not
one of them authorized to transact fire insurance in the
Dominion. From the standing of those offices at home,
there is no question that the insured will get his money upon
the .presentation of proper proofs, but it is a great pity that
offices having such good names at home should travel
abroad by the Underground Railway, as if they feared to
be seen and recognised; and also in view of the fact that,
there is ample capital of duly authorized Companies in the
Dominion, to cover all these mercantile risks, including even
those of Quebec. If Canadian business is good enough
to be taken " on the sly" it is good enough to be
taken openly and in compliance with, the law. We trust
that so long as the insurance laws are in force upon the
statute books of the Dominion, they shall not be considered
as " dead letters " by our Insurance Superintendent; and
we further hope that our fire underwriters will make things
so warm in this matter that the public authorities will be
thawed out in time to take some decided action in the pre-
mises before the trail grows cold.
SPECIAL HAZARDS.
Special hazards are said to be the ban of fire insurance
because their usual high rates of premium brings to the
agent a liberal commission ; and companies themselves are
found to which this temptation of heavy premiums unfre-
quently becomes too strong for resistance, until it has be-
come an adage among fire underwriters that " specials have
dug the grave of many young and ambitious fire offices, laid
the corpse therein, and covered it from sight forever.''
While this reads prettily, and no doubt has truth for a
basis, it does not follow of necessity that, because inexperi-
enced and " ambitious" companies have had their fingers
burned by meddling with what they did not understand,
that special hazards are not, when handled with judgment
good insurance risks. But, as in other things connected with
fire insuring, from the lack of classified and recorded experi-
ence, there is a very great diversity of opinion as to the
selection of business, many offices, the country mutuals
especially, confine their efforts to isolated farm risks, or
dwellings in villages, usually more or less detached; others,
again, usually the stock offices, restrict their writings, in
addition to ordinary hazardous and non-hazardous classes
JANUARY, 1884.
WSURANCK S6CIETY.
<5
to the better classes of extra hazardous risks in cities, de
dining all specially hazardous, as undesirable ; while others
again, usually the more venturesome of the larger agency
companies, write freely upon all classes of mercantile and
manufacturing risks, and find it profitable to do so.
Opinions also differ among fire underwriters as to the
profitable results arising from writing upon those classes of
hazards which command high rates of premium, as compared
with those which pay uniform low rates as being less hazard-
ous. Among some of the Companys officers it is held as an
axiom, that good risks always pay low rates, while the poorer
classes command high figures in the ratios of their several
increasing hazards. As an axiom, this seems faulty, and
smacks of over-caution and lack of insurance wisdom. The
mere fact that, from their classification, non-hazardous risks
are held as good insurance investments, is no argument that
all manufacturing establishments are undesirable as insur-
ance risks merely because they command a higher premium
rate than such non-hazardous property. On the contrary,
well-developed experience has demonstrated that a well
selected average line of the higher grade of premium hazards,
properly adjusted as to the rate, will bear a much heavier
percentage of loss and leave better results than an equally
desirable line of risks of a lower premium value. Low rate pre-
miums entail a larger average line of insurance, and hence
of liability, to realize a given amount of business; while,
on the other hand, high-priced premiums always accom-
pany reduced lines of writing, usually graded to the rate of
premium, with a corresponding reduction in the extent of
liability: The result is that, while special hazard lines are
comparatively small and proportionately scattered, in the
event of loss, even if total, the Company loses but a mini
mum amount upon any single risk; while low rate lines are
always large in proportion, so that, when a fire occurs, the
loss is always heavy, and, relatively to the premium received^
larger to the insurer, even when partial as to the amount of
the insurance. Thus, with an insurance say of $10,000,
upon merchandise haz and ex haz (the lazy man's
way of expressing it) at 45 cents, gives $45 as the
total of the premium. A loss occurs and damage ensues
from fire, water, smoke, etc., to the amount of not less than
$2,500, in a fire of any proportions, for which but $45 was
received as the equivalent. On the other hand, estimating
ten average manufacturing risks of $2,000 each, at 5 per
cent. premium, being $100 each or $1,000 in the aggregate :
a loss occurs, and one risk is totally destroyed, costing
$2,000, on which the premium was $100. In the first case
there is an absolute loss of $2,500, with a risk of $7,500
still remaining to be carried to maturity, with but $45 as
compensation. In the second place the loss is total $2,000,
with no remaining risk and a compensation of$ioo ; while
if the same due care has been observed in the selection of
the special risk as was bestowed upon the non-hazardous
one, the liability of the former to destruction will be less
than the latter, because this class of hazards are ordinarily
more or less detached, and well provided with fire extin-
guishing facilities.
If a company proposes to enter into the special hazard
business, it cannot expect to reap success unless it makes
a business of it; a single risk or two of any given class, laid
away upon the shelf to await the turn of" the die, will not
suffice for safety. To make any class of specials profitable,
as a class, and at any rate that the insured can afford to pay,
there must be a number written large and broad enough to
afford a fair breadth of average. We knew of a Company
that with one hundred tanneries upon its records, lost
money; with the number increased to four hundred, it
made money ; that Company's experience solves the prob-
lem. Writing specials, however, without experience, is
handling edge tools without knowledge; the expert handles
them with impunity; the ignorant man only maims himself.
THE NEW BRUNSWICK BOARD OF FIBE UNDER-
WRITERS.
REPORT OF THE NINETEENTH ANNUAL MEETING HELD IN
THE BOARD ROOM AT ST. JOHN, N.B., pTH JANUARY, 1884.
The following Companies were represented at the meet-
ing, viz : Royal, North British & Mercantile, Scottish Union
and National, Queen, Imperial, ^Etna, Hartford, Northern,
Liverpool and London and Globe, Commercial Union, Lon-
don and Lancashire, Phoenix of London, Fire Insurance
Association, Royal Canadian, Norwich Union, Western,
British America, Phenix of Brooklyn, City of London and
National of Ireland.
After the routine business was transacted the President
read his annual address.
TO THE MEMBERS OF THE NEW BRUNSWICK BOARD OF FIRE UNDER
WRITERS.
GENTLEMEN,—Since our last annual meeting the Water Works on
the Saint John River at Fredericton have been completed, and that City
is now enjoying an abundant water supply. A Committee from this
Board visited Fredericton in the month of November last, and upon
their report considerable changes were made in the Tariff ratings.
The Water Works at Woodstock are now in course of completion
and in a few months that City will also have a good water supply.
Mr. C. E. L. Jarvis visited St. Stephen in the interests of this Board
in the month of June last, and there met a Committee from the New
England Inspectors' Exchange, the result of their labors has been a
complete tariff, including both sides of the St. Croix River, which is
being faithfully carried out by the members of the St. Croix Board.
During the past year a Board has been formed at Charlottetown,
Prince Edward Island, and a Tariff prepared and published, under the
direction of Mr. C. E. L. Jarvis and Mr. C. D. Cory. A new tariff has
been prepared and published by Mr. C. E. L. Jarvis for the Halifax
Board.
The Boards at Toronto and Montreal are also giving the subject of
Insurance rates careful attention, and it may be said that Insurance
Companies throughout the Dominion of Canada are now under tariff
regulations.
As the Citizens Insurance'Company of Montreal is in unison with the
Boards at Toronto and Montreal this Board may fairly claim that
the Directors of that Company should, in conducting their business in
this City and Province, respect our tariff.
The New England Inspectors' Exchange at Boston has done much
to improve the insurance business in the New England States by adopt-
ing tariff rates made after careful inspection by committees from the
Exchange. I trust as a result of the labors of that influential Board a
greatly improved business will accrue to the Companies there estab-
lished. I am happy to be able to state that the managers of several of
the leading American Companies in Boston have assured me that in
accepting business in New Brunswick they will respect our Tariff.
Mr. J. B. Cherriman, Superintendent of Insurance, has informed me
that an amendment to the Insurance Law will be submitted to Parali-
m'ent at its next session, and that in the preparation of such amendment
the suggestions as forwarded to him from this Board should have due
consideration.
i The Chief Engineer of the Fire Department has made the annual
inspection of Mercantile risks in St. John, and his report is on file with
the Secretary, Mr. Clinch,
t6
t^lSUKANCE SOCIETY.
JANUARY, t884.
I desire to express my appreciation of the honor conferred in electing
me to the position of President of the Board, and thank the members
for the uniform courtesy extended to me during my occupancy of the
chair.
Hoping that the business of the present year will show a good margin
of profit to the Companies represented at the Board,
I remain, gentlemen,
Your obedient servant,
(Signed), GEO. E. FAIRWEATHER,
President.
St. John, N.B.,9th January, 1884.
The election of officers was then proceeded with, and Mr'
Geo. E. Fairweather, of the London and Lancashire, was
unanimously re-elected President and Mr. Peter Clinch,
Secretary.
The following were appointed a standing committee on
rates: E. L. Whittaker, Imperial, ^tna and Hartford;
Thos. Maclellan, Fire Insurance Association; R. W. W.
Frink, Western and British America.
The Salvage Corps Committee were then appointed. TheY
are, J. Macgregor Grant, Lancashire^ and Scottish Union an
Mational; C. E. L. Jar vis, Queen; R. W. W. Frink, West-
ern and British America.
THE NORTH WEST FIRE INSURANCE COMPANY
The North West Fire Insurance Company was incorpor-
ated in 1880, under the Manitoba Legislative Body Act, for
the transaction of fire business only; with an authorized
capital of $500,000, divided into 5,000 shares of $100 each.
The requisite amount of stock having been subscribed for
and paid in ; the Company commenced business in April of
last year, since which time up to the 3ist of December
ult, the premiums received amounted to $16,104.65, whilst
the losses only amounted to the very low sum of $3,297.69,
which, in our opinion, is a remarkably favorable result for
Winnipeg, and reflects much credit on the able and energe-
tic Secretary and Manager, Mr. G. W. Girdlestone, who for
the last twenty years has been the representative of the
Royal and other first-class fire offices, and, we are glad to
note, has lately been appointed agent for the Guardian.
The President of the Company is Mr. Duncan MacArthur
(head of the firm of Messrs. MacArthur, Boyle and Camp-
bell). The Vice-President is Col. W. N. Kennedy (Regis-
trar of the County of Selkirk), and among the Board of
Directors are to be found the names of the principal mer-
chants of Winnipeg and Manitoba.
The North West is a Stock Company, its head office is at
Winnipeg.
CITIZENS INS. CO. vs. BUDGET-LIBEL SUIT.
The libel suit—Citizens Insurance Company vs. Budget
of Toronto—terminated on Monday, i4th inst., after a trial
which lasted four days,—verdict for Plaintiffs,—damages,
nominal, $i.
This case created quite a sensation amongst the insurance
fraternity of Toronto, for it has been many a day, if ever,
before, since the affairs of any insurance company in Canada'
underwent such an overhauling in public. \
It will be remembered that this suit was instituted by the
" Citizens" because of an article which appeared in the
Budget of Dec. 82, and a subsequent letter inserted in
January, of last year, signed " Fire Insurance Shareholder,"
reflecting on the Company, and accusing the management of
" reckless underwriting." It was admitted by the defen-
dants that the above letter was written by A. T. McCord,
who was a dismissed agent of the Company, and against
whom Mr. Hart, the General Manager, made some very
serious charges which, as far as we can see, were not contra-
dicted in court, and to which the judge in his charge to the
jury made special reference.
From time to time adverse criticisms have appeared against
the Citizens, in some journals, and consequently the Directors
and M anagement determined to vindicate the position of the
Company by going before the Court, and thus submitting its
business to public scrutiny. We doubt, however,if even this
will put an end to their attacks, for no doubt rival agents
will try to make use of any apparently weak points which
may have appeared at the trial and twist them to the detri -
ment of the company; for there are few Companies which
have not got some weak points.
The General Manager of the Citizens, who was in the
the witness box for over a day and a half, seems to have
been ever ready with an answer, without hesitating, to the
multifarious questions put to him by the counsel for the
defense, and displayed so much ability, and such an inti-
mate knowledge of all the details of the business of his Com-
pany as to surprise a good many even of the underwriters
present. He was very highly complimented by the various
counsel engaged in the case; as well as by the jndge in his
address to the jury.
Our Toronto correspondent who was present during the
greater portion of the trial says:—" All the insurance
experts " " called on behalf of the Budget and McCord were
obviously not in favor of the Company, and one or two dis-
played a certain hostility to it in their evidence. They
showed partiality in manner, if not in matter, towards the
defendants. The Citizens won their case without the aid of
friendly testimony. They relied on the statements and
figures they put in evidence, and won on these, which I
am sure, must be satisfactory to them."
With reference to the amount of damages, the Judge in
his charge to the jury said :—" That the company claimed
none, and had proved none, no evidence whatever having
been offered; and that it therefore remained with the jury
to give $i or $100 as they saw fit."
The costs of the trial, which are considerable, are to be
paid by the defendants.
ASSESSMENT INSURANCE COMPANIES.
A falsehood, especially if it is one which pays any one to
propagate, dies very hard indeed. Such a falsehood is the
one which identifies the assessment insurance companies of
the United States with the friendly societies and industrial
insurance companies of England. We have repeatedly
asserted, and our assertions have not yet been denied, that
the assessment insurance companies of America are abso-
lutely different, both in the letter and the spirit, from the
English institutions on whose reputation the assessment
companies are endeavoring to thrive. The friendly socie-
JANUARY, 1884.
INSURANCE SOCIETY
11
ties and the industrial insurance companies of England I
are maintained by regular premiums, assessed according to tl
the respective liabilities incurred, and are collected weekly, h
monthly, or yearly, as the case may be. The retrospective fi
system of assessment on the whole body of members on the
death of an individual is, we will not say absolutely unknown a
in Great Britain, but so rarely met with that when found it ^
is studied as an article of great curiosity as well as of exceed- r
ing scarcity. Furthermore, when such an assessment f
society is found out, which can only be after diligent investi- a
gation, it will be found to consist of a number of persons ^
more or less known to each other, or linked together in such (
official or social connection that they are more or less t
interested one in the other. Of such a class is the Regis- I
trar's Friendly Society, to which a considerable numb°r of c
the registrars of births, marriages, and deaths do, or did ^,
some years ago, belong. Here, however, were a number of ^
officials holding fixed positions, and who, for mutual pur- ]
poses such as these, would be considered as members 0s one s
family. What possible comparison can be drawn between c
a society like this and the Grand United Templars' Co-opera- j
tive Association, say, of Oshkosh, or of Little Rock ? ,
The assessment principle of insurance; as practised ir the I 1
United States by the co-ope.-ative companies, is a snare and | \
a delusion. It cannot be too often repeated that the c'aim \ '
advanced by these societies to be either representatives of ! '
the English friendly societies, or to resemble them in their j ^
way of carrying on the.r business, is simply a deliberate and j ;
premeditated fraud. The friendly societies and industrial j
insurance companies of Great Britain have at least some |
principle to guide them ; and this principle is the payment I
out of certain sums of money in proportion to the moneys
paid in, whilst the latter are graduated upon such a scale as
will enable the liabilities of the society to be discharged at
maturity. Futhermore, the payments are made in advance
and at fixed intervals. The principles upon which the
American assessment companies are carried on are—first, to
put money into the pockets of the managers and promoters of
the companies; and, secondly, to pay as little out in the
settlement of claims as 'vili not check a large addition of |
fresh victims. The assessment? made by the company are
levied upon the members to meet claims already accn- f.d,
and upon a scale of A-hic'i the managers of the companies
are allowed to be the only judges. The managers, also, dre
the sole judges as to how much of the assessment should go
in payment of the claims of deceased policy-holders, and
how much in the working expenses of the office. These,
broadly speaking, are the points of difference between the
two classes of compares. We think we have said enough
to prove our preliminary statement that any comparison
made by an' American co-operative society between itself
and any friendly or industrial society of Great Britain is
simply for the purpose of swindling such confiding citizens of
the United States as may be guileless enough to believe any
statements put before them by interested persons,—T/ie
Review, London, Eng.
BENBFITS OF WS INSITRANCE.
The objects and benefits of Fire and Lile Insurance was
(be subject of a prize essay competition inaugurate by the;
Insurance Institute of Manchester, Eng.; F. J. Kingsley was
the successful essayist, and we give the closing portion of
his essay, which treats more especially on the indirect bene-
fits of life assurance :
Insurance has been treated rather as a direct, convenient
and advantageous means of exercising two most powerful
motives of human conduct, than as a practice having large
moral weight and significance. But, if the points already
raised are held to be established, a closer insight will hardly
fail to recognize wider and deeper influences at work in insur-
ance than may at first be apparent. When a drinking foun-
tain is set up in a populous neighborhood, its direct and
immediate advantages are plain to the simplest mind. The
thirsty man may drink, and the dirty man may wash—good
things enough in the eyes of all men. But the excellent
philanthropist who built the fountain, doubtless, had a deeper
design than merely the satisfaction of passing needs, however
natural and wholesome in themselves. He looks to permanen
results, to moral effects, to the force of example, to the
power of conduct, in their influence upon human chiracters
He hopes, by the silent but ceaseless influence of the little
stream of clear running water, the unfailing ally of cleanlines
and sobriety, the standing reproof of drunkenness and dirt
to act upon the lives of his fellow-men—and who, knowing
human nature and the invincible influence of the little things
that " make for righteousness," will say that his hopes are
without reason or unlikely to have their reward ? Just in
the same way we may distinguish between the direct and
; indirect advantages that flow from insurance. The direct
I advantages, already dealt with, are obvious enough when its
I nature and functions are properly grasped. The indirect
i advantages, like those of the fountain, do not lie so near the
' surface, and require somewhat closer examination to be seen
1 in all their bearings.
First of all let us look at the personal effect of insurance
! _its influence upon the man who takes out a policy. It
1 is a maxim of modern philosophy that a moral effect attaches
to every human action, apart from the motive which prompted
it. A s^ood thing or a bad thing done by a man, no matter
what his intention may be, and quite irrespective of its direct
results, will react upon him and effect others for good or for
evil, merely from the tendency in all human affairs to repe-
tition_from the ingrained habit of our nature to move along
the grooves made "bv ourselves or others. Of course the
moral effect of actions widely varies according to their scope
and importance, slight things producing small results of this
kind, and " matters of great pith and moment " producing
! momentous and lasting effects. Certainly it would be absurd
to describe the taking out of a policy of insurance, under
ordinary circumstances, as marking an epoch in a man's
life, and yet its moral effect upon himself alone must, from
the very nature of the transaction, be very considerable. For
what ha? he done ? He has taken, as it were, a sort of pledge
that he will practice so much self-denial of present satisfac-
tion and enjoyment in order that others, in the future, may
reap the benefit. He has become a party to a " self-denying
ordinance, " binding him to sow a harvest, in the garnering
of which he sliall never share. True it may be those that are
most dear to him, and whose lives are most closely knit with
his own, for whom this sacrifice is made, but the moral effect
of the matter is none the less potent. Self-denial, forethought
and decision have come into play, and these leave their
permanent marks upon the man's character.
INSURANCE JOURNAUSM.
A good many foolish, not a few unjust, and some toler-
ably wise things have at one time and another of late been
said about insurance journalism. Critics outside of the
profession itself have frequently represented that deplorable,
jf not despicable, phase of human nature which hastens tq
12
INSURANCE SOCIETY.
JANUARY, 1884.
definitely. We have only referred to the matter as two
insurance companies, besides several clerical Provident
Societies, hold considerable stock in the institution.
WINNIPEG'S FIKE LOSSES IN 1883.
charge upon an entire class the sins and follies of the fewdefinitely. We have only referred to the matter as two
belonging to the class. There have been-they are nowinsurance companies, besides several clerical Provident
happily extinct—professed insurance journals which mainlyc, . . .
lived by the levy of blackmail, and there yet exist a fewSofties, hold considerable stock in the institution.
which are constantly saying things inspired by folly asso-————
ciated with mediocrity. To estimate insurance journalism by——„---„, -CTRI? Tn^-E-Q -nsr i»at
the exceptional scoundrels of the past or the fools of theWINNIPEG S FIRE LOSSES IN 1883.
present is about as fair, and just as sensible, as to measureWe have been favored by a correspondent with a copy of
the soundness and honesty of a staunch life company by^he Chief of the Fire Brigade's annual report for 1883, and
one of the graveyard insurance frauds, or to class the estab-r ,. , ., „. „ , .
lished fire companies with the imbecile township mutuals.from lt! comblned wlth ollr own Flre Record' we g1^ a
The insurance journals of to-day, as a class, are as muchdetailed list of the fires which occurred in Winnipeg during
needed, as ably conducted, and as free from mercenarythe year ending December 31 st, 1883, including only those
taint as any in existence, and in point of usefulness andwhich amount to $100 and over :—
ability infinitely superior to many. Nothing lives long in, „,.„. - „ „ ,. . ,
this world without a vocation. Frauds are short-lived, menJanuary 4—William st., P. St. Gaudin, wooden house...... $ 500
with a mistaken mission suddenly disappear, dead-beats are" 13-Main st.,J. W. Wmnett, furniture store, etc.... 5,000
ephemeral, and everywhere and in all things demand regu-March '"-^ p- ^ ^rd' ^erheating of Caboose....... 350
lates supply. In this day of progressive enterprise every". 14—No. 91 Logan st., Mrs. Osilan, dwelling....... 250
important and wide-spread business interest demands a jour-'^P"1 'S.—C. P. Ry., car of hay.... .................. 125
nalistic service devoted to its interests as a news medium, an" 25.—Prairie st., stable............ .............. 150
advocate and a purveyor of well-considered opinion. The" 27-—Garrie st., bedroom......................... 100
established success of insurance journalism shows how wellMay i3.—Peddie's Dry Goods store, etc................ 7,000
it has fulfilled all these requirements in the interest of sound" 25.—McDermott st., stable....................... 125
underwriting, and the man who denies either its necessity or" 31.— Annie st., M. Walker, stable.. .............. 800
its power writes himself down as either a fossilized Rip VanJune 5.—Main st., shed.............................. 200
Winkle or an incapable noodle.—The Investigator." 6.—Main st., Daly Hotel........................ 800
_____" 21.—Tecumseh House............................ 150
__" 29.—Annie and Arthur sts., J. H. Ashdown, wooden
THE MUTUAL HEALTH AND ACCIDENT ASSO-sheds ................................... 1,100
CIATION OP HARTFORD.July 14.— Water St., M. Hughes, furniture warehouse..... 3^000
In answer to enquiries respecting the Mutual Health and" '9-- Main st., M. McNabb, store................. 3,500
Accident Association of Hartford, Conn., we quote the" "-Main st., Ludy&. Davidson, harness store..... 1,197
..,,.- , , _ , .. __ ,August 4.—Main st., M. Flary, restaurant..... ......... 800
following from the Insurance Journal of Hartford:g^ ^_prineess st., stable......................... 150
" From all we can learn of the company we believe there« 15.—Main and Bannatyne sts.Dufferin Block...... 150
was an honest intention in its organization, but that it isOctober i.—Euclid st., M. Higgins, stable............... 250
weakly managed, and, as it is an assessment company, it is" 2.—Alexander st., Jos. Irwin, dwelling............ 300
necessarily faulty in construction. It goes without saying" 2.—Smith st., M. Harker, dwelling............... 100
that any organization proposing to do what this company is" lo—S""^ st., M. Skead, dwelling................ 100
„ . ..i,.. .., , . . -" 21.—Noire Dame st. E.,J. Schultz, stable........ .. no
attempting, must be, to a greater or less extent, the victim of,. „ o -.1, . T. u i, . j r i ..
"' ' o 'Nov. S.—Smith st. Terrace, Hubert <& Locke, store...... 300
fraudulent attempts to secure money. With its assessment« i4.-Notre Dame st. E., M. Burns, dwelling........ 125
organization these frauds become more easy of accomplish-Dec. 18.—William st., P. Gallagher, pork house......... 200
ment, so long as people can be induced to pay assess--———
ments. It is an attempt to realize the same sort of benefit$26,972
given by many of the English Friendly Societies withoutFrom this statement it will be seen that the fire losses for
having their neighborhood feeling of associated interest,the year amounted to $26,972, to which, if we add say $2,-
which alone keeps them from being the victims of impos-ooo for small fires which were less than $100 each, the
ture and from disintegration. We should consider it a verytotal loss by fire in Winnipeg for the year ending December
good company to keep out of.3ist, 1883, was $28,972.
____We consider the above a very favorable record for a large
MONTREAL LOAN AND MORTGAGE COMPANY.^ like winniPeg'in which there are such a h^ Propor-
tion of frame buildings. During the past year over 500
The position of this institution has been pretty fullynew houses were erected.
ventilated in the public press of late. A meeting of thel^-s foregoing facts are worthy of the attention of the fire
shareholders was lately called to receive the reports of theoffices operating in the Prairie City.
two auditors who had been appointed to investigate the____
Company's affairs. Their report was to effect that the cap-
ital of the company was intact, and its earning powerTHE GUARANTEE COMPANY OF NORTH
undiminished. A committee of three was, however, appoint-AMERICA.
ed to have the Company's real estate and other securitiesA very high tribute has been paid to the Guarantee Corn-
valued, and to report at the annual meeting, which comespany of North America, by the Pennsylvania Railroad
off early in March. The committee consists of three gentle-.Company in passing the following resolution :
men who have the complete confidence of the shareholders,R^hed.-" That the Board of Directors do hereby approve of and
and the exact position of matters will thus soon be knowniaccept the Guarantee Company of North America as a sufficient
JANUARY, 1884.
INSURANCE SOCIETY.
<?
surety in the bond of any officer or employe of this Cempany, who
shall procure it as his surety, and that the general solicitor be and he
is hereby authorized, instead of requiring two or more sureties, as here
tofore, to accept the said Guarantee Company as the sole surety on
such bond."
The Guarantee Company of North America is a sound
and prosperous institution, and is doing a very extensive
business, both in Canada and the United States, under the
able and energetic management of Mr. Edward Rawlings,
the Managing Director. We strongly recommend it to
Railway, Banking and other institutions requiring Bonds of
Suretyship from their employees.
The head offices of the Guarantee Company are at 260
St. James street, Montreal.
SCOTTISH UNION AND NATIONAL INSURANCE
COMPANY.
Manager M. Bennett, jr., in a recent circular calls atten-
tion to the very satisfactory report made by the Insurance
Commissioner of Massachusetts after a very thorough and
searching examination of the financial condition and affairs of
the Scottish Union and National. The examination includes
the transactions of twenty-three months—the twelve months
of 1882 and eleven months of 1883. According to this
work of supererogation on the part of the examiner the only
discrepancy seems to have been an over-estimate instead of
an under-estimate of the Company's liabilities. Mr. Bennett,
who seems to be indefatigable in the interests of his Com-
panies, hopes to inspire additional confidence in the agents
of the Company by communicating the result of this
scrutiny. We append a copy of the examiners' report, which
is as follows :
[COPY.]
BOSTON, MASS., Dec. nth, 1883.
Hon. Jo1m K. Tarbov, Insurance Commissioner Ccimmonivealth of
Massachusetts:
SIR :—Referring to your letter of the 3rd inst., I have the honor to
report that I have visited and examined into the financial condition
and affairs of the United States Branch of the Scottish Union and
National Insurance Company, of Edinburgh, Scotland, at the principal
office of the resident manager, Marlin Bennett, jr., at Hartford, Conn.
The assets oftlie Company I carefully inspected, and find the loans
on mortgages of real estate—first liens—to be saiely placed on pro-
perty in Hartford, having an appraised value double the amount of the
loan. The rate of interest on each loan is at five per cent., payable
semi-annually, and it has been paid and properly endorsed on the
several notes.
The balance of the assets, as per schedule in the last annual state-
ment, remains as reported, so far as securities deposited with the Insur-
ance departments of the United States and Canada are concerned. An
additional special deposit of $10,000 in U. S. bonds has been made
during the present year in the Insurance department of the State of
Virginia. Additional loans on mortgage of real estate, equal in char-
acter to those already reported, have also been placed during the pre-
sent year to the amount of $12,500.
X The exhibit of liabilities made in the last annual statement was founrl
o be substantially correct, the total amount being overstated to a
small amount, resulting from an estimate of the December business of
the past year, the reports from several important agencies at distant
points not reaching the manager in time to be included therein.
The figures which formed the basis of the semi-annual statement to
date, July 1st, 1883, to the Insurance department of the State of New
York, were carefully verified by reference to the original accounts.
The trial balance from the ledger, covering the eleven months' busi-
ness of the current year to Dec. 1st, shows an increased percentage of
losses incurred to premium receipts of five per cent., and an increase in
expense of management of two per cent., as against the total for 1882.
The financial condition of the Company is excellent, and has not
changed materially during the year from the exhibit made in the last
annual statement. The examination of the books and papers was
facilitated by reason of the systematic and accurate manner in which
they are kept.
Very respectfully yours.
(Signed), NOAH A. PLYMPTON.
Examiner.
A REMEDY FOR FIRE LOSSES.
The Philadelphia Item publishes a letter from a corres-
pondent who asks a number of questions regarding the
immense fire loss of this country, and attempts to answer
the questions himself in a series of propositions to be adopt-
ed, and which are to furnish a remedy. These are :—
First.—Make " over insurance " a crime by law, holding
alike amenable the company, the agent, and the insured.
Second.—Make property-owners first responsible, a la
France, for all fires occurring on their premises, unless proven
to have been unavoidable or accidental, and not attributable
to " criminal carelessness."
Third.—Regulate the prices of insurance just like any
other merchantable commodity. The standard article is
worth so much. Scientific experience has fixed the rates,—and
that which is sold lower is " shoddy."
Fourth.—Reduce commissions to a fixed, fair rate, and
end all needless competition at cut rate prices. Let com-
panies run themselves and not surrender to brokers.
Fifth.—Make inspections more rigid, and acceptance of
rules more prudent, and there will be reduced loss rates and
fewer cares for the adjuster.
Sixth—Ignore and stamp out the " bummers" and
" free-booters" who divide commissions with the insured
as a bribe to get them into some favorite concern.
Seventh—Have enacted more rigid and practical build-
ing laws, and then have them enforced for the protection of
human life and property.
Eighth.—Transform our fire departments into non-
partisan organisations, and no longer make them political
hospitals for broken-down wire-pullers, and thus elevate
and improve the standard of our national fire service.
Ninth.—Labor without ceasing until the water supply
in all of our large cities (and in the smaller ones, too) is
fully equal to all reasonable demands.
Tenth.—Drop special hazards off the books until the char-
acter is improved by the applicant, and made at least a
passable risk.
Eleventh.—Join the present associations into one grand
national association. Bury petty jealousies and school-boy
bickerings. Agree no longer to disagree. Adopt uniform
policies, standard rates, fixed commissions, and labor with
unity of action, and you will solve the problem as expressed
in the twelfth and last reason briefly and forcibly, we believe,
viz:
Twelfth.— Practice COMMON-SENSE FOR SELF-PROTEC-
TION.
The Insurance Journal, in commenting on the
above, says : As to the first proposition we wish that and
" over insurance " could be eliminated from the underwrit-
ing vocabulary. There is no such thing in the modern
| practice of underwriting as "over insurance," the policy
I merely covering the cash value of the property, not exceed-
ing a specified sum. To make " over insurance," so-called,
^4
INSURANCE SOCIETY:
JANUARY, 1884.
a crime would be a peculiar exercise of criminal legislation,
because the knowledge of actual values can be possessed by
only one of the three parties whom this writer proposes to
make amenable. Neither the company nor the agent can
tell the cash value of a man's property without-a very
expensive survey. The evils arising of taxable values in
this country it is hard to exaggerate, and yet we doubt
whether the American public is prepared for the enactment
here of the Code .Napoleon. We are at some loss as to
whether this writer desires the State or the insurance com-
pany to regulate the prices of insurance, but if he is the
practical underwriter he is assumed to be lie ought to know
that just what the standard article of insurance is worth
is a matter " which no fellow can find out." His fourth
specific is one which we should heartily endorse and should
like to see adopted. His seventh specific is also a very
excellent one if it can be carried into effect; and we take it
that, as a rule, the fire departments are not open to the impu-
tation which is contained in the eighth paragraph. As to
the rest of the prescription we should take it without
wincing.
THE LONDON FIRE BRIGADE.
We have referred elsewhere to the fact that the Metro-
politan Board of Works intend, during the coming session
of Parliament, to apply for power to raise a further con-
tribution from the London ratepayers and others towards
the additional expense involved in increasing the Metro-
politan Fire Brigade. It is very instructive to notice the
altered tone adopted within the last twelve months by those
intelligent orators who used to inveigh in unmeasured
terms at the meetings of the Metropolitan Board against the
presumption of those citizens of London who considered
that their lives and their property were insufficiently pro-
tected. One after the other they have abandoned the posi-
tion taken up originally by them, and now tacitly admit that
London has for a long time past been in grievous peril by
reason of its insufficient resources for the extinction of fires.
It is no longer contended that London was never so well
provided with a Fire Brigade as it is to-day; but it is con-
ceded that this is merely a minor question, and that, if it
was badly protected in the past, that is no reason why it
should continue to be so, either in the present or in the future.
That the Metropolitan Board have enormously increased
the Fire Brigade, both in men, engines, fire-stations and sig-
nalling arrangements, cannot be denied, but the point at issue
is, whether London possesses that amount of fire protection
to which it is entitled. One by one the advocates of the
theory that the citizens of London should rest and be thank-
ful have quietly been extinguished ; and now the question is
not so much as to whether the Brigade should be enlarged,
but where the money is to come from to pay the necessary
expenses. There is but one answer to this question. It-is
from the pockets of the ratepayers as a body, and it remains
to be seen whether the Metropolitan Board will carry their
obstinacy of last session into the Parliamentary session of
1884. It will be remembered that the Treasury were per
fectly willing to allow the Metropolitan Board to take the
powers to levy an additional halfpenny rate for the purpose
of increasing the Fire Brigade, but demurred to the clause
which provided for the taxation of the fire insurance com-
panies. The Metropolitan Board refused to act upon the
ground that half a loaf was better than no bread, and with-
drew their bill in dudgeon. This proceeding on their part is
strongly illustrative of their operations with regard to the
wood-stacking business—they grasped at too much and got
nothing. The fire offices will, of course, protect themselves,
but now that the necessity for an enlarged Fire Brigade
establishment is accepted in principle by the. Metropolitan
Board they will be compelled to get all the money Parlia-
ment is willing to grant, without attempting to dictate the
source from which it shall be derived. We venture to
suggest that the Board be advised in time, and thus save
themselves a good deal of unnecessary trouble. They must
assuredly be defeated in their attempt to impose a fresh tax
upon the fire offices, and they had better, therefore, take
their defeat in good part and in good time, rather than place
themselves in the undignified position they occupied some
months a."o.—Review, London.
MARINE INSURANCE CLUB.
English Exchanges mention the formation of a marine
insurance club at West Hartlepool, called the Hartlepool
Steamship Mutual Insurance Association. This is an associa-
tion of steamship owners, organized for the purpose of insur-
ing each other, the arrangement being confined to what are
termed "well-decked" steamers used in the India trade by
way of the Suez Canal. There are about 200 of these
steamers sailing from Hartlepool, with an average capacity
each of 1,500 tons. The amount of'risk is limited to $5,000
on each steamer.
A REASONABLE PRUDENCE.
Considering how liable young and middle-aged men are
to die, and how dependent their families are upon the re-
sults of their labor, the insurance of their lives is seen to be
only the exercise of a reasonable prudence. The average
mortality of men at age thirty is about eight per thousand,
at age forty about ten per thousand, at forty-seven about
twelve per thousand, at fifty about fourteen per thousand.
Among men from thirty to fifty, therefore, about eleven
families will each year be deprived of their chief support.
The ranks of such a Company will be more than decimated
every ten years.
It is said, with some show of reason, that the safest place
for a man is on board an express train moving at the rate of
thirty miles an hour—because statistics show so few per-
sons injured in comparison with the number carried. And
why ? Because great pains are taken to prevent accidents.
Everything, from road-bed to patent brakes, is studied with
reference to safety. Were it known that any reasonable
precautions for the safety of the passengers were neglected
there would be an outcry of public indignation. Railroad
Companies are held to account in heavy damages for injury
to passengers, because it istheir business to carry them safely.
So it is eve''y nans business to carry his family safely
through the period of their dependence, and to trifle with
interests so sacred, by putting them to unnecessary hazard,
is to incur a very grave responsibility. When a man does
his best there still remains risks enough ; but woe unto him
who neglects a reasonable precaution against dangers that
are wellknown.
When one goes on board a steamboat and sees the fire-
buckets and axes, the life-boats and life-preservers, and then
reflects how seldom there is any occasion to use them, it
seems like a waste of money—a provision against danger
out of all proportion to the danger. Thousands of passen-
gers are carried every year, and not one of them uses a life-
preserver ; th elite-boats rot at the davits ; but who would wish
o travel on a steamboat that neglected to provide such things ?
The truth is, when such things are needed it is a matter of
iife or death^ and people realize that it is better to provide
them ten thousand times where they may prove unnecessary
than to be without them once when they need then.
But no large company of persons journey through the
world long before some of them feel the need of life insur-
ance. Every year the shadows of death fall upon the homes
and hearts of more or less, It is only a rsasonable precau-
JANUARY, r884.
INSURANCE SOCIETY.
^
tion for all to insure. The cost of insuring is not so great
that it deserves to be compared with the sad results to the
families of those who die uninsured.—The London, Eng.,
Spectator.
UNITY.
The last clause of the old adage, " In union there is
strength," seems to have too little bearing with fire under-
writers generally, and the motto, " Not thy way, but my way,"
appears to have superseded it. There are divers opinions
advanced as to the best course to pursue to regulate the
rate of insurance, and for the prevention and extinguishment
of fires. Each underwriter, if he is one of large and varied
experience, not unnaturally thinks that his opinions on the
subject at hand are unquestionably the best, and the con-
sequences are that contention not infrequently arises, good
resolutions and voluntary pledges are broken, all of which
results in the wrong remaining unremedied, or, if remedied,
the advanced rate is not universally adhered to, nor is the
adoption of the measures for prevention or the means
for extinguishment rigidly enforced. As a most forcible
illustration of this fact we might mention the many tariff
associations and local boards of underwriters and other
similar organizations that have been launched upon the fire
underwriting field with all the blaze and splendor of a
friction match, which, like the match, have suddenly burned
away and expired for the want of harmonious effort and
united action. This state of affairs not only exists in the
associations of our large cities, but in the organizations of
the smaller cities and towns, and even in those under the
best management we find jealous rivalry and five-cent-piece
quarrels, creating discord and preventing harmonious action.
The question of legislation has long been an important
issue, but until each company can be absolved from its
bigoted desire to be the figure-head of the fire underwriting
life-boat, and until each underwriter can be freed from his
delusion that he must necessarily pull the bow oar in order
to insure the success of the boat, but little progress will be
made in the legislating line from action based upon this
eddy of inharmony and confusion.
It is an easy matter to tell wliat should be done, but the
next thing is. to do it, and as but little can be accomplished in
minor affairs without working in unison, then how much
less can be achieved in a business so important and ex-
tensive as fire underwriting, where consistent effort and
combined action are wanting ? This is what the business
needs, and must have in order to make any material
advancement toward the desired end. The Standard.
ASSESSMENT INSURANCE.
(From the Post Magazine, London, Eng.)
We quote the following from a long article devoted to
"Assessment Insurance in England" in a recent issue o
our esteemed contemporary, the Post Magazine :
" Fortunately, in England, assessment life insurance is
practically unknown. It is based on an entire fallacy, and
can only lead to disappointment and loss to all those who
are entrapped into it. The principal upon which assess-
ment companies seem to be based is that the members do
not subscribe a fixed annual premium,but they have to pay
irregular calls whenever the death claims render calls
necessary. In fact, they are very similar to the mutual
marine insurance clubs, not uncommon in England, the
members of which, instead of paying a premium fixed
beforehand, simply subscribe the amount of the losses when
that amount is known. When applied to life insurance this
principle is at first very captivating to ignorant people.
During the early years the calls on the members are
naturally very small, because the members are compara
lively young, and the death-rate is therefore light; but as
time passes on, it being an inherent law of human mortality
that the liability to death increases with age, the claims on
the fund must become larger, and the assessments of the
members must inevitably rapidly increase. Therefore,
while at the beginning the assessments are much less than
the ordinary life insurance premiums, in the end they will
become much greater, and 'if it were possible for the
assessment society to survive long enough—a very doubtful
supposition—the members in old age would be compelled to
make enormous payments."
ONTARIO MUTUAL LIFE ASSURANCE COMPANY
We are much pleased to note the rapid progress being
made by this Company. From being one of the smallest
companies in the country, it is fast becoming one of the
largest. Its financial position is thoroughly sound, and it has
never yet contested a claim. Its assets at the close of
1882 were $423,598, its income $176,337 , and its surplus
$32,116. During that year it issued 1341 policies for $i,-
720,550, and had at its close $5,429,478 in force.
It is the only.purely Mutual Life Company in the Dominion
and it naturally gets the support of many who prefer purely
mutual life assurance. We wish the Company every suc-
ANNUAL STATEMENTS.
Hartford Fire.—This staunch Company closes the year
188-? with a gain of 8200,000 added to its assets, which stand
at §4,541,239.82. Its gross premiums during 1883 were
$2,600,000, and its net premiums $2,304,000. Its net earn-
ings have been about $450,000.
jEtna Fire.—Shows by its report at the close of 1883,
assets to the extent of $9,192,643, a gain of $I38,o33.tor the
year Its gain in surplus has been $76,276, in addition to
which it has paid its stockholders dividends amounting to
$720,000. Its surplus as regards policy-holders is $7,269,-
458- _____
ROYAL EXCHANGE ASSURANCE CORPORATION.
In the balance-sheet of the Royal Exchange Assurance
Corporation for the year ending April 30, 1882, appeared
the considerable item of " unclaimed dividends, ;634,9°8-
i4S " and the amount was fractionally increased in the
accounts of the present year. But a few months ago there
appeared a claimant for about ,£3,600 of this sum, in virtue
of the accumulated profits of 160 years, on a simple ,6100
of stock, which had belonged to one William Brydges, of
Gray's Inn Square, who died in 1764, and the claimant
succeeded in making out his title. This case has been
quickly followed by two others, one of which we reported
on the 24th lilt., the same amount of stock being in-
volved, and the title, which was held sufficient, having to be
brought down from Michaelmas, 1725, the date of the last
dividend received by the original proprietor. The third
case will be found reported this week, and the corporation
has again found an owner for some ,£6,600 more. Ihe
original proprietor having been owner of £200stock from
the first formation of the society, and becoming bankrupt in
the same year (1720), it would appear that his assignee
fought shy of this particular asset, which was at that time
,what the learned judge called "onerous property in res-
pect to the liability attaching to the share in a then untried
venture It is likely that the saleable interest was very sma
then—no 300 per cent. premium, as now quoted. In all
i6
WSUK.AMCE sowry.
JANUARY, i§§4.
the cases, the Royal Exchange Corporation appears to have
acted with the greatest propriety, throwing no obstacles in
the way of the several claimants, except such as were abso-
lutely necessary to exclude any ' bogus ' element from the
adventures. That the publicity given to the first trial led
to the second and third claimants coming forward is hardly
open to doubt, and it is quite within the range of possibility
that there will be further manifestations, some of which may
be of the Arthur Orton type, and, therefore, it is to be
hoped that tlie attitude of vigilance will be maintained
It must not be supposed, however, that all this large fund
is of ancient standing, the larger portion consists, probably
of fluctuating balances of uncalled-for dividends left by easy-
pomg proprietors in the safe-keeping of an old and wealthy
institution.—London Insurance Post.
Mr. A. W. Dodd of Moncton, N.R, who has for some
years acted as Special Agent and Adjuster of the Western
Assurance Company for the Maritime Provinces, has been
appointed General Agent of the above Company for the
United States. This is a move in the right direction, and one
winch we venture to predict will be found profitable for the
Western. Mr. Dodd is a hardworking, able and enterpris-
ing Underwriter, a good adjuster, and his genial and straight-
forward disposition will make him a favorite across the line
OBITUARY RECORD.
Mr. James Davison, Manager of the Royal Canadian
Insurance Company.—It is with much regret we record the
demise of Mr. James Davison, which took place in this city
on the 25th of December ult., at the age of 69 years and
7 months. It will be remembered that he got a stroke of
paralysis some ten days prior to his death.
Mr. Davison was a native of Bedford, England, he came
to this country about the year 1850, and remained in
Quebec a couple of years. He was Manager of the Mont-
real Agency ot the Phcenix Fire Insurance Company of Lon-
don for twenty-six years, and about five years ago he became
manager of the Royal Canadian. He preserved an
unblemished reputation throughout his official career, was
an able, efficient and conservative underwriter; a worthy
honorable, unobtrusive and conscientious man. Mr'
Davison did good work for the Royal Canadian, and we
wish there were more underwriters as careful and conserva-
tive in the Dominion.
He was for a number of years an office-bearer in Cotte
street Presbyterian Church. His bereaved family have our
sincere sympathy.
IN MEMOKIAM.
We record with regret the death of Mr. Francis Homan
Berry, of congestion of the lungs, on the 6th inst., at
ioronto.
Mr. Berry came to this country in '72 from Dublin,
which was his native city, and where for some time he
acted as assistant-secretary in the head office of the
" National Assurance Company of Ireland:' In Canada
he was employed as Inspector, successively, in the Liverpool
and London and Globe, " Stadacona," " Ottawa AgricuL
tural," and " Quebec " Insurance Companies, and latterly
in the "Royal Canadian" and "British America" at
Toronto.
Intelligent, warm-hearted, and generous, he made friends
of all with whom he came in contact. The failings of his :
life are buried with him; we can remember of him only '
pleasant things—kind words and deeds that can never be I
forgotten.—A kindly face is indeed gone forever—an honest j
heart stilled—he sleeps his last sleep !
COMMUNICATIONS.
All communications to be addressed to the Editor, INSUR
ANCE SOCIETY, and correspondence to bear the name and
address of the author, not necessarily for publication, but as
a guarantee of good faith.
The publication of a communication does not by any
means commit the paper to the sentiments expressed there in;
but a fair hearing will be allowed for all sides of the question
we may consider of sufficient interest tc the Insurance public,
TORONTO LETTER.
DEAR EDITOR,
; The great libel suit is over! Citizens Insurance Co. versus
1 " Budget " et al., verdict for - Citizens " Co.
1 Not the visit of Lord Lansdowne to our city, nor the late Royal
; Canadian Yacht Club ball has stirred us up half as much as this inter -
esting and exciting case. For four days, from Thursday the loth to
Monday the I4th inst., has the case been on, and during that period
every insurance man in Toronto of any note whatever has visited the
Court room at least once. And once in, there was such a fascination
. about the proceedings that it was difficult to tear one's self away, until
the Court rose-that is Judge Rose. Such a turning up of the affairs
of an Insurance Co. has not occurred for many a day in public.
General Manager Hart was in the witness box from 11 o'clock of one
day until four p. m. of the next. It must be allowed that he gave his
answers with excellent discretion. Too much inclined, perhaps, to
branch off and make speeches, as the Defendant's counsel said, but that
was an advantage, and for his Company's interest after all. There was
plenty of fun mixed in with the business going on. More than once,
judge, jury, counsel, witnesses and audience were provoked to laugh at
Manager Hart's smart sayings. The display of legal talent was im-
mense, and the pithy remarks and scintillations of wit were abounding.
There was a trunk full of books and papers, bags of legal documents,
statements from this one and that one " under oath " circulars, letters,
etc., etc. The Counsel's table was piled high with the materials of
war—offensive and defensive. Talk of your Ice Palace and Winter
Carnival, as a sensation ! I can assure you this suit has outshone you
in the way of a winter entertainment, for we have combined instruction
with our amusement.
If you don't get a libel suit on your hands before long, I shall think
you do not amount to much, and are too slow.
Why the Budget now, without any pretension as to representing the
blue-blooded aristocracy of the Canadian Insurance World, has had
two suits already—a summer and a winter one, so to speak. Surely
you can do as well. Certainly you did your best, perhaps, in tlie
Standard case, but there was no metal in your opponent. I seriously
believe tliat after this the Budget will have a boom that will astonish
us. What have you to set off against their enterprise ? True you made
a point in the Standard case, and barked up the right tree, but there is
a large notoriety and prominence to be gained in a libel suit—even a
lost one (when the libel, as in this case, is not such a wicked and mon-
strous one after all), that is of great value, if properly made use of.
It is an art to extract benefits from your misadventures. Look at
Chicago Society, and take a lesson from that brilliant western city.
For a lady, there, to have been once divorced is to become a mark of
exceeding interest, but to have brought it about twice, whilst still
young and interesting, is to rise in the social scale to'an elevation
simply sublime.
Get a libel suit on by all means. If you back me up I can arrange
the preliminaries in a jiffey. Take this all in good part—it is the
advice of a friend. As your correspondent, too, I do not like to see
rival journals outshine you.
The verdict in favor of the "Citizens " has occasioned much com-
tnent. All the insurance " experts " called in on behalf of the Budget
<rere obviously not in favor of the Company, and one or two displayed
JANUARY, 1884.
INSURANCE sooinrr.
^7
a certain hostility to it in their evidence. They showed partiality in
manner if not in matter towards the defendants. The "Citizens"
won their case without the aid of friendly testimony. They relied on
the statements and figures they put in evidence, and won on these,
which was, I am sure, satisfactory to them. Notwithstanding, the friends
of both parties must greatly regret that the action was ever instituted.
What lasting good can come of it to either ? The " Citizens " has had
all its affairs exposed to criticism, present and future, thus putting it in
the power of rivals to twist a meaning out of its figures, adverse and
perhaps unfair, to the Company, whilst the Budget by the mouth of
those unfriendly to it will be styled a libellous paper, a name which it
does not deserve, verdict or no verdict, and has not shown a tendency
to deserve.
Mr. Justice Rose in his charge to the jury dealt lightly with the
Budget people, but emphasized the evidence as against McCord, the
co-defendant and author of the letter which caused all the trouble.
As is usual in insurance cases of the kind there was a lot of what is
known as "poppy cock" (is that the right word ?) given off, especi-
ally as to rates. " The proper figure," the " Living rate," the
" Tariff rate," " Cut-throat rates" were mentioned, and which, when
explained, did not, I am sure, tend to elevate the profession in the eyes
of laymen. For install.—;, it was urged in proof of the alleged " reck-
less underwriting" of the "Citizens" that it accepted the insurance
on the Public School Buildings in Toronto at .63 for three years. The
rate being .80, i. e., the local agents of this city forming our Board,
from their combined experience found that .80 was the " living rate "
on Public School Buildings. To support the .80 view, the Governor
General of the " British (and U. S. ot) America " Insurance Company
was called up by the defendants. He said his Company would not
accept under .80. Wanted the best rates going, etc. Said .80 was the
" living rate, etc." On cross-examination he admitted that whilst this
" living rate " was the correct thing to charge, that outside Toronto,
(Montreal, perhaps) his Company might accept similar risks at a lower
figure—didn't cost so much to live in Montreal as in Toronto, you see.
He also admitted that they generally charged lower rates in Montreal
than in Toronto. The laymen present could not understand these
things. Poor laymen !
It is no news, perhaps, to tell you that the " Sovereign " has ceased
to do business—is going on the retired list, without a pension. As the
"Isolated Risk" Insurance Company, there was a good chance for
the Company to have made money, but "isolated" with them came
to mean detached, so they called a risk isolated with lo feet between it
and another. The "isolated" rates were too low for the losses in-
curred. So it changed its name and the management, still struggling
with adverse fortune ; then they changed the management again, and
went to joint housekeeping with a richer neighbor, the " London and
Lancashire" in the "Mail Buildings;" but in such a conservative
stronghold, Mr. McKenzie's Reform Company could not long survive
its misfortunes. Even the " living rates " have not saved it. Didn't
get a large enough dose, perhaps. The "Glasgow and London Re-
assurance Company, I believe, are likely to inter the remains.
On the 23rd instant will be held in this city the annual general
meeting of the Canada Fire Underwriters' Association, so that we shall
be favored with a visit by several Montreal insurance magnates at that
time. Much interest is felt in this meeting, as many matters of impor-
tance will come before the assembly for consideration, not the least
important one either will be the introduction of a tariff of rates for
Province of Quebec, which will include Montreal. You ought to have
a share in the benefits of a minimum tariff as well as Ontario. We
really desire to do the right thing by you, you see.
The timely lielp -and succor that might have been afforded by Life
and Accident Insurance to the families of the killed, and to the
wounded themselves in the late lamentable railway disaster near the
Humber, is painfully evident when you consider that of the 29 dead,
husbands and sons, the respective families are left without support
other than that collected from the public charity, pending the "com-
pensation " to come from the G. T. R. Co. I understand that the
representative of a prominent accident company had been in communi-
cation before the disaster with these very men and their fellow
employees at the Bolt works, with the view to granting special terms
for the insurance of $1,000 on each man, with weekly allowance for
injuries, and that the negotiations fell through because the men formed
some kind of benefit society among themselves. Poor fellows, I fear
in such a wholesale slaughter their surviving fellows could do but little
to relieve the needs of the widows and orphans.
Yours,
ARIEL.
Toronto, I^th January, 1884.
LUMBER ADJUSTMENTS.
The Editor INSURANCE SOCIETY.
I have read with much interest your article on " Lumber Losses,"
which contains some valuable information but is not, I think, correct
in some of its conclusions. In this as well as in all other losses it is
necessary first to consider that a policy of fire insurance is a contract to
indemify, to an extent not exceeding its amount, for the loss and dam-
age by fire, consequently it is necessary to establish the exact amount
of the loss and damage inflicted by the fire, pure and simple; the
actual cost of the lumber may, or may not, be the measure of the fire
loss, as in the lumber business there are so many contingencies to be
taken into account which may seriously affect the problem.
There are two, separate and distinct factors to be taken into con-
sideration, each of which is governed by circumstances some of which
are foreign and others of which are local. In the first place, as no
stream can rise above its fount so lumber cannot be more valuable
than its price at the place of distribution (Albany or Chicago), less the
cost of carrying and handling, so that, taken for Ontario generally and
for Western Quebec, the Albany prices, less the various charges between
the place of the burning and Albany, and allowing a fair margin for
profit of manufacture, you produce a fair measure of indemnity to the
manufacturer. This problem is affected by the rise and fall of cost of
transportation and the habits of shipment of the parties, because if
the assured has sufficient means to enable him to hold his lumber, he
will not ship any during the months when freights are higher than the
average, or, if he is dependent upon the market for funds, he will be
entitled to a consideration of the averages in freight as in everything
else.
In the second place, the fire loss may be arrived at approximately
by finding the average cost of production of lumber of tlie like grades
and qualities; but the actual cost to the assured may differ very widely
from the average, and so may be as measure of his fire loss; suppose,
for instance, each of two persons, A and B, purchases two hundred square
miles of timber limits of equal quality for an equal price,—A has the
good fortune to preserve his timber from forest fires, has good seasons
for cutting, hauling, driving, booming and towing ; gets his men at
fair wages, has efficient foremen and honest purveyors who purchase
and deliver supplies at low rates. B is not so fortunate, half his limits
are destroyed by prairie fires ; the ground is bare half the winter, whilst
during the other half the snow is too deep for good hauling, then, be-
ing light and recent, the snow goes off with a flood which makes the
streams too rough for a while and then too shallow for driving; a storm
strikes the boom and scatters the logs, contrary winds prevent
the towing, wages are high, foremen are inefficient, purveyors are
ignorant or dishonest, and yet, although all B's misfortunes added to-
gether do not increase the value of his loss by one cent although they
nearly treble the cost, so that, without cutting one of the logs into lum-
ber he is a ruined man, but, if he cuts his logs into boards, and adds the
cost of cutting and piling to the cost of his logs, and then some green-
horn of an adjuster takes the combined cost as the measure of the loss and
damage by/ire, he saves friend B from bankruptcy at the expense of the
insurance company.
There are lumber producers whose business is managed by a system
of Brigadier Generals with high salaries and velvet slippers, whilst there
are others whose business is managed by those who Jead the men to
work and take part in everything difficult or dangerous, so that, by their
sk'ill and intelligence, most of the contingencies of the business are
avoided or obviated,
^
WSVKA^tCS S6ClETy.
JANUARY, 1^4.
You will perceive at a glance that whilst all these things affect the
cost of the lumber, yet none of them affect the value, consequently we
must go outside of them, yet take them all into consideration, in order
to arrive at the proper cost of the lumber, which may, or may not, be
the average value of it.
A proper adjustment would go from both ends for proof of amount
of fire loss ; working from the purchase of the limit to the piling of the
product in one direction, and from the (say Albany) market back to the
lumber pile. The real difficulty in lumber losses arises from the loase
way in which insurances are effected by both insured and insurers, both
of whom enter into contracts without any understanding or agreement
as to their interpretation, neither of them providing for the contingency
which alone causes the insurance to be desired or granted, and then
when the contingency does arise, the individual adjuster has to bear the
brunt of the dissatisfaction arising out of the mutual carelessness.
In most districts the adjustment of lumber losses can be facilitated
by adding to the current market value of logs in the locality the
value of sawing and piling. In some of them a system of mutual insur-
ance against theft and error is established and known as the Booming'
Towing and Driving Company, in which the Company is liable for all
missing logs at an established rate mutually agreed upon by all the
lumbermen interested ; but, as these lumbermen well know, there are
togs and logs. One lumberman will cut virgin limits of clean, healthy
pine, excluding all logs below fourteen inches, whilst another will be
clearing up old timber limits and running the logs into the tops, so that
one will produce logs making from five to eight per cent. of culls with
sixty per cent. of merchantable stock, whilst the other produces logs
making from twenty to thirty per cent. of culls, with twenty per cent.
of strips and scarcely any merchantable stock ; so that the quality of the
logs is a very important factor, a factor which is not at all demonstrated
by the cost, as the inferior logs, being scattered sparsely over an exten-
sive area, may cost more than the closely growing good ones, by reason
of the cost of cutting roads and drawing.
If it were possible to get everybody to understand and confess that
a " policy of fire insurance is an agreement to indemnify the party
against the actual loss or damage by the fire to an extent not exceeding
the amount of the policy," then the difficulties of adjusters would be
lessened, but unfairness on one side excludes the profit which has been
made by the insured, whilst unfairness on the other seeks to be recouped
for losses which have occurred independently of the fire.
I am aware that some shallow thinkers style these principles of ad-
justment " theories " and point to bankrupt stocks as justification, but
they forget that whilst an ordinary stock is never worth its cost, because
the principle of selection has reduced the proportionate value of the
remaining stock, yet the value of a bankrupt stock has been demon-
strated by an actual purchase and sale, and if the purchase and sale
have been honestly conducted the price has been a fair measure of the
value ; and yet there are men who, ignoring all principles, will demand
the cost of an open stock, and the original cost of the olla podrida of a
bankrupt stock whenever a fire occurs, refusing to acknowledge the
fact that the policy is not a perfector of profit but of indemnity for loss.
Faithfully yours,
HENRY LYE,
Adjuster.
The above communication, just received as we go to press,
we must therefore reserve our remarks for next issue.
EDITOR.
HALIFAX, Jan. 10, IS84.
To the Editor of INSURANCE SOCIETY.
DEAR SIR,—A perusal of Mr. Campbell's letter published in the
last issue of your excellent magazine, in which he thanks you for your
expressions of confidence in the management of the Dominion Safety
Fund which appeared in the previous issue, leads me to send for your
perusal a copy of one of its leaflets setting forth its plans and also a
circular which purports to Iw an examination of the certificate which
it issues. I do this, and make the comments contained in this letteir,
partly because Mr. Campbell says, " Our leaflets and other literature!
with which all our agents are furnished, set forth fully our system of
insurance, and no agent is authorised to promise anything not contained
therein," and partly became I feel sure you would have doubted the
honetty of the Society had it been your privilege to have examined
this literature previous to publishing your comment* on the letter
written by "Watch."
You will observe that the D. S. F. circular claims for the sytem
" simplicity, safety and economy ; " that by it " the dangers and
defects" of the old " Reserve Plans " and the weakness and uncertainty
of Co-operative Plans are alike " avoided " and that it gives " Endow-
ments to Persisting Members."
Leaving its " simplicity, safety and economy " for a future letter I
call attention to the fact that it claims "weakness and uncertainty "
as being the elements of the Co-operative Plans. It would certainly
prove very interesting reading for your subscribers in the Maritime
Provinces if Mr. Campbell would rise and explain any material differ-
ence there exists between the " system of insurance," and methods of
the D. S. F. and the ordinary co-operative societies, further than such
methods as are adopted to enable that Society to practise its deceptions
on an over-credulous public with a greater showing of good faith.
With regard to the "Endowments to Persisting Member*" the
Society can have no other object in advertising this admirable feature
than to lead an over-credulsus public to beli ve t iat it is something
real. Let us examine the endowment feature as set forth in its contract
and leaflets, and we will find that when in addition to the $300,000
Safety Fund, there shall be an amount greater than that contributed by
the class of any one year to the said Fund ; and when such class shall
have been reduced so that such amount shall be more than sufficient to
meet the full face of all the certificates then in force, the several members
holding such certificates shall be entitled to be paid the full face
thereof as endowments on their surrender. Let us test the chances of
class 82—in which year 668 certificates are reported to have been
issued, necessitating a contribution to the Safety Fund of $6,680.
When the full amount of the Safety Fund shall have accumulated, and
there is an excess of $6,680, and when the certificates held by this class
have been reduced from 668 to 6, or when less than one per cent. of
the original certificates remain in force, if the holders thereof become
aware of the then existing state of things and surrender them to the
Society, they shall be entitled to their full face value. As there is
nothing said about the order in which the various classes shall receive
these unparalleled advantages, we presume the class of any other year
is just as likely to be the fortunate one to be first served as that of 82,
thus postponing in the imagination these wonderful results. What
would occur if various classes should at the same time occupy a posi-
tion entitling them to such advantages witli a surplus fund inadequate
to satisfy the whole we cannot surmise. For instance, what would
occur if the number of certificates in class 81, in which year 345
certificates are reported to have been issued which were entitled to
participate in the benefits of this fund, had been reduced to 3, and in
class 82 to 6 at the same time, and the surplus should be less than
sufficient to satisfy both classes ? These nine certificates might be held
by three solitary individuals, as the returns show on page 162 that one
person may hold three certincates. Were this to be the case a member-
ship of 605 persons, comprising the total number of persons forming
classes 81 and 82, would require to be reduced to a membership of 3
persons or to ^ of one per cent. of the original number before
" Endowments to Persisting Members " would become available. So
much for the Endowment feature.
I have only further to add at this time that literature so calculated
to mislead the unwary could emanate only from a source such as the
one from which emanated the statement of the affairs of this Society
published by Prof. Cherriman in his last report, which gives no account
of admission fees or fees for medical examinations, both legitimate
items of expense which regular companies are bound to account for.
An agent who could not from the circular which I send you alone
find sufficient to justify all that was charged by " Watch," and so dis-
ingenuously passed over by Mr. Charles Campbell, would lack much of
the astuteness of the average representative of such Co-operative frauds.
Very truly yours,
EXAMINER.
The enterprising editor of the Argus has sent us a copy
of the Argus extra, containing a record of events of the past
year.
The Equitable Life intend to make $100,000 the max-
imum amount of insurance allowable on a single life, instead
of $50,000.