VI. FIRE BUSINESS. IMMEDIATELY after incorporation, Fire Insurance suggested itself to the directors. The two local mutual companies insured buildings alone; and no instrumen- tality existed to offer indemnity to merchants and manufac- turers for their losses by fire on land; if the company could take all the risks of the sea, with fire included, why should it not take the risk of fire on land; and while protecting the merchant by their policies on his sea ventures, could they not offer him a policy to cover his ventures when safely landed and stored in his warehouses. At a meeting of the directors on 28 April, 1794, it was "proposed to form a Plan for Insuring Goods, Wares, and Merchandises in Dwelling Houses, Warehouses or Stores and upon Buildings, against the Risque arising from Fire"; and Messrs. Swanwick, Blod- get and Fry were appointed a committee to consider the subject. The committee reported in favor of the plan on 11 July, and "on the question, will the Company insure the full sum the Goods in Store are valued at, or two-thirds of said Value, it was determined in favor of insuring the full sum, by eleven votes against one." But the summer, with its renewed visitation of yellow fever, prevented action. On 13 October, the "Proposals for Insurance," or conditions as we now style them, were adopted and ordered printed and advertised, and the new fire policy was approved on 62 A HISTORY OF THE 10 November. On 24 November, William Garrig-ues was appointed Surveyor of Houses, and on 8 December, a badge "was adopted to be attached to houses upon which policies were to be issued, agreeably to the custom of the two older mutual companies of the city, which was a wavy star of six points, cast in lead, and mounted on a wooden shield; and at the same meeting it was determined not to make any insurance on frame Houses or Stores, or on Goods in either of them; this rule was not adhered to, however, as by the minutes of 27 March, 1798, reference is made to the practice of insuring wooden buildings, and the question raised how far it will be proper to continue it. On 10 December, 1794, the first two policies were issued, namely: No. 1. William Beynroth, on German Dry Goods, in the House No. 21 High Street, for three years, for $8,000, at 30 cents per annum, the premium being $64, which was on the scale of two and two-thirds years' premium for a term of three years. 'No. 2. Lawrence Harbert, on Dry Goods, $5,000, and on Furniture and Wearing Apparel, $1,300, in the House No. 161, on the North Side of High Street, for one year, at 30 cents. The demand for the fire policies was limited, but the amounts sometimes written on a single policy made a fair average of business. On the 22 December, No. 6 was issued to John White- sides for $25,000, being $23,000 on Linen, Woolen and Silk Goods, and f2,000 on Furniture and Wearing Apparel, "in the Dwelling House and Store adjoining, both included in No. 136, on the South Side of High Street," for one year INSURANCE COMPANY OF NORTH AMERICA. 63 at 60 cts. 'No. 7 was issued on the 31st to Wells and Morris, on Ironmongery, Saddlery and Hardware, in the House ]STo. 135 High Street, for $16,000, at 45 cts. On 19 January, 1795, the Secretary was directed to have printed 5,000 of the "Proposals," to be distributed at the houses of the Inhabitants of the City, a stroke of activity not common in corporate circles of that day. The badge of a star was shortly disused, for we find on 26 December, 1796, the adoption of an eagle rising from a rock, as an alternate with the star, "the Insured to have their option of the Badges"; the eagle we yet see on some of the buildings in the eastern part of the city. But one of the star badges is known to exist, and that was recognized only six years ago on the building now ~No. 229 south Front street, in which, upon examination of the policy register, it was found that Policy 'No. 4 covered $8,000 on wines and teas, for one year, at 30 cents. The insurances at first were exclusively on town risks; but after a consideration of an extension of this branch, it was agreed on 9 March, 1795, "that Brick or Stone Houses within ten miles of the City (in Pennsylvania), may be insured against fire." A year elapsed, when greater exten- sion was given, and 18 April, 1796, the Directors "having considered the expediency of affording the Public an opportunity to make Assurance on Buildings" from Fire beyond the limits heretofore prescribed, they determine to "allow tlie same, provided they be situated within the United States, and premiums adequate to the risk in the opinion of the President and Committee of the Week be paid for the same. And provided also, however, that on hazardous in 64 A HISTORY OF THE the vicinity of Philadelphia, and denominated of the first class, no single risk shall exceed Six Thousand Dollars unless situated in a principal Town or City, nor he accepted at a less premium than a half ^ cent. per annum; and pro- vided also, that on hazards of the second class, no creator risk on a single building shall he taken than four thousand Dollars, and that no less a premium than three-fourths ^8 cent. annually." And "That the Insurance on Wooden Buildings shall not he considered to he precluded by any article in our printed proposals, but that wheu two or more wooden buildings adjoin, a larger premium shall be required than is demanded on a single wooden building." Prior to this the same risks beyond the line sanctioned 9 March 1795, had been accepted, and on 29 February, it was resolved, "the Insurances which have been so made be and they are hereby approved and confirmed." On 27 February, 1798, "the Board is of opinion that it is not expedient to have an Agent at Charleston authorised to take Risques against Fire," which minute points to the first offers of a distant agency. On 19 April, 1798, a total loss on a risk on Maiden lane, ^ew York, was suspected to be of incendiary origin, and a reward of ^1,000 was offered "for discovering and prosecuting" the supposed incendiary, which was duly advertised in the JSTew York papers. On 16 January, 1804, the president referred to the board "the demands of applicants for insurances against fire to have the premiums reduced" which the board were not prepared to order, leaving them to the president and the committees to make according as they should deem it expedient where circumstances would fairly admit of small
INSURANCE COMPANY OF NORTH AMERICA. 65 alterations, "so, however, as not to go below 25 cents for $100 per annum." This doubtless may have been induced by the increased competition of the two new companies, the Union and the Phoenix, who as well added fire underwriting to marine, and who began operations before incorporation was consummated. On 19 May, 1807 the society for protecting property from loss in case of fire made application for assistance, and the president was directed "to pay as a Contribution to said Company the sum of $50." This institution was the early forerunner of our present Fire Patrol, but of its work and its duration we find here no further trace. Policies had been from time to time issued covering properties in distant localities where the applicant had been known to the company; this led to extending the business more systematically; and on 6 October, 1807 Mr. Alexander Henry presented an address " on the subject of extending Insurances against Fire to Lexington, in Kentucky," on which Messrs. Henry, Taylor and Read "were appointed a Committee to consider as to the benefit and propriety of extending insurances against Fire generally to other Cities and Towns in other States beyond what is now customary to take." On 3 Xovember the committee's favorable report was adopted, and they were directed "to digest and report such limitations, regulations and restrictions as it may be thought prudent to recommend." And on 1 December, the board adopted their resolutions, which were carefully drawn, looking to a cautious business, one of which em- powered the president "to appoint suitable and trusty persons at such places as he shall think advisable to act as 66 A HISTORY OF THE Surveyors and Agents of the Company," and "to instruct each agent of the Company as to the execution of his trust and furnish him with such information as he may think proper." This was the beginning of a fire agency business which half a century developed into such great and profit- able proportions. From a little manuscript book entitled "Fire Agents," in President Inskeep's handwriting, recently found in the files of the company, we obtain some particu- lars of this agency work which are worthy of record here. By this we learn on 22 January, 1808, Charles Ellis was appointed agent at Burlington, James Ewing at Trenton; on the 23d, Andrew Boss at Washington; on the 26th, Ephraim Holmes at Bridgeton; and at "Towns Westward," Jesse Hunt at Cincinnati, Peter Lee at Washington, Thomas McCall at Lexington, Jeptha Dudley at Frankfort, John Bustard at Louisville, Thomas Howard at Richmond. On 3 February, among others, Jacob Hay at York Town, John Creigh at Carlisle, Edward Crawford at Chambers- burg, Robert Brown at Greensburg, James M. Caldwell at Wheeling, John McCoy at Chillicothe, Doctor John McDowell at Steubenville, William Tate at Nashville, and on 6 February, Robert Boggs at :New Brunswick. Mr. Dudley held the agency at Frankfort for thirty years, his resignation being noticed at the directors' meeting of 8 0 t—' January, 1838. On 20 February, Mr. Inskeep wrote to Marks John Biddle, Esq., of Reading, "I take the liberty to send you some of our Proposals, form of a survey, and letter of appointment for an agent, which I will thank you to direct to some suitable person in your place who will act as such for this Company. I should be pleased if you INSURANCE COMPANY OF NORTH AMERICA. 67 would accept the agency yourself, but this I can scarcely hope, as the magnitude of your own concerns will probably forbid it." Mr. Biddle selected and appointed Mr. Frederick Fritz, and this was the beginning of an agency which to this day has been continuously filled with faithful and competent representatives. * This extension of the company's business found a motive in the establishment by the Phoenix Insurance Company of London of agencies in this country; and as their experiment had been successful, the time had arrived for the ]N'orth America to secure the like footing at distant places. But the Phoenix may have resorted to flexible rates when this home company entered the agency field, if we can so con- clude from a letter Mr. Inskeep wrote 14 March, 1808 to
* The following is the first letter of the president to the new agent, and dis- plays the caution with which the " agency business " was conducted. " 29 March, 1808. I am pleased to hear from Marks John Biddle, Esquire, that you have accepted the agency of the Company for the Borough of Reading. I have received your survey of Mr. George Keim's property, which is very minute and circumstantial. The risque would have been a very good one was it not for the circumstance of the Oil and Paints being kept in the cellar, and the Tavern being so nearly situated. I will, however, agree to take the Risque at 40 cts. per $100, for one year—should the premium be agreeable, the amount as per statement at foot may be remitted, and on the receipt of which the Insurance will be binding. The policies shall be forwarded by Post or otherwise as may l)e directed." These were numbered 5,003 for $1,000, " on a Stone House or Building, Kitchen and Store adjoining and belonging thereto, Situate on the north side of Penn Street, in the Centre Square, near the Court House, in the Borough of Beading," and No. 5,004, for $5,000, "on Goods or Merchandize contained in the one and an half Story Store adjoining the assured's Dwelling," all at 40 cts. for one year. Both had the following endorsement: "Notwith- standing the foregoing restriction, It is agreed that the assured shall have permission to store in the above named Store, Gunpowder, Spirit of Turpentine, and Oil, together with such other articles in small quantities as are usually kept in a retail Country Store." Charge was made for a badge of $2, and for two policies, $2. The only remuneration to the agent being his survey fee from the assured, i 68 A HISTORY OF THE Mr. Ewing at Trenton, viz : "I am aware that the Phoenix Insurance Company of London do take risks both in and out of this City at a lower premium than we do in this office, and that without much investigation. We find, however, that a decided preference is given to our office at higher premiums than they generally ask, the reasons for which, people must judge for themselves—it does not belong to me to assign them." The Phoenix came here in 1806, but withdrew its agencies in a few years, but re-entered the United States in 1879. One of its original "Proposals'" issued in Philadelphia, was found in 1880 among the papers of the N"orth America, where it yet remains. In 1807 the Pelican Insurance Company of London was represented in ~New York, but it was without any representative in Philadelphia. The expiration of fire polices was notified to policy- holders by advertisement in the daily papers, in monthly lists; whether the assured was a citizen of Philadelphia or of Charleston, his reminder was obtained only through the Philadelphia papers. The general results of the fire busi- ness were satisfactory to the directors, but it was in these early years looked upon only as an adjunct to their marine business in its convenience to their customers; and Mr. Stephens, the secretary, often referred in his semi-annual reports to the profits of this business as meeting the ex- penses of the office, showing that it was relied upon to defray the current expense of the office, which it more than did, so that the marine business in its fluctuations and uncertainties should not be exposed to the charge of office support. Secretary Stephens in his report to the stock-
INSURANCE COMPANY OF NORTH AMERICA. 69 holders January, 1825, says: "the fire business meets expenses as it ordinarily does when no losses occur." The extension of the business to other localities was to increase this profitable result, and at a time when marine insurance in this country was disastrous and had a very doubtful future. We might suppose that had in the outstart more direct attention been paid to this branch, larger returns would have been had and the company have been propor- tionably benefited; but we must recollect that fire insurance was in its infancy comparatively, and the insurer in a com- munity, was the exception, and not the rule. The large lines written by the company were evidence of the want of proper knowledge of the danger in so writing, but it was on the other hand evidence that the moral hazard was more certain, as the danger from frequent fires wa6 lessened by the fact that the major portion of any community was entirely uninsured, and the want of a guarantee of indem- nity in case of loss, perforce made this class of people more heedful to the dangers of fire and watchful of their interests. To the close of the year 1802, embracing eight years and twenty days, the fire premiums received amounted to $81,253.76, and the losses, which first began in 1797, $30,116.59. The next ten years were better—premiums, $98,647.95; losses, $23,873.30; the succeeding decade was remarkable in its figures—premiums, $69,224.20; losses, $1.569.44, the years 1814, 1816-19 and 1822, not showing a dollar of loss on a premium receipt, of $42,380.79. From 1823 to 1832. premiums were $61,639.33; losses, $17,973; the decade following, premiums, $114,326.34; losses, $78,948.27. From 1843 to 1852, premiums, $554,267.08; 70 A HISTORY OF THE losses, $382,407.43; this last period embraced the losses by the great fire in the vicinity of Vine and Callowhill, west- ward from the wharves, July, 1850, after which there was an acknowledgment of the inadequacy of fire premiums in Philadelphia on the part of the companies, which led to action in October following, which would have been united and common hut for one company declining to agree to advanced rating. The years 1843 to 1852 mark the de- velopment of the modern system of an agency business, for the receipts had quintupled those of the preceding ten years. The decade following showed a larger busi- ness and with better results; premiums, $1,138,164.24; losses, $424,448.32. The next decade showed a premium receipt of eight times the amount of its predecessor; and the premiums for the year 1884 alone exceeded the com- bined premium receipts of the first sixty-eight years of the Company's operations; the average loss in this long period being but 45.3 per cent. of the premiums. On 28 January, 1840, a committee was appointed to pre- pare a form of perpetual policy, the recent supplement to the charter enabling the company to enter on this business, but the final steps were deferred, and authority was only formally given to the officers on 4 May, 1841, and the first policy was shortly thereafter issued; and to the close of the year 1846 a loss of but $62.09 was made upon a net deposit receipt of $5,781.55. To the close of the year 1872, the losses had been but twelve and one-half per cent. of the net deposit receipts; but a proper mode to calculate the per- petual business is to base the losses upon the interest of the net balances, and the result in this instance will show the INSURANCE COMPANY OF NORTH AMERICA. 71 losses of the company to be about one-third of the interest account on their perpetual deposit balances, and after adding its proper expenses, leaving the deposit untouched, (subject to call as it may be,) and a profit beside. The beginnings of the fire business, modest in the ex- treme, have grown in our day to a figure which the first board of directors never contemplated, any more than they could contemplate the immense growth of the nation in its wealth and population. The wealth of those days was to be found on the Atlantic board, and shipping was the most familiar and perhaps the most respectable calling, and opened the most. promising avenue to the rising generations for the extension of their activities. But wars and the changes in the courses of trade made the uncertainties of sea ventures more conspicuous, while the silent but sure growth of inland interests was outstepping them in attrac- tion, until in our day we find the best energies of our people given to internal development, and for the success of this corporate underwriting must and will be had, and the future of fire underwriting seems illimitable so long as we cannot measure or bound our national growth. And we must admit that marine underwriting, even with its peculiar fascinations, has lost its rank of prominence, and that fire underwriting is now and will remain in the forefront.