Copyright
Wisconsin. Dept. of Insurance.

Report online

. (page 1 of 94)
Online LibraryWisconsin. Dept. of InsuranceReport → online text (page 1 of 94)
Font size
QR-code for this ebook


This is a digital copy of a book that was preserved for generations on library shelves before it was carefully scanned by Google as part of a project
to make the world's books discoverable online.

It has survived long enough for the copyright to expire and the book to enter the public domain. A public domain book is one that was never subject
to copyright or whose legal copyright term has expired. Whether a book is in the public domain may vary country to country. Public domain books
are our gateways to the past, representing a wealth of history, culture and knowledge that's often difficult to discover.

Marks, notations and other marginalia present in the original volume will appear in this file - a reminder of this book's long journey from the
publisher to a library and finally to you.

Usage guidelines

Google is proud to partner with libraries to digitize public domain materials and make them widely accessible. Public domain books belong to the
public and we are merely their custodians. Nevertheless, this work is expensive, so in order to keep providing this resource, we have taken steps to
prevent abuse by commercial parties, including placing technical restrictions on automated querying.

We also ask that you:

+ Make non-commercial use of the files We designed Google Book Search for use by individuals, and we request that you use these files for
personal, non-commercial purposes.

+ Refrain from automated querying Do not send automated queries of any sort to Google's system: If you are conducting research on machine
translation, optical character recognition or other areas where access to a large amount of text is helpful, please contact us. We encourage the
use of public domain materials for these purposes and may be able to help.

+ Maintain attribution The Google "watermark" you see on each file is essential for informing people about this project and helping them find
additional materials through Google Book Search. Please do not remove it.

+ Keep it legal Whatever your use, remember that you are responsible for ensuring that what you are doing is legal. Do not assume that just
because we believe a book is in the public domain for users in the United States, that the work is also in the public domain for users in other
countries. Whether a book is still in copyright varies from country to country, and we can't offer guidance on whether any specific use of
any specific book is allowed. Please do not assume that a book's appearance in Google Book Search means it can be used in any manner
anywhere in the world. Copyright infringement liability can be quite severe.

About Google Book Search

Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers
discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web

at http : //books . google . com/|



Digitized by



GoogI(




Beloit College Library



GIVEN BY



^/oTZ ■ <»^ 1>Ia>o ,



Accsttion.



55S/?



Number.




igitized by



GoogI(



ujj;
l:



Digitized by



GoogI(



0'



Digitized by



GoogI(



FORTY-FIFTH ANNUAL REPORT



OP THE



COMMISSIONER OF INSURANCE



OF THE



STATE OF WISCONSIN



PART I

FIRE AND MARINE INSURANCE

Premiums, Losses, Expenses and Profits
Regulation of Fire Insurance Bates
Preventing Fires and Conflagrations
Laws Recommended



1914

(Business of 1913)

Herman L. Ekern, Commissioner of Insurance



MADISON, WISCONSIN

Democrat Printing Company, State Printer

1914



Digitized by



GoogI(



SECRETARIES OP STATE.

Ex Officio Oommisaionera of Inaurance

Name. Residence. Term.

LLBWBLYN BREBSB. Portage from Jan. 8, 1870 to Jan. 6, 1874

PBTBR DOYLE Prairie du Chien...from Jan. 6. 1874 to Jan. 7, 1878

HANS B. WARNER. . . Ellsworth from Jan. 7. 1878 to

COMMISSIONERS OP INSURANCE.

PHILIP L. SPOONBR. Madison from Apr. 1, 1878 to Jan. 3, 1887

PHILIP CHEEK, Jr. . .Baraboo from Jan. 3. 1887 to Jan. 6, 1891

WILBUR ^, BOOT. •• .Sheboygan from Jan. 5, 1891 to Jan. 7, 1895

WILLIAM A. FRICKB. Milwaukee from Jan. 7» 1895 to Oct 15, 1898

BMIL GILJOHANN. . . Milwaukee from Oct. 15, 1898 to Jan. 5, 1903

ZENO M. HOST Milwaukee from Jan. 5, 1903 to Jan. 1, 1907

GEORGE E. BEEDLE. Embarrass from Jan. 7, 1907 to Jan. 2, 1911

HERMAN L. EKERN. . Whitehall. .*. from Jan. 2, 1911 to

Note: (By chapter 56, section 82, General Laws of 1870, the Secretary of
State was Commissioner of Insurance es officio until the passage of Chapter 214,
I4iw8 of 1878, creating the office of Commissioner of Insurance, which office was
made elective by Chapter 300, Laws of 1881). During the legislative session
of 1911 the office was made appointive instead of elective.



Digitized by



GoogI(



FORTY-FIFTH ANNUAL REPORT



OP THE



COMMISSIONER OF INSURANCE



PART I



FIRE AND MARINE INSURANCE



State of Wisconsin,
Department of Insurance.
To His Excellency, Francis E. McGovern,
Governor of Wisconsin.
I have the honor to submit herewith, as provided by law. Part
I of the Forty-fifth Annual Report of the Department.

Herman L. Ekern,
, , , Commismner of Insurance,



Digitized by



GoogI(



CONTENTS

General Remarks.

Fire Insurance Rates* p. v.

Oomparlson, U. S. and Wisconsin Ratios, pp. vli-xii.

Conflagrations, p. x.

Dwelling House Rates, p. xlv.

Stock Company Profits, pp. xvi-xx.

Stock Company Expenses, pp. xxiii-xxv.

Agents' Qualifications, pp. xxv-xxvi.

State Rate Regulation Upheld, pp. xxvi-xxviii.

Uniform Legislation Recommended by Insurance Commissioners,
pp. xxviii ; Ixxxii-xciv.

Legislation Required, p. xxix.

Fire Prevention, p. xxx.

Wisconsin City and Village Premiums and Losses, pp. xxxiv; Ixx-
Ixzxl.

Fire Proofing Cities, Milwaukee, pp. xxxvl-xxxlx.

Shingle Roof, p. xl.

Form of Annual Report, p. xl.

Summary and Conclusions, pp. xl-xliii.
Table 1. Wisconsin Premiums and Losses 1904-13, pp. xllv-xlv.
Table 2. U. S. and Wisconsin Premiums and Losses 1904-13, pp. xlvl-

xlvii.
Table 3. Ratio Burning, (Losses, Expenses 1909-13, pp. xlyill-li.
Tables 4-7. Expense Ratios 1909-13, pp. lil-liil.
Table 8. New England Mutual Inspection Expense, p. liv.
Tables 9-10-11. Profits Stock Companies 1904-13, 1909-13, 1913, pp. Iv-

Ivli.
Agents' Commission Schedules, pp. Ivlil-lxlx.
Table Premiums and Losses, 1911-13, pp. Ixx-lxxxl.
Fire Rate Regulation Recommended by Insurance Commissioners,

pp. Ixxxii-xciv.
Companies' Admissions, Change and Withdrawals, pp. xcv-xcvll.
Taxes and Fees and Payments to State Treasurer Collected, pp. xcvlli-

cvi; clx-cxi.
State Insurance Fund, p. evil.
Employes and Salaries, p. cvili.
Comparative Tables, 1870-1913, pp. cxil^xlll.
1913 Business, pp. cxlv-cxv.
Statistical tables, Stock and Mutual Fire (other than Local Mutual) :

pp. 1-190.
Stock Companies:

Table I. Income.

Table II. Disbursements.

Table III. Assets.

Table IV. Liabilities.

Table V. Total risks and Wisconsin business.

Table VI. Underwriting and Investment Exhibit.
Domestic Mutiials:

Table I. Income.

Table II. Disbursements.

Table III. Assets.

Table IV. Liabilities, Risks, Losses and Claims.
Town Mutuale:

Table I. Income.

Table II. Disbursements.

Table III. Assets.

Table IV. Liabilities, Risks, Losses and Claims.
Hail and Cyclone Mutuals:

Table I. Income.

Table II. Disbursements.

Table III. Assets.

Table IV. Liabilities, Risks, Losses and Claims.
History, admissions and withdrawals of Insurance Companies In Wis-
consin, pp. 192-224.
Company Statements, pp. 230-967. ^ , , C^r^r^n]r>

Index, 969- . j digitized by ^OOgie



tblPORT OF THE COMMISSIONEB OF INSURANCE.



GENERAL REMARKS

Fire Insurance Rates

In the report on fire and marine insurance for 1911 it was
stated that "It has been charged that the rates on all forms of
fire insurance are excessive in comparison with the rates of other
states, and there is much that bears out this charge."

The legislative insurance investigating committee, which re-
ported in 1912, did not make any attempt to determine whether
or not the rates in Wisconsin were too high or too low. It recom-
mended a law whereby that question might be determined in any
case and the proper correction might be ordered by sta*te author-
ity.

These recommendations of the investigating committee were
defeated and there is now no authority under the law for the
regulation of the rates of fire insurance companies, or for an in-
quiry into such rates, except such as may be made by the com-
missioner of insurance under the authority given to him to make
recommendations for legislation. Such laws for inquiry into and
the regulation of fire insurance rates are absolutely necessary.
This is one of the big immediate problems in Wisconsin.

Policyholders Pay Fire Losses

The fire insurance corporations do not bear the losses of those
who sufiEer by fire. These losses are paid by the policyholders in
their premiums. Primarily, that is what the premiums are for.
The insurance companies merely collect, administer and dis-
tribute the funds.

Fire insurance has become practically universal. It is an ab-
solute necessity. The statistics of fires in American cities pub-
lished by the National Board of Fire Underwriters show an
insurance loss of more than 90% of the total loss, insured and
uninsured, from all fires in United States cities over 20,000. In
Wisconsin for 1913 the insurance loss shown for such cities is
97% of the total loss insured and uninsured, i Loans and mer-
cantile credits are universally protected by fire insurance. It



Digitized by



GoogI(



vi Report of the Commissioner of tNsuRAKoii.

is enforced by every ordinary regard for safety as well as by
business prudence, ethics and requirements. The premium is
thus really a tax.

The Cost op Fire Insurance — Wisconsin Overcharged

The people of Wisconsin pay a large amount of money for fire
insurance. During ten years from 1904 to 1913, inclusive, the
insurance premiums were more than three and one-half times
the total direct state taxes, including all levies for educational
purposes.

The tax in fire insurance premiums paid by Wisconsin policy-
holders to the stock fire insurance corporations was nearly three
times the direct state tax. The stock companies' fire losses were
one and one-fifth times the state tax. The stock companies' ex-
penses and profits were one and two-thirds times tne state tax.

This fire premium tax is largely unnecessary. The losses are
too large, the expenses are excessive, and as compared with other
states and with the entire United States, the stock insurance cor-
porations are overcharging the people of Wisconsin.

Wisconsin Premiums and Losses

During the ten years, 1904-1913, inclusive, the people of Wis-
consin have paid to the stock fire insurance corporations in net
premiums $68,065,042, and have received in return for losses
$29,152,025, or $42.80 per $100 of premiums. Four stock com-
panies located in Wisconsin collected in net premiums $5,344,394,
and paid in losses $1,599,964, or $29.90 for each $100 in pre-
miums.

The stock corporations have thus collected from the people of
Wisconsin $38,913,017 more than they have returned. Deduct-
ing the increase in reserve liabilities, the amount taken in ten
years from the people of Wisconsin for expenses and profits is
over $37,500,000.

During the same period, the mutual companies doing a gen-
eral business in Wisconsin collected in net premiums $6,138,062
and paid in losses $3,406,136, or $55.50 out of each $100 of pre-
miums collected. The farmers' town mutual companies collected
$7,129,954 and paid back in losses $5,829,694, or $81.80 for each
$100 collected in premiums.



Digitized by



GoogI(



Report of the Commissioner op Insurance. vii

The total net premiums eollected in Wisconsin by all compa-
nies amounted to $82,003,467, and the total losses paid to $38,-
689,165, or $47.20 for each $100 collected in premiums.

United States Premiums and Losses

During ten years, 1904-1913, inclusive, the stock fire insur-
ance companies doing business in Wisconsin collected from their
policyholders throughout the United States $2,445,697,711 in net
premiums and returned in losses paid $1,377,452,748, or $56.30
per $10.0 of premiums. Omitting the San Francisco conflagra-
tion year, 1906, the loss ratio of the stock companies for the re-
maining nine years was $52.10 per $100 of net premiums.

Wisconsin Cost Excessive

During this period it has cost $234 in net premiums paid to
the stock corporations by Wisconsin policyholders to pay $100
of losses. It has cost $180 to mutual companies, and $122 paid to
the farmers' town mutuals for each $100 paid in losses. Be-
cause of the profit in insuring dwellings and other selected prop-
erty, it took $334 in premiums paid Wisconsin stock fire insur-
ance corporations to pay $100 of Wisconsin losses. Because of
the large volume of business done by the stock corporations, it
has cost on the average for the entire state $212 in premiums for
each $100 paid in Ibsscs. During this time the same stcck cor-
porations have collected from policyholders throughout the
United States in net premiums $177.60 for each $100 in losses
paid.

Stock Corporations Collect 5/G Premiums

During the ten years, the stock fire insurance corporations
have collected 83% of the total net premiums paid by Wisconsin
policyholders and have paid back 75% of the total paid for losses.
Mutuals of this and other states, excluding farmers* muluals,
have received 7.5% of the premiums and paid 8.8% of the looses.
Farmers' town mutuals have received 8.7% of the premiums
and paid 15% of the losses. A comparison of the premiums paid
to stock corporations throughout the United States and in Wis-
consin shows that Wisconsin policyholders paid 2.78% of Ihj



Digitized by



GoogI(



VIU



Report of the Commissioner of Insurance.



premiums collected throughout the United States, and received
in return 2.11% of the losses paid. It should also be understood
that the foregoing docs not take any account of the fact that
losbos are unnecessarily large or that expenses are excessive, but
is merely based upon a comparison of the experience of Wiscon-
sin with other states. The full figures are given in the following
tabic :



WISCONSIN BUSINESS

TOTAL NET PREMIUMS AND NET L0SSE3 PAID 1004 TO 1013 WITH RATIO
OF LOSSES TO PREMIUMS AND AMOUNT OF NET PREMIUMS FOR EVERY
SlOO OF NET LOSSES PAID.





Premiums.


Losses.


Ratio.


Per
$100.


Stock Companies:
Of Wisconsin


$3,344,304
48,603.006
14.116.742

$68,065,042
580,88*^
174,370


$1,500,064
21,370,366
6,172,605

$20,152,025
217.082
70,662


20.0%

44.0

43.7

42.8
550
40.5


$834


Of other states


227


Forttlsrn ilr©


220


Sab-total


$234


Foreign marine.


170


Lloyds i


247






Total


$68,620,204


$20,440,660

$325,615

708,114

2,i82,407


42.0

54.8%

53.4

56.3


S233






Mutual Companies:
of Wisconsin


$504,301
1,403.612
4,050.140

$6,188,062

106,157

7.120,054


$182


• Of other states


187


City and vlllasre


178






Sub-total


$3,406,136

12,666

5.820,604


55.5
11.0
81.8


1180


Interlnsurers..


840


Farmers town


122






Total


$13,874,173


$0,248,496


60.2


$144






Grand total


$82,003,467


$38,680,165


47.2


$212







Period of Experience

It is generally agreed by those experienced in insurance that
because of changes in construction, process of manufacture and
methods of living, a ten year period is the longest which can
reasonably be used on which to base an average as to fire losses,
and that on the whole such ten year average is about as fair a
basis as can be secured. However, some contend that a shoiler
period is more accurate.



Digitized by



GoogI(



Report of the Commissioner of Inst^ranck. ix



FivK Year Loss Ratio

Comparing the premiums for the five year period from 1909
to 1913, inclusive, it is found that the stock premiums collected
were $35,691,240, against which losses were paid amounting to
$15,597,220, or a ratio of $43.70 losses paid per $100 of premi-
ums collected. During the same period, the ratio of losses paid
for mutual companies remain nearly constant with the ten year
experience, the losses paid being $55.60 per $100 premiums col-
lected. The farm mutual loss ratio also remains nearly constant
at $82.80 paid for losses for each $100 of premiums collected.

A table giving the full figures for all classes of companies for
the years 1904-1913, inclusive, and for the five year periods, is
given hereafter. (See table No. 1.)

Stock Company Overcharge on Basis op United States

Business

The average loss rate for the United States during 34 years,
from 1880 to 1913, as published by the Weekly Underwriter,
New York City is $55.20, and for Wisconsin is $49.70 per $100
of net premiums, making an overcharge on the $153,567,334 Wis-
consin premiums of $15,356,733.

During the ten years from 1904 to 1913, for the companies do-
ing business in Wisconsin, the loss rate for United States was
$56.30 and for Wisconsin $42.80. On this basis the people of Wis-
consin have been overcharged 24%, or over $15,000,000, an aver-
age of $1,500,000.00 per year. During the five year period, 1909-
1913, the United States loss ratio was $51.60, and that for Wis-
consin $43.70. The overcharge is almost 16%, or over $5,500,000,
an average of $1,100,000 per year.

In 1912 the average loss rate throughout the United States
was $52.80, and that in Wisconsin was $38.20 per $100 net pre-
miums. The overcharge for Wisconsin was 28%, or over $2,000,-
000. In 1913 the average loss rate for the United States was
$53.40, and that for Wisconsin $34.40, an overcharge of over
36%, or over $2,600,000, as compared with the average of premi-
ums to losses throughout the United States.

Whether the overcharge be reckoned at the $1,500,000 per year
for the ten year average, or $1,100,000 per year for the five yec^r



Digitized by



GoogI(



X Report op the Commissioner of Insurance.

average, or $2,000,000 for 1912, or $2,600,000 for 1913, it is ap-
parent that Wisconsin is a very profitable state to the stock fire
insurance corporations.

Stock and Mutual Insurance

The lower ratio of expenses in mutual as compared with stock
insurance shown by the proportion of losses paid to premiums,
is shown as strikingly in other states as in Wisconsin. Thus, in
Vermont, in 1913, the total premiums received on $98,102,033.44
risks written were $1,507,486.19, and the losses paid were $992,-
295.77, or 66% of the premiums.

Out of this the mutual companies of Vermont wrote $36,404,-
406.90 or 37% of the risks written, for which they collected
$637,169.45 or 42% of premiums received, and on which they paid
in losses $511,218.19 or 52% of the loss3s paid. The mutuals
of other states wrote $5,911,310.89 or 6% of the risks written,
and received $107,679.29 or 7% of the premiums received, and
paid $32,369.46 or 3% of the losses paid.

The stock companies wrote $55,786,315.65 or 57% of the risks
written, and collected $752,637.45 or 50% of the premiums re-
ceived, and paid $448,708.12 or 45% of the losses paid.

Thus in the state of Vermont where the mutuals do nearly
one-half the business, the mutuals collected less than 50% of the
premiums, yet paid 55% of the losses, while the stock companies
collected 50% of the premiums and paid 45% of the losses.

Conflagrations

The five year period is not affected by any serious conflagra-
tions. The ten year period mentioned includes the San Fran-
cisco conflagration, which brought the total losses paid in Cali-
fornia for 1906 to $146,306,377. The fact that this includes the
average annual loss of the state is offset by the fact that $3,744,-
550 of San Francisco losses were paid in 1907, so that roughly
the companies paid nearly $150,000,000 on account of this com-
bined earthquake and conflagration.

Notwithstanding this, the state of California has in thirty-four
years, from 1880 to 1913, paid to the stock fire insurance
corporations more money than it has received in return for
losses. The total premiums for the period are $274,645,276, and
the losses $246,195,714, or 90% of the premiums. The state has



Digitized by



GoogI(



Report of the Commissioner op Insurance. xi

thus not'alone paid all its own losses, but has paid enough to
cover the expenses of a business conducted with an economy a
little more than equal to that of the Wisconsin farmers' mu
tuals.

The National Board of Fire Underwriters treats every loss in
excess of $500,000 as a conflagration. During the ten year pe-
riod Wisconsin, in common with other states, has had a number
of such conflagrations. Underwriters do not agree what consti-
tutes a conflagration or what deductions or allowances should
be made on account of conflagrations. For purposes of compari-
son, therefore, it seems that the most reliable results in the end
will be reached by taking the total losses, merely noting anything
extraordinary in the conditions caused by the occurrence of con-
flagrations, or by their absence or by immunity therefrom.

Premiums not Lowered with Reduced Losses

Since the year 1911, there has been a marked decrease in the
Wisconsin ratio of losses to premiums. Thus in 1912 the amount
collected from Wisconsin policyholders by the stock fire corpo-
rations was $7,201,916, and the amount returned in losses $2,-
750,467, or $38.20 for each $100 collected in premiums. In 1913
the premiums were $7,349,743 and the losses $2,526,859, or $34.-
40 returned in losses for each $100 paid by Wisconsin policy-
holders in premiums to the stock fire corporations. In 1913 the
excess of premiums over losses was $4,822,884.

In other words, the average collection in net premiums from
Wisconsin policyholders by stock fire insurance corporations has
risen from the ten year average of $234 to $264 in 1912, and to
$291 in 1913 for each $100 of losses paid.

Reductions in Burning Rate the Greater

The reductions in premium rates have not kept pace with the
reductions in losses from fires in Wisconsin. The reductions in
premiums in the United States as a whole have exceeded the re-
ductions in losses. On the showing of losses per $100 of in-
surance, Wisconsin is clearly entitled to a lower rate Instead of
to a higher rate than the average.

The average burning rate per $100 of insurance written for
the companies doing business in Wisconsin in 1904 was 49 cents
for the total business, and 56 cents for the Wisconsin business ;
and this was gradually reduced in 1913 to 44 cents for total



Digitized by



GoogI(



xu



Report of the Combossioneb of Insurance.



business, and 32 cents for Wisconsin business, an average for
the ten year period of 49 cents for the total business, and 47
cents for the Wisconsin business.

Loss Ratio

A detailed comparison of stock company loss ratios in the
United States and in Wisconsin by years and classes of compa-
nies shows that the excess of Wisconsin premiums over losses is
greater than, the excess of United States premiums over losses
for every year except 1910.

The table follows :



SHOWING THR ratio OP NET L03SE9 TO NET PREMIUMS FOR TOTAL BUSINESS
AND BUSINESS IN THE STATE OP WISCONSIN FOR THE YEARS 1904 TO 1913 IN-
CLUnVE POR ALL CLASSES OF FIRE INSURANCE COMPANIES.





t 1904.
Tot. Wis.


1905.


1906.


1907.


1908.


5 Years.




Tot.

89.3
47.7
51.7
48.5
56.0
71.4
48.7

90.0
61.5


Wis.


Tot. |Wls.


Tot. Wis.

88.0 29.5

45.8 38.1
50.4, 45.8
46.7 30.1

60.9 57.2
74.2 18-8


Tot

42.5
55.8
65.4
55.4
55.9
79.4
55.5

140.0
72.8


Wis.

33.8
49.0
47.5
47.5
81.4
48.5
47.4

39.4
56.0
58.1
56.6


Tot.

45.7
58.8
72.9
62.0
5?.0
75.8
61.9

68.1
68.9

'ii'.i


Wis.


Stock Companies:

Of Wisconsin

Of other states

Foreign ere

Sub-total

Porelim marine

Lloyds


, 51.4

60.0

66.8

61.8

1 45.0


JW.2
42.6
46.2
42.7
83.5


36.3
43.7
43.8
42.5
149.0


58.6' 28.8
83.4 37.2
131.6 40.6
96.8 37.8
41.0 87.5


30.6
42.2
44.8
41.8
58.1
32,6


Total

Mutual Companies:

Of Wisconsin

Of other states

City and village


61.8

57.1

57.4


42.8

57.0
24.7
57.0
46.6


42.7

76.6
59.4
54.0
56.9


96.6j 87.8

87.8' 40.0
63.7 72.9

' 55.6

1 63.2 58.7
1


47.0

61.0
61.0

'6*1 .'6


39.2

56.8
68.3
49.5
54.0


41.9

51.9
57.7
54.9


Sub-total

Interlnsurers



Online LibraryWisconsin. Dept. of InsuranceReport → online text (page 1 of 94)