THE WISCONSIN STATE FIRE INSURANCE FUND
Ekern, Herman L.
The Y/isconsin State Fire Insurance Fund By Herman L. Ekern Former Commissioner of Insurance of Wisconsin TOCK Fire Insurance celeSbrates whenever a state building in Wisconsin burns. This is...
...of the annual premium paid to the state is paid from year to year...
...McDougal—"Thank ye, laddie...
...not so sure Sestet (to McDougal, returning from wedding festivities)—"Pass, friend, all's well...
...The stock fire insurance companies are not in business for their health...
...Much of the public business is carried on the annual basis...
...The law provides for setting into the fund CO per cent...
...As the state insurance fund has collected its premiums on the annual basis the above figures are on the annual basis...
...agents' commissions but nearly all the 40 per cent...
...But ye dinna ken the guid wife or ye would na' be so sure...
...expense which the most economical companies pay...
...Hence every time the state has a fire the stock in-suran e journals carry a hew story as to the "failure" of the fund...
...They must meet their expenses and provide for stockholders' profits...
...The figures above are for the most economical companies...
...However the stock companies have been writing insurance for three years at two premiums and for five years at three premiums...
...The companies are naturally pleased to escape the loss, but more, they want if possible to kill off the state insurance fund...
...THE Wisconsin Fund was established in 1903 under the leadership of Governor La Follette...
...the state of Wisconsin assesses property valued at more than $3,000,000,000, or forty times the capital of all the stock fire insurance companies...
...The principal advantage of the state fund is not however the saving in the premiums but the ultimate saving in the fire losses...
...Only the necessity for making a false show of economy has temporarily delayed this being done...
...Peoud Father—"Yes...
...promptly paid, and the loan was practically made good when the legislature in 1911 extended the law to cover the property of such counties as choose to come in...
...Notwithstanding exception-ally heavy losses it has been a success...
...The expense for the whole period was $7,564...
...The Commissioner of Insurance has the management of the fund...
...The railroads, many of them, carry their own insurance, and the Pennsylvania Railroad, one of the largest, has done this for years and accumulated millions of savings...
...Even had all the state business been written on the five-year plan the saving IN INTEREST ALONE would have been $41,000 in the state fund which, adding the accumulated surplus, made a minimum saving of $71,440, with exceptionally heavy losses, on the most favorable showing the stock companies could ask...
...This is not because the companies like to see property burn, but because Wisconsin carries its own insurance in its own insurance fund...
...The state has no profits to pay and saves not alone the 25 per cent...
...The companies like to complain against the state carrying its own risk on a property as large as the state capitol with its value of more than $5,000,000...
...and a full $5,000,000 loss, though im-sible, could be borne with an increase HERE where the fight is not yet for state insurance but for a modest regulation of their rates, the stock fire insurance interests are asking to name our governors and legislators that they may not be disturbed in collecting their toll...
...After paying back all money borrowed for the state capitol loss and providing for the unearned premium the same as the stock companies, the fund then had a surplus of $30,440, making the total saving then nearly $325,000, on the annual premium basis...
...Sovereignty Recognized Agent—"Is the boss of the house in...
...FIRE INSURANCE on public buildings is carried on an annual and on a three or five year term basis...
...This leaves them about $46 for expenses and profits...
...This is modeled on the Wisconsin fund...
...The companies of course collect the premiums for the full three or five years in advance, while the 60 per cent...
...In addition they receive about $4 in interest on the unearned premiums of their policyholders, which gives them in all about $50 out of each $100 of premiums for expenses and profits...
...Pennsylvania established its fire insurance fund in 1915 and appropriated $300,000 to start it off...
...The rate to all is 60 per cent, of the company rates but the companies and their agents—always on the job— have been quite successful in saving their 25 per cent...
...The state could not fail to save money under the plan...
...The capitol is as nearly fire proof as it can be built, and barring damage from a carpenter and paint shop in the basement it could not have a fire and smoke damage of more than $200,000...
...It is thus abundantly able to take care of itself in the distribution of its fire losses...
...This, and other fire prevention equipment goes in when the state insures in its own fund...
...The fund now insures against fire and tornado more than 2,000 separate buildings, the insurance amounting to more than $20,000,000...
...The loss was...
...Every live merchant and manufacturer puts automatic sprinklers on his property as the best protection against fire, but as these cut down the insurance rates to one-third or even one-tenth of what they were before, stock companies can not be enthusiastic about them...
...OTHERS are awakening to the same facts...
...From July 1, 1903, to April 1, 1915, the fund collected $440,620 in premiums and paid out $380,206 for losses...
...The annual state fund premiums are now nearly $S4,000 as compared to annual stock company premiums of about $140,000, a saving of $56,-001) a year in the state fund...
...of the average premiums charged by responsible stock fire insurance companies...
...The fund has also this advantage that the state property is always fully covered and the money is immediately available for rebuilding...
...Minnesota established a state fund against fire and tornado in 1913...
...Against this 40 per cent...
...commissions by keeping the insurance with the stock companies at the 100 per cent...
...There is no question of neglect of officers or agents in renewing the insurance and no "jockeying" over what the insurance covers, co-insurance, or other items which enter into adjustments and often contests with the companies...
...The state property is all insured to 90 per cent, of the value...
...On the average all stock companies in the United States pay back about $54 for losses out of each $100 received in premiums...
...of a smaller premium...
...They have undertaken a job like sweeping back the sea...
...In 1913, on the unanimous request of the State Teachers' Association, the legislature extended the law to the property of school districts choosing to come in...
...of less than two mills in the tax rata for a single year...
...The 40 per cent, saving for the twelve years is $293,-747...
...expense the state expense for twelve years was less than 2 per cent...
...As usual, the people pay while those who take the profits run their business...
...Within nine months after the fund was started the state capitol burned...
...This amendment extended the same privilege to cities, villages and towns...
...As any form of insurance exists to indemnify losses, its efficiency must be measured by the amount used for expenses and profits in carrying the indemnity...
...Michigan established its fund in 1915...
...The best proof of the saving is the European experience where state fire insurance has reduced the annual loss to eight cents per $100 against sixty cents per $100 in the United States...
...The fund has saved money to the people of Wisconsin...
...he's asleep upstairs in his cradle...
...An expert report backed by the merchants and manufacturers has recommended sprinklers in the Wisconsin insane asylums and other charitable and penal institutions, not alone to save property but to safeguard the lives of the state's wards who are prevented from helping themselves in case of fire...
...And here where the fight is not yet for state insurance but for a modest regulation of their rates, the stock fire insurance interests are asking to name our governors and legislators that they may not be disturbed in collecting their ton...
...They cut off too much income...
...London Opinion...
...The fund was started without any appropriation excepting the right to borrow from the general fund to pay any excessive loss...
...The premiums are figured exactly as the stock companies figure them, with the same credits for co-insurance, improvements and other items...
...But the critics forget that while the stock fire companies only have a total capital stock of $80,000,000...
...The fund has received in premiums on July 1, 1915, and July 1, 1916, about $170,000, and in spite of the burning of the Oshkosh Normal School and the recent fire at the University, the fund shows a surplus, and AN ACTUAL SAVING to the people of Wisconsin as compared with the annual premiums to the stock companies OF MORE THAN $4 00,000...
...Philadelphia Evening Ledger...
Vol. 8 • December 1916 • No. 12
