cessity of the orders or because it age in surplus for that year, and the seems a wise provision for the future. same may be said for 1914, was traceIn 1916 one of the largest of the fra- able in large measure to the extremeternal orders and one with a mostly low range of security values which honorable history, the Royal Arca- prevailed during the year. It was num, was compelled to make a very then indicated that there was reason considerable increase in its rates. to believe that the same unfavorable This is having the usual result of the situation would not present itself at withdrawal of many members. the close of 1915, owing to the material and continued rise in most security values. In conjunction with the increased value of securities held, however, should be mentioned the fact that fire losses during 1915 compare very favorably with 1914, the nation's fire waste amounting to only 183 millions, as compared with 2352 millions in 1914.

An inspection of the accompanying table of fraternal orders shows that the increase which is seen in ordinary life insurance is lacking in fraternal insurance, which has tended in recent years rather to retrogression. The reason for this is not far to seek when the facts with regard to the Royal Arcanum are noted and it is remembered that similar experiences are overtaking many of the fraternal orders.

PROPERTY AND CASUALTY
INSURANCE

S. S. HUEBNER

Fire and Marine Insurance.-The number of fire and marine companies and Lloyds associations doing business in the United States during 1915 was slightly larger than during the preceding year, the total being given by the Insurance Year Book as 659, as compared with 633 in 1914, 645 in 1913 and 621 in 1912. The capitalization of these companies and associations totaled $107,674,000, an increase of slightly less than two per cent. as compared with 1914. The total assets of $888,700,000, however, show a very substantial increase, the gain in this item for the year being $60,513,000, or an increase of 7.3 per cent. This gain compares with 26 millions during 1914, 17 millions during 1913, 30 millions during 1912, 40 millions during 1911, and 45 millions during 1910. Net surplus amounted to $330,353,000, a gain over 1914 of $37,899,000, or nearly 13 per cent. This increase appears unusually large when we recall that the net surplus during 1914 showed a gain of only $1,262,000, and this in view of the fact that during 1913 there actually occurred a decline of $1,701,000. Even during the more favorable years of 1912 and 1911 the respective increases amounted to only 10 and 20 millions. was explained for the year 1913 Y. B., 1914, p. 364), the shrink

Net premiums and total income show increases during 1915 of $28,020,000 (nearly 7 per cent.) and $23,893,000 (over 5.4 per cent.), respectively. These figures compare with increases of $20,608,000 and $19,135,000 for 1914 as compared with 1913. Paidfor losses actually show a decrease of $1,348,000, whereas during 1914 such losses increased by $23,418,000. Total disbursements increased by only $9,635,000, as contrasted with $24,543,000 for 1914. Of the total disbursements the amount paid for losses constituted 54.3 per cent.; dividend payments 7.1 per cent.; and paid-for expenses slightly over 38 per cent. The respective ratios of these items to total disbursements in 1914 were 56 per cent., 8.3 per cent., and 35 per cent., and for 1913, 54 per cent., 92 per cent. and 37 per cent.

The Insurance Year Book for 1916 furnishes the data given on the next page for companies and Lloyds associations doing a fire and marine insurance business in the United States. The figures indicate a prosperous year for the business. A summary of the report of the New York Insurance Department for 1915 shows that 264 companies writing fire and marine insurance in New York State had aggregate assets on Dec. 31 of $783,013,000, an increase over those of the preceding year of 49,177,000, while their total liabilities, excluding capital, showed an increase of but $14,835,000. The report also shows that while the total income of $453,209,000 represents an increase of $27,225,000, the increase in total disbursements

$107,674 $888,700 $330,353 $433,995 $474,626 $226,867 $29,839 $159,568 $416,275 105,670 828,187 292,454 405,975 440,733 228,215 33,786 144,638 406,640 105,195 801,918 291,192 385,367 421,598 204,797 34,266 143,033 382,097 96,944 784,478 292,893 371,626 410,760 190,073 32,526 136,738 359,338 97,703 754,344 283,201 358,623 392,966 184,917 33,291 129,474 347,683 94,918 713,138 263,867 352,436 385,657 168,433 35,905 124,878 329,218 87,638 668,194 243,414 333,862 365,264 156,369 31,217 116,964 304,552

referred to, that "one only needs to look at the record of the present year as far as it has gone to find warrant for the fear that the 1915 record was too good to be counted upon as a basis of steady future experience." The following table, compiled by the Journal of Commerce and Commercial Bulletin, shows the fire losses in the

During the first nine months of 1916, fire losses unfortunately averaged much higher than during the corresponding period of 1915, the losses totaling $171,799,845, as compared with only $126,288,400 for the same period in 1915, an increase of $45,511,445 or nearly 34.5 per cent. This recent experience indicates the correctness of the statement already | United States for the past five years:

September.

14,383,050

14,823,500

12,244,625

October

14,465,850

17,701,375

November.

December

Total.....

13,779,300 17,919,300 13,651,650 14,932,750 14,004,700 16,172,300 15,207,600 21,372,750 21,204,850 19,898,450 17,967,000 16,126,450 23,507,150 20,877,100 22,063,325 $225,320,900 $224,723,350 $235,591,350 $182,836,200 $231,442,995

commissioner was empowered (1) to revoke the license of any company failing to comply with the provisions of the law, and following official revocation, no renewal of authority could be granted for a period of three years; and (2) to review rates with a view to determining whether they are discriminatory or unjust. The law also forbids "any difference or distinction in rates or in methods of payment of premiums or in any other way whatsoever" upon risks of like hazard.

The Laney-Odom Law.-No other | event in the field of fire insurance during the year has been the subject of so much editorial comment in the insurance and financial press as the Laney-Odom Fire Insurance Act passed at the 1916 session of the South Carolina legislature and declared constitutional by the state Supreme Court on May 1. Ignoring the experience of Missouri and Kentucky with similar legislation, South Carolina enacted a drastic law which undertook "to prevent fire-insurance companies or associations or partnerships doing a Considering the harsh terms of the fire-insurance business in this state Act impracticable and unendurable, to enter into any compact or combina- nearly all the companies doing busition with any other insurance compa- ness in the state decided to withdraw, nies, associations or partnerships for following the course pursued in Misthe purpose of governing or control- souri and Kentucky. According to ling rates." All companies engaged published accounts the total insurin business within the state were ance in force in South Carolina of the obliged to file on March 1, 1917, and retiring companies at the time of annually thereafter, an affidavit to withdrawal amounted to about $250,the effect that "the company of which 000,000, while that carried by the he is an officer or agent, has not in remaining companies aggregated only the 12 months previous to the date of about $19,000,000. Moreover, David the said affidavit, entered into any B. Henderson, an insurance broker, trust, combination or association, for representing the Liverpool & London the purpose of preventing competition & Globe Insurance Co. of England, alin insurance rates." Any false state-leged the unconstitutionality of the ment was made punishable by a fine Act and petitioned the state Supreme and imprisonment. The insurance Court to enjoin the attorney-general

and the United States. Quoting the extended review of the case by the Commercial and Financial Chronicle:

to

tends that the sole question is as The Supreme Court in its opinion conwhether the provision in question is void on the ground that it discriminates of the citizens of South Carolina in against citizens of other states in favor violation of Section 2, Article 4 of the Federal Constitution. The opinion sets out the differentiation between "citizens" and "residents" of the state and seeks to show that under the provision in dispute citizens of the state are granted no privileges by reason of citizenship joyed by the citizens of any other state alone that may not be as freely enupon the same terms and conditions.

and the insurance commissioner from | in prohibiting the issuance of a lienforcing the law. Among other cense to non-residents, was opposed to points the petition contended "that the constitutions of both the state the exemption of the mills mutuals and factory associations is an unjust discrimination," and "that both legislative and executive powers are conferred on the insurance commissioner." The Court overruled all the contentions of the petition, including the two last mentioned. It took the position, to quote the opinion, that "the duties of the insurance commissioner are not legislative or judicial, but merely ministerial, and the right of the state to review insurance rates is not in issue"; and further, that "the constitution requires the legislature to enact laws to prevent agreements against the public welfare. The legislature must primarily determine what agreements are against the public welfare." In view of this decision, the hope is now freely expressed that South Carolina may follow in the footsteps of New York, Pennsylvania, and various other states, and legalize fire-underwriters' associations, at the same time, however, placing them under strict governmental regulation.

Insurance Business for Banks.-In June the Comptroller of the Currency submitted a proposed amendment to the Federal Reserve Act, entitled "An Act to extend the corporate powers of national banks located in places without exceeding 3,000 population." According to this amendment about 2,000 national banks would be enabled to enlarge their activities by acting as agents for the placing of fire and life insurance and for the placing of real estate and farm loans in their localities. Provision is made to the effect that a bank may receive for soliciting and selling insurance such fees or commissions as may be agreed upon between it and the insurance company for which it may act as agent.

Insurance Brokers' License Act Declared Constitutional.-Another event in fire insurance which has been the cause of much discussion during the year was an act passed in South Carolina on March 2, entitled "An Act to provide for the licensing of insurance brokers." One section of this Act provided that "only such persons be licensed as are residents of this state Marine Insurance.-Despite great and have been licensed insurance fluctuations in the hazard, owing to agents of this state for at least two war conditions, the marine branch of years." In dismissing the applica- the insurance business continued durtion of Philip La Tourette of New ing 1915 the satisfactory progress reYork for a license to do an insurance ported for the preceding year (A. Y. business in South Carolina under the B., 1915, p. 381). The extent of this Laney-Odom Act, the Supreme Court progress may be judged by the showof South Carolina held that only ing of the 32 marine-insurance comthose may be licensed who are resi-panies reporting to the Insurance Dedents of the state and have been licensed insurance agents for at least two years. The decision grew out of mandamus proceedings brought against the insurance commissioner by the state warehouse commissioner, who sought the issuance of a broker's license to La Tourette in furtherance of his attempt to obtain insurance for cotton stored under his charge. The complaint alleged that the law,

partment of New York State, although it should be noted that a considerable number of fire-insurance companies also write marine risks. According to the New York report, the 32 companies had marine risks in force at the close of 1915 of $858,936,149, an increase of 1621⁄2 millions (nearly 23.3 per cent.) over the total volume of insurance outstanding at the close of 1914. This high increase

may be contrasted with that of only $678,000 in 1914 over the total at the close of 1913. Premiums received increased from $20,286,417 to $28,013,171, or over 33 per cent. Paid losses, however, unlike 1914, showed the large increase of 33 per cent., from $10,032,695 to $13,399,492. Total income increased during the year from $25,514,076 to $33,831,485, or 13.2 per cent. Despite the great increase in paid losses, the net surplus of the companies increased from $18,540,151 to $21,671,485, or nearly 17 per cent. The net surplus increased in 1915 from $16,245,643 to $18,540,151, or slightly over 14 per cent.

the European War, we feel that condi-
tions are such as to make the continu-
ance of the Bureau most desirable after
the expiration date. . . . Our board of
directors believes that the continuance
the placing of risks and by its effect
of the War Risk Bureau by facilitating
on insurance rates will be most helpful
to our growing merchant marine, and
vessels in a favorable
will place our
position to compete with foreign vessels,
which are granted similar protection by
their various Governments.

Liability and Compensation Insurance.-The extent of employers'-liability and workmen's-compensation insurance is indicated by the premiums written and losses paid by 42 companies writing liability contracts War Risk Insurance.-Previous is- and 40 companies transacting workAcsues of the YEAR BOOK have referred men's compensation insurance. to the law enacted by Congress on cording to the Insurance Year Book, Sept. 2, 1914, as a result of the Euro- the liability premiums of these compean War, which created a Federal panies for 1915 amounted to $35,537,Bureau of War-Risk Insurance with 231, and the losses paid to $22,262,a fund of $5,000,000 for a period of 841; the ratio of losses to premiums two years, designed to insure Ameri- was 62.6 per cent. On workmen's-compremiums can vessels, freight and cargo when-pensation policies the ever it proved impossible to secure amounted to $31,348,758, the losses adequate war-risk insurance elsewhere to $15,603,464, and the ratio of losses on reasonable terms (A. Y. B., 1914, to premiums was 29.9 per cent. In the YEAR BOOK for 1915 (p. 382) p. 368; 1915, p. 381). The results of this attempt of the Government to was presented a discussion of the raparticipate in the marine branch of pidity with which the old system of the insurance business have proved employers' liability for negligence is exceedingly profitable to the Govern- being supplanted by laws providing ment and apparently highly satisfac- for automatic compensation for intory to the shipping community. Ac-juries. At the close of 1914, it was cording to late reports, the Bureau of stated, 23 states had adopted such War Risks, during its existence of laws, and during 1915 ten more states nearly two years has yielded a net and territories were added to the list. profit to the Treasury Department of To quote Mr. Edwin W. De Leon's re$2,237,859, and in August reductions view in the 1915 Insurance Year

in rates were made on several classes of insurance for American vessels and non-contraband cargoes. Over 1,500 policies, representing $141,415,302 insurance, have been written; known losses total $771,329, and of this amount $58,811 has been recovered in salvage. Mention should be made also of the fact that the Maritime Association of the Port of New York has requested Congress to extend the life of the Bureau for another two years. In his communication to Secretary McAdoo, making the request, President Morrell of the Maritime Association states that:

While the establishment of this Bureau was intended as an emergency measure, in view of the prolonging of

Book:

There are now 31 states with compensation laws in addition to Alaska and Hawaii, the Canal Zone and the Philiplegislature of Utah provided for a compine Islands, and the Federal laws. The mission to prepare the draft of a law and report to the next legislature. The houses which was vetoed by the GovIdaho legislature passed a law in both ernor. The Missouri commission, appointed in 1913, reported a law, as well as a bill, for an Industrial Commission,

but neither of these was enacted.

Kentucky, where the workmen'scompensation law was declared unconstitutional in December, 1914, it may be added, reënacted another law in March, 1916, providing for an elective system of compensation. (See also XVI, Labor Legislation.)