36 UNITED STATES - INSURANCE AND THRIFT 



Kansas in 1909. Legislation of a more radical type, exemplified bj' the law 

 passed in Texas in 1910, created State commissions having power actually 

 to fix in the first instance the rates to be charged by companies. A similar 

 Act passed in Kentucky in 1912 caused considerable difRcult3^ fort^'^-seven 

 companies having actually left the State in consequence of it in March 1914. 

 The following benefits are claimed to be derived from a State rating 



law : 



1. The elimination of discrimination favouring the large insurer and 

 favouring certain localities and classes of risks. 



2. A reduction of insurance rates : 



a) by improvements in cities causing reductions in their key rates ; 



b) by improvements in individual risks ; 



c) by the removal of unnecessan.- and the reduction of necessary ha- 

 zards, 



d) by the elimination of faults of management ; 



e) by preventing insurance companies from advancing rates when tem- 

 porary conditions and bad losses in certain localities make them wish to 

 do so. 



3. Stability of rates and schedules and accessibility of information re- 

 garding the process of ratemaking. 



The principal advantages of the State rating Acts were that they fully 

 admitted the necessity of having but one rate for each risk, thereby endeav- 

 ouring to secure the same result as the associations of underwriters. 



In 1911 the State of New York passed a law vinder which the compa- 

 nies were allowed still to fix rates by agreement, under the regulation of 

 the State. In 1913 North Carolina and West Virginia passed similar laws. 

 Finally a committee of the National Convention of Insurance Commissioners 

 in April 191 5 submitted for adoption throughout the United States four 

 model Acts, as follows : 



1. An Act like the New York law already- described, providing for 

 the supervision and examination of rating bureaus ; 



2. An Act prohibiting discrimination in rates and any stipulation 

 that the whole or part of a risk be placed with certain companies ; 



3. An Act requiring companies to maintain and co-operate with a 

 oublic rating bureau, sharing its expenses equitabh' and having an equal 

 voice as to its actions. 



4. An Act requiring a written sur^^ey of each risk specificall}' rated 

 by schedule. 



A report to the National Convention in April 1915 indicated that the 

 first of these laws was in existence before 1915 in six States and was enacted 

 in three additional States by April 1915. Laws forbidding discrimination 

 were in force before 1915 in ten States and three additional Acts of this 

 nature were pa.^sed by April 1915. Act 3 had been passed in two States by 

 April 1915. Massachusetts and North Carolina laws provide for a general 

 review of all rates bat onl}' give power to make recommendations. Kansas, 

 Kentucky and Minne.sota have laws authorizing the insurance companies to 

 review rates made by companies and order the proper rates to be substi- 



