THE GENERA!, CONDITIONS OF INSURANCE AGAINST FIRE 37 



tuted for them. Missouri authorizes the insurance superintendent to order 

 rate reductions which will insure only a reasonable profit to the companies. 

 Oklahoma delegates similar power to an insurance board. New Hampshire 

 has long had a law enabling the insurance commissioner to review and fix 

 rates. The following States and territories have no legislation of the types 

 considered : Alaska, California, Canal Zone, Colorado, Connecticut, Dela- 

 ware, District of Columbia, Florida, Hawaii, Illinois, Indiana, Maine, 

 Maryland, Nevada, New Mexico, North Dakota, Ohio, Philippines, Porto 

 Rico, Rhode Island, Utah, Vermont, Virginia, Wyoming. 



The tendency during the past two years has been unmistakably towards 

 a type of legislation which recognizes the difticulties of State rate-making 

 and, on the other hand, appreciates the right of the public to be protected 

 from arbitrary action and unnecessary inequity. The advantages of a 

 statute combining the principles of private co-operation and public regula- 

 tion may be shown by the results of the law passed in New York in iqii, 

 after a very thorough investigation of fire insurance conditions, whereby 

 this State became the leader in this kind of fire insurance legislation. Four 

 rate-making associations now operate in New York State and have done so 

 for some time. One of the results of delegating the power of supervision 

 to the superintendent of insurance was to bring about co-operation and 

 harmony of action among these associations. The first initiative came from 

 the State but the associations brought about many reforms on their own in- 

 itiative. Uniform rules, practices and forms were adopted and promulgated. 

 Non-uniformity of rates disappeared with diversity of rules. A science of 

 fire rating was developed, one of its most important phases being the super- 

 .session of " judgement rating " by " schedule rating ". Dwelling and farm 

 schedules have been devised with the resultant advantages of schedule rating, 

 especially the possibilit}^ of detecting and avoiding discrimination. To some 

 degree also the law has satisfied the nearly universal desire for lower rates. 

 During the first few years the orders to remove unfair discriminations resulted 

 in a saving in ]>remiums estimated at $1,000,000 a year. 



b) Methods ol Determininii Rates. 



Risks to be covered by fire insurance were first rated bj'' means of a 

 classification of buildings — for some time the only property insured — into 

 groups, each risk included in a group taking its rate. With an increased 

 appreciation of the multitude of differences in the construction, use and si- 

 tuation of buildings and the nature and quality of substances, the classi- 

 fications necessarily nmltiplied. It became impossible to obtain enough like 

 risks to form a valid class ; there was the difficulty of classifying a building 

 having diverse occupancies and congregated risks ; an ever-growing " miscel- 

 laneous " group of heterogeneous and unrelated risks developed. The only 

 groups which coiild be successfully rated were churches and dwelling-houses 

 as to which there is a sufficient collection of data. 



From t868 onwards the schedule system was substituted in the United 

 States for that of classification. This system atempts an analysis of fire 



