708 JOURNAL OF FORKSTRY 



4. Compute the average total annual conflagration loss for the entire 

 United States, per $100 of value insured. 



To rate a sj)ecific risk, classify it according to specifications given, 

 and multiply the damage factor for that class hy the area factor for 

 the proper suh-class, then multiply this product by the occurrence 

 factor for the kind of hazard involved. If the risk is subject to more 

 than one form of hazard, add the occurrence factors for the difiFerent 

 hazards in the given type and region, and multiply the damage-area 

 product by this sum. The final product will give the rate of loss 

 (excluding conflagration losses) for the specific risk involved. Since 

 it is considered proper here as in regular fire insurance, to spread 

 conflagration losses over the whole system, the conflagration rate for 

 the country as a whole should be added to the normal rate as found. 



An example will perhaps make this clearer. Suppose we take the 

 least inflammable class of western yellow pine stands in eastern 

 Oregon. vSuppose the records show that on the areas burned over 

 during the past ten years, 5 per cent of the total values present (timber 

 and all other values) were destroyed. (The figures are purely imagi- 

 nary.) The damage factor is then .05. Sup])ose that for the areas 

 of this class which have made 3 protection systems, the average fire, 

 excluding conflagrations, was 20 acres. Suppose the general blanket 

 risk (lightning and other scattered fires) for yellow pine in this region 

 to be 5 per 100,000 acres; the risk of railroad fires on areas subject to 

 railroad hazard in the type and region, 50 per 100,000 acres, and the 

 risk of camper fires on areas subject to this form of hazard, 45 per 

 100,000 acres. Suppose we take a given area of this class of timber, 

 subject to all three forms of hazard. Then the occurrence factor will 

 be 5 plus 50 plus 45, or 100 per 100,000 acres, or .001. The product 

 of the three factors .05 X 20 X .001 = .001, or 10 cents per $100 of 

 value. Tf the conflagration rate for the country is found to be 3 

 cents per $100, then the total loss-rate for the given risk will be 13 

 cents per $100. 



While this scheme appears somewhat complicated, it is much sim- 

 pler than that outlined by the National Board of Fire Underwriters, 

 and will be much easier to work out when we get the basic data. In 

 forest insurance we are up against the same difficulty that was found 

 in insurance of other property — namely, the want of a central bureau 

 to standardize records of losses and of writings, and to collect and 

 compile these records and develop from them a standard rating. Our 



