250 INSURANCE 



of the absurdities and unnecessary complications in present con- 

 tracts would disappear. A specimen of every contract-form issued 

 should be deposited with the supervising office, and every contract 

 departing from the recorded and deposited types declared illegal. 

 This is not an argument in favor of absolute uniformity among the 

 companies, which would be undesirable in that it would deprive 

 society of the benefits which come from individual initiative and 

 invention. The competition of the companies in the attractiveness 

 of their policy provisions is one of the most valuable features of 

 the rivalry which has been keen for many years. Rivalry in bene- 

 fits bestowed upon policy-holders and in economy of management 

 brings advantages to society. The suggestion here made has for 

 its purpose simply the elimination of objectionable features in policy 

 contracts. It is a difficult, delicate, but not impossible task, and, 

 with adequate provisions for appeal, entirely safe. 



Turning now towards the great field of fire insurance, upon which 

 so much of modern business rests, the most characteristic feature 

 of recent development is the rapid extension of the use of schedules 

 in rating risks, and the establishment of fire insurance exchanges. 

 Not very many years ago fire insurance was accurately described 

 as a magnificent system of guesswork. The schedule has reduced 

 the guessing element by furnishing a basis for the classification of 

 risks and the determination of rates, which can be made intelligible 

 to men of average understanding. Existing schedules have laid the 

 foundation for the classification of risks which may lead to the estab- 

 lishment of loss ratios for certain classes of property, similar to 

 mortality statistics for different classes of the population. The 

 establishment of average losses for different classes of property, 

 such as planing-mills, breweries, foundries, warehouses, etc., is one 

 of the most important problems of to-day. Since not every building 

 must be destroyed, even partially, fire insurance tables of losses 

 can never reach the degree of accuracy possessed by mortality sta- 

 tistics. Nor is this necessary. But up to very recent times the 

 problem of scientific rating has received relatively little attention. 

 Each building was regarded as a unit by itself, and a rate fixed for 

 it in a haphazard manner. The schedule introduced a standard by 

 which to judge the merits of different types of buildings, contents, 

 appliances, etc. The schedule places a premium on high-class con- 

 struction, good management, efficient fire protection, and thorough 

 inspection. The value of rigid compliance with established 

 standards is amply demonstrated by the remarkable record of the 

 New England manufacturers' mutual fire insurance companies. By 

 establishing and maintaining an insurance engineering station these 

 companies are doing a most necessary and highly valuable work in 

 applying scientific methods by which the entire fire insurance world 



