Fire Insurance in California. 



WILLIAM SEXTON. 



THE pioneer company in California and on the coast is the Liverpool, 

 London and Globe Insurance Company, which established an agency 

 in San Francisco in 1852. This company was followed by a number 

 of Eastern and foreign offices, and in 1863 local capital became inter- 

 ested, and between that date and this time, seventeen companies 



were organized in San Francisco, with a total capital of $8,000,000 

 cash; one in Stockton, two in Oakland, one in Los Angeles, four in Port- 

 land, Ore., four in Seattle, three in Tacoma, two in Spokane, and one in 

 Salem, Ore. — of which only three, in San Francisco, survive. The largest 

 of the three survivors was knocked out twice — once in Chicago and once in 

 Boston — but with California pluck, the stockholders paid the losses and by 

 paying in capital, $1,000,000, and assessments, $425,000 (total, $1,425,- 

 000 in gold coin), maintained and built up one of the largest and strongest 

 insurance corporations in the world. One other of the living trio withdrew 

 about fourteen years ago, with a profit, after paying all claims in full; and 

 during the year 1905 re-entered the field with excellent prospects. The two 

 members of the living trio that continued in the field through the hard times, 

 during the more than forty years from organization, have agents in every 

 town and city under the American flag from Maine to Manila, and also in 

 Hongkong, Shanghai and London, all tributary to San Francisco. The third 

 member of the trio is forging ahead and California can boast at this time of 

 having more capital invested and more income from its fire insurance com- 

 panies than can St. Louis, Pittsburg, Chicago or any other city west of 

 Philadelphia. San Francisco Is the insurance center and headquarters of 

 nine-tenths of the branches or general agencies of fire insurance companies 

 doing business on the Pacific Coast. The agents of these offices in Mon- 

 tana, Idaho, Washington, Oregpn, Arizona, California, and many in Wyom- 

 ing, Colorado, Utah and New Mexico, report to San Francisco. The sum 

 of about $20,000,000 annually is accounted for through the San Francisco 

 head offices, the handling of which sum furnishes employment to a large 

 clerical force at good pay, requires offices at good rentals, and with printers, 

 stationers and other needs of big offices, puts much money Into circulation; 

 also does much towards bringing our banking institutions into business 

 contact with banks and business men in these States, by remittances, by 

 checks to San Francisco for premiums, and return remittances in payment 

 of losses. 



The insurance laws of California so far as regards stock companies are 

 particularly stringent. A fire insurance company must have $200,000 in 

 gold coin paid up in full within a year from commencing business, must 

 carry over at the end of each calendar year 50 per cent of all premiums re- 

 ceived on one year's business for that year, and from 60 to 90 per cent on 

 all three or five year premiums. This is known as a reinsurance fund and 

 must be on hand in addition to the paid-up capital. This gives the people 

 good protection and keeps out wild cats. 



In the upbuilding of California, particularly on grain growing, fire in- 

 surance was a big factor. The long dry season — six months without rain — 

 which makes the fire risk twice as heavy as it is in a country of regular 

 summer rains, made grain growing extremely hazardous. This, in connec- 

 tion with the necessity of the farmer being carried by the country mer- 

 chant, and the country merchant being carried by the city wholesaler, 

 called for a new class in the way of crop collateral mortgages, secured by 

 fire insurance policies on growing crops, and as the ripened crop might, 

 could, stand in the field from June to November without shelling or sprout- 

 ing, the hazard, similar to the old-time prairie fire, was too much for the 

 farmer or the merchant to carry, and a new class of fire insurance, known 



11 



