28 DEPARTMENT BULLETIN 912. 



losses paid by joint-stock fire insurance companies from 1890 to 1919, 

 inclusive, will be found of interest. As indicative of the variation in 

 the hail hazard from year to year, the figures for premiums and 

 losses of the joint-stock companies are, of course, more significant 

 than the corresponding figures for mutual companies. 1 Many of the 

 mutual companies, as already stated, operate on the assessment plan, 

 and hence their premium or assessment income expands or contracts 

 each year in proportion to the losses incurred. In the case of joint- 

 stock companies, while the rates have been frequently adjusted they 

 have, however, been fixed in advance on the basis of past experience. 



Figure 6, it should be noted, compares the premium income of the 

 companies as a group, not with the cost of the business to them, but 

 only with the losses paid. It is doubtful if any of the companies 

 represented in these figures have had an expense ratio much below 

 35 per cent of the premium income. In the case of some of them, 

 such ratio has certainly exceeded this figure. Assuming that on an 

 average 35 per cent of the premiums has been required to cover ex- 

 penses of operation, it would follow that the companies, as a group, 

 have lost money during each year in which the actual losses, as indi- 

 cated in the diagram, have exceeded 65 per cent of the premiums, and 

 have made a profit during each year in which the loss ratio has fallen 

 below this figure. The net profits in the hail business taken as a 

 whole have by no means been as large as many persons have assumed. 

 The last four years have been highly favorable, but many of the com- 

 panies showed a net loss on their hail insurance experience at the close 

 of 1916. 



The variation in the destructiveness of hail in a given State de- 

 pends, of course, to some extent upon the degree to which the land 

 is given over to one or two commercial crops. Thus, Kansas and 

 Oklahoma, for example, with their large winter-wheat acreage in 

 proportion to the total acreage in crops, North Dakota and Montana 

 with their similarly large spring wheat acreage, or parts of Texas 

 with their cotton acreage, are likely to be subject to especially great 

 variations. One or more bad hail storms occurring at a critical period 

 in the development of the main crop in these States may, of course, 

 ruin a relatively large percentage of the total crops on the farms 

 in the territory visited by such storms. Even though during the 

 next season equally severe hail storms occur, the damage will be far 

 less in case such storms occur either before or after the critical 

 period of the principal crop. The variation in the annual hail losses 

 experienced by insurance companies in States where a single com- 



1 The figures represented in this diagram, as well as those given in the text, are as 

 complete and accurate as it was possible to' make them. An effort to supplement as well 

 as to check up the figures given in the various published reports, by data secured direct 

 from the home records of the companies, was only partially successful. While a large 

 percentage of the companies, and among these the more important pioneers in the 

 business, generously furnished all the data requested, other companies for one reason or 

 another failed to do so. 



