FIRE.] INSURANCE of exact measurement. The insured is naturally bound to state and prove his claim ; and the office, while exposed on the one hand to exaggerated and even to fraudulent demands, may on the other endeavour to exact from an honest claimant details and evidence which it is scarcely possible for him to give. Fortunately for both parties to the contract, there are strong motives on either side tending towards a reasonable adjustment. In most cases the office is guided by the advice of an independent professional valuer, who, while attending to the interests of his employers, has a natural desire, even apart from his in structions, to conciliate the claimant, and to avoid landing the company he represents in troublesome controversies. Claims which cannot be adjusted in this way are usually submitted to arbitration, and it is a condition of most policies that both sides must refer the quantum of loss to an arbiter or arbiters. Few claims find their way into the courts of law, and those only where some principle is in volved, or where the claim is thought to be fraudulently overstated, or where the still more serious objection is taken that the fire has been the wilful act of the insured. Many troublesome questions are rendered more easy of solution by the condition that it is in the power of the company to reinstate property rather than to pay the value of it. The insured has not the option of requiring rein statement. In general an office prefers to settle a claim by payment in cash, but an offer to reinstate may be a convenient as it is a perfectly fair reply to an exaggerated demand, and may adjust the pretensions of competing claimants. The insured is not entitled to "abandon" his property, and the company is not bound to take on itself the care or risk of damaged property : it is for the insured to make the most of the " salvage," and to deduct the value of it from his claim, but in practice it is sometimes found desirable to relieve him of this duty. A part of the insurance system which has developed into great magnitude is the practice of reinsurance. No one company, however large its resources, deems it prudent to undertake a risk to an unlimited amount in connexion with any one set of goods or one locality. An office might restrict its liabilities by refusing to insure to a larger amount than what it pleased to run the risk of, but the convenience of the insured and the interest of its own agents, to say nothing of other considerations, make it difficult for any office so to limit its responsibilities. It therefore issues a policy for the amount proposed to it, but reinsures a part with some other office or offices. Business to a very large amount is exchanged in this way, and there are some offices which professedly, and some which practically, live by the premiums paid over to them by other offices. The principal British offices have established a code of laws for the regulation of these transactions, and a court of arbitration for the decision of such questions as may arise among themselves in connexion with them. They are often also matter of special contract between office and office. The system is of some benefit to the public. In the earlier periods of fire insurance, when a large sum had to be insured, a higher rate was charged ; but this has long ceased to be the rule. A man who wishes now to insure a large amount has not only no extra rate to pay, but has not to take the trouble of arranging with numerous offices, or, if a fire occurs, of adjusting his loss with numerous offices. He can usually, if he pleases, obtain a policy from one company for the full sum he needs to insure, and the company takes all the trouble and risk of distributing the liability, a distribution with which he has nothing to do. He may even benefit in another way, for when a loss occurs he has on the whole, perhaps, a better chance of being liberally dealt with than if lie had to make a direct claim on many offices. What has been said hitherto has had reference chiefly to one side of the fire insurance contract the obligations undertaken by the company. The consideration they receive in return is the payment made by the insured called the " premium." The premium is calculated at so much per cent, of the sum insured, and is usually paid once a year, at one or other of four quarter days ; but many insurances are effected on mercantile property and on ships for periods less than a year ten days, one, three, or six months the rate in such a case being higher than an aliquot part of the yearly rate ; and insurances may be effected for seven years by a payment of six times the yearly rate, and for other periods at a proportionate discount. Insurances effected for a year, and stated to be renewable, practically remain in force for fourteen or fifteen days after the expiry of the year ; that is, they may be renewed by payment of the premium within these " days of grace," and if a fire occurs in the meantime the company will be liable. This will not happen, however, if an intention not to renew has been manifested on either side. The rate of premium varies with the supposed risk, and in Great Britain runs from Is. 6d. per cent, yearly, the rate for first-class dwelling-houses and ordinary private furniture, to six or seven guineas per cent. The highest British rates are what are charged for some descriptions of corn-mills and sugar refineries, and for Turkey-red dye- works. Large classes of property are insured at the ordi nary "hazardous" rate of 2s. Gd., or " extra hazardous " rate of 4s. 6d., but certain descriptions of property are specially and more elaborately rated. This has been done to a considerable extent by common agreement amongst the offices, and the arrangements are known as the " tariff system/ which requires here a few words of explanation. We may suppose the question to arise, What ought to be paid for insuring a cotton-mill, or a flax or woollen mill, or a weaving factory, or a wharf or warehouse in some large city 1 The experience of any one office scarcely affords adequate data, and a rate based on the combined experience of many offices has a greater chance of being at once safe and fair. The problem, indeed, is a more complicated one than what has been already said would indicate. The property to be insured may consist of several distinct buildings and the contents of them : one building may be devoted to operations involving in a high degree the risk of fire ; in another the processes carried on may be more simple and safe ; a third may be used only for the storage of materials having little tendency to burn. These several buildings may be more or less connected with each other under the same roof, under different roofs but with internal communications, contiguous but with out any communications, detached but still within reach of fire. Of two mills one may work on fine materials, the other on coarse ; in one the machinery may be driven twice as fast as in the other ; in one the most hazardous processes may be carried on in the heart of the building, in the other they may be so treated and so guarded as to involve the rest of the property in no peculiar danger. Fairly to measure these various hazards it has been found necessary that the experience and skill at the command of many companies shall be combined, and that the rates shall be the result of consultation and a common understanding. Now it is clear that no office will contribute its skill and experience to such a common stock if the effect is to be that other offices may avail themselves of the information in order to undersell it. Consultation about rates and a common understanding necessarily involve a reciprocal obligation to charge not less than the rates thus agreed on ; in other words, a tariff of rates is developed to which each office binds itself to adhere. The system tends to restrain and moderate the competition for business which inevitably
