oldest existing New York company was organized in 1806, and the oldest Massachusetts company in 1818. Thousands of charters have been granted to fire-insurance companies since the beginning of the nineteenth century, but many of them have never been used. In a general way the number of new companies established from year to year has varied with the general prosperity of the country, and every period of depression has seen the failure or withdrawal of a number of companies. The most trying time in the history of fire insurance in the United States during the last fifty years came in the early seventies. In October, 1871, as a result of the Chicago fire, insurance companies became liable for indemnities amounting to more than $96,500,000. In November of the following year occurred the great Boston fire, which brought a loss of more than $52,600,000 upon the companies. These two great losses, coming in quick succession, subjected all fire-insurance companies to great strain. More than a hundred of them were forced to suspend operations, while many others found their surplus wiped out and their capital seriously impaired. While there has been no such wholesale slaughter of companies since that time, there have been many isolated cases of failure. It is estimated that in the nineteenth century not less than one thousand fire-insurance companies perished, entailing very great loss upon insurers and insured alike. On the whole, however, the history of the century, and especially of the second half of it, shows a nearly constant growth in the magnitude of the fire-insurance business, and a steady improvement in the financial standing of the companies. During the latter part of the century the establishment of governmental supervision of insurance companies in many of the States, involving periodical reports from each company, and thus a great degree of publicity as to its financial condition, has done much to prevent reckless management on the part of the companies and to protect the interests of the insured.
It is impossible to obtain complete statistics of the number of fire-insurance companies in the United States, or of the amount of business they transact. In a number of the States certain companies, especially the small mutuals, are exempted from the duty of reporting to the commissioner, and statistics about such companies are nowhere attainable. There are probably in the United States at the present time nearly or quite 2000 companies granting insurance against fire. Of this number, however, only about 150 are of any considerable size or operate over a large territory. The total amount of fire insurance carried by all the companies is probably not far from $30,000,000,000. The average rate of premium in 1901, according to the tables presented at the meeting of the National Board of Fire Underwriters in May, 1902, was practically $1.08 for each $100 of insurance. This rate fluctuates considerably, the figures for the decade 1891-1900 showing a maximum of $1.12 in 1894, and a minimum of $0.99 in 1899. Profits for the decade, as shown by the dividends declared, have been fairly uniform. The lowest average annual rate during the decade was 10.43 per cent., in 1893; the highest. 11.65 per cent., in 1899. In seven of the ten years the average rate exceeded 11 per cent.
Some indication of the increase in the use of fire insurance by property-owners may be gained from a comparison of the total fire loss for different periods with the losses sustained by the insurance companies during the same periods. The figures given in the Spectator Year Book for 1902 indicate that in the decade 1881-1890 57.4 per cent. of the total fire loss was covered by insurance, while in the decade 1891-1900 60.9 per cent. of the total loss was thus covered. The following table, compiled from the reports made to the Insurance Department of the State of New York by companies operating in that State, may serve to illustrate the growth of the business during the last forty years of the nineteenth century. It must be remembered, however, that the actual growth has been greater than these numbers indicate, owing to the increase in the proportion of companies in the West and South which make no report to the New York Department: YEAR Risks in force Dec. 31st Premiums Losses
1860 $1,466,954,382.57 $14,436,869.76 $8.570,956.74 1865 2,564,112,605.00 25,419,588.00 17,264,617.00 1870 4,149,473,784.00 37,916.965.23 22,476,300.70 1875 6,039,507,339.00 59.285,105.00 27,695,628.00 1880 7,305,729,981.00 61,126,535.51 43,243.439.94 1885 10,517,940.175.00 81,251,444.00 47,758,787.00 1890 15,272,785,000.00 104,706,417.51 57,026,230.29 1895 17,657,994,301.00 122,599,676.88 68,369.563.71 1900 22,352,562,553.00 141,232,031.75 89,566,349.00
Organization. Stock Companies. Nearly all the fire-insurance companies in the United States are organized either as mutual companies or as joint-stock companies. There are a few organ- ized as unincorporated associations of individu- als, transacting business on the principle of the English Lloyds. The mutual companies are more than five times as numerous as the joint-stock companies, but the risks carried by the relative- ly small number of stock companies are many times as great in amount as those carried in the mutual companies. The relation of the insured to the stock company is simple and definite. By paying the stipulated premium he becomes en- titled to indemnity in case of loss by fire within a given time. He incurs no liability, but sub- stitutes a certain and definite periodical pay- ment for the possibility of a loss of uncertain amount. It is probably the element of certainty and definiteness that gives the stock companies a large part of their advantage over the mutual companies.
Mutual Companies. The relation of a person insured in a mutual company to the company is by no means so simple as in the previous case. In the simplest form of mutual insurance the funds necessary to pay losses are raised by as- sessment after the losses have occurred. Under such a system neither profit nor loss can arise. as the assessments are made to cover only los expenses. Experience has shown, however, that it is extremely difficult to raise the required amount in this way, whenever losses are un- usually heavy. The general custom among the older mutual companies at the present time, therefore', is to collect a part of the necessary funds by premiums paid in advance, and to hold the insured responsible for such additional amounts as may be required to pay losses. The liability of the insured is. however, frequently limited to a certain amount, or to a certain pro-
