V.-FIRE INSURANCE, AND ITS TAXATION. Nothing decisive has yet been done towards the realization of the plan noticed in last year's Companion,'* for improving the fire-brigade and fire-engine system of the metropolis. It will be remembered that a Committee of the House of Commons, in 1862, recommended that the existing fire brigade— belonging to the chief Fire Insurance Companies, and managed by a Committee of their directors—should be handed over to the Government, to be managed in an improved form by a section or department of the metropolitan police. The session of 1863 has passed over without any settlement of this matter. Another subject, however, relating to Fire Insurance rather than to fire bri. gades, and affecting more nearly the interests of the public, has come under notice. Whether or not the fire insurance duty ought to be reduced, if not abolished altogether, is a problem which has brought to light much curious information, concerning the stupendous value of insurable property in this country.

Before speaking of the property liable to be burned, we may ask How many confagrations are there to burn it? As a means of giving an answer, or at least a partial answer, to this question, Mr. Samuel Brown, actuary of the ‘Mutual’ Assurance Society, communicated to the • Assurance Magazine,' in 1851, a curious tabulation of the fires which had occurred in London for 17 years, from 1833 to 1849 inclusive; based chiefly on the late Mr. Braidwood's Reports, and on Mr. Baddeley's annual résumé in the Mechanics' Magazine.' In those 17 years, besides “false alarms,” there were 11,305 fires in London; and of the houses affected by the fires, 451 were totally destroyed, 3,335 considerably damaged, and 7,519 slightly damaged. It is singular to observe that, year after year, the ratio of false alarms to real fires remains nearly constant; and so do the ratios between the three degrees of injury wreaked upon the houses. For instance; the brigademen expect 1 false alarm to every 9 real fires, and about 4 houses to be “ totally destroyed” out of every 100 that catch fire. There is a similar approach to uniformity in the months when the fires occur. We should naturally expect that December and January, with their long hours of firelight and their frequent fireside merrymakings, would be months of greater disaster by fire than any other; and so they are, but the preponderance is very small indeed. In the average of the whole 17 years above-named, no month differed very far from its proper proportion, which would be about 8} per cent. of the fires for the year. Still more closely do all the seven days of the week bear equal shares of this calamity: each day has very nearly indeed one-seventh of the whole. Fires are mos as numerous on Sundays as on other days, contrary to what might be expected; but it is explained thus, that “in many small private houses, and in manufactories where it is necessary to keep up fires till work is resumed, the attendance is more negligent; and a fire having smouldered without observation through the whole of the sabbath, bursts forth before attention has been brought to it.” As concerns hours, instead of * “Fires and Fire Brigades, at Home and Abroad,' Companion to the Almanac, 1863.

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days, it appears, as might reasonably be expected, that the night hours are more dangerous than the day ; but, in accordance with the singular law of uniformity, these relative degrees of danger remain as nearly constant as the other ratios above noticed. Year after year, for instance, it is found that, out of 100 fires, just about 70 break out between 5 in the afternoon and 5 in the morning, and 30 between 5 in the morning and 5 in the afternoon: the deviations from this ratio are very small indeed. From 7 10 9 in the morning are the least calamitous hours ; from 9 to 11 in the evening the most. Even among various trades and occupations, the uniformity of the proportions is worthy of note. Thus, inferring from the average results of 17 years, we may expect with something like confidence that, out of every 100 houses that catch fire in London next year, there will be about 32 private houses, 10 lodging-houses, 5 licensed victuallers', 4 carpenters', 3 drapers', &c. The causes of fire, too, though not always susceptible of clear description, or even of being determined at all, are marked by something like uniformity. Ignited bed and window curtains are responsible for 15 out of every 100 of our conflagrations in London, never far above or below that ratio ; linen while airing, 5; overheated stoves, furnaces, ovens, and flues, 19; loose shavings, 3; while lightning causes just about one fire in a thousand. And if we investigate the numbers for the 14 years subsequent to the period embraced by Mr. Brown's tabulation, we shall find that most of the above ratios are pretty well maintained year after year; although of course the total number of fires, owing to the constant addition to the number of houses, is every year increasing in the metropolis.

This may be simply a curious matter to the reader; but it is allimportant to any plan for insuring property from fire. We do not know whose house will be burned down, or injured by fire, tomorrow, next week, next month; we do not even know that any

; house will be burned; but it is found, nevertheless, that there is a sort of law of uniformity in human carelessness as in more important matters ; this carelessness produces just about the same ratio of mischief, on an average of years, in any one community; and this ratio enables companies to grant insurances upon property, which would be quite impracticable if they could not make even a conjecture as to the probable amount of destruction by future fires. So reliable are such tabulations as these (for approximate estimates), that the statistical authorities above named could make a tolerably good guess at the number of ladies who will set fire to bed-curtains next year by reading novels in bed when they ought to be asleep; and to the number of conflagrations attributed to “ the cat ”--the scapegoat for so many household peccadilloes. If it be found, that out of (say) four hundred thousand houses (the number now in the metropolis), a tolerably uniform number are burned or injured by fire every year; and if the value of the destroyed property also keeps pretty close to a mean average—then we have the means of judging how much money would suffice to pay the losses, and how much a householder might fairly be charged for a contract to liberate him for his losses in case his property is burned. It is in this way that the curious uniformities

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above noticed have rendered fire insurance practicable. England began the system in 1681, by insurances effected in London by the Corporation and by private individuals—at 6d. in the pound sterling for brick houses, and 1s. for those of timber. Joint-stock companies were afterwards formed to grant these insurances ; some proprietary, keeping the profits wholly for the shareholders; some mutual, dividing the profits wholly among the insurers. Six of these companies, still existing, have been in existence far more than a century. The ‘Hand in Hand office was founded in 1699, the 'Sun'in 1710, the Union ' in 1714, the “Westminster'in 1717, the 'London' and the Royal Exchange in 1720. The comparative business transacted by these and the other offices is measured nearly, but not exactly, by the amount of duty paid to the Crown. A recent tabulation of this matter has been given by Mr. George Coode, in a parliamentary paper which will be noticed more fully presently. He takes, not a whole year, but the first quarter of the year 1862; apparently because that was the latest available to him. Whether insurances are effected in greater or less number at Lady-day than at the other quarter-days in the year, we are not told; but the ratios between the several Companies are likely to be pretty nearly the same. The following were the number of new policies issued in England and Wales (not the United Kingdom or abroad,) in the three months denoted, at the chief offices in London, in addition to those which were in force at the end of 1861: Offices.

New Policies.



8,082 Royal Exchange

5,395 6,572 Phonix.

4,749 6,163 Liverpool and London:


5,360 Norwich Union.


2,846 County

2,664 2,633 Imperial

2,565 4,685 West of England


2,669 Manchester

1,751 2,295 Atlas

1,472 2,022 Law


1,630 Union


1,322 Alliance

1,076 Law Union


364 Royal Farmers'


344 These figures present averages varying from 15s. annual duty on cach new insurance in the 'Royal Farmers,' to 48s. in the ' Alliance;' the average of the whole being 26s. This gives no clue, however, to the amount of premiums paid, or to the profits of the companies ; because the duty is uniformly 3s. per cent. whether the premium be high or low. Only 4,297 of the policies were for sums at and below 1001.; more than ten times that number being for higher sums.

There are three modes in which property is now insured from fire; depending on different data, and each presenting its own peculiar advantages. They are specified insurance, average insurance, and self insurance. (1). When an owner of property effects a specified insurance



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with an office or company (as is usually the case in England, but not on the Continent), he considers which part of his property is destructible by fire, and which part is not so; he determines for himself what is the value which it is prudent to insure; and he insures for that value only. On the occurrence of a loss by fire, he is entitled to all the value destroyed up to the extreme amount which he has insured; but if he has erred in judgment, if property is destroyed which he did not think destructible, or did not choose to insure, he obtains no payment from the fire insurance companies for such extra portions. (2). The insurance by average, on the contrary, does not allow the insurer to distinguish between destructible and indestructible. Whatever sum he insures is to apply to both varieties. In case of a loss by fire, he is only entitled to be paid a sum which bears such a proportion to the whole loss as the sum insured bears to the total value of the property. If he insures to the whole value, destructible and indestructible, he can recover from the company the whole loss ; if he insures to half the value, he can recover only half the loss; and

The indestructible as well as the destructible portions of the property are included in the same policy; and therefore the premium per cent. charged for the insurance is low. Many actuaries of insurance companies believe that average insurance is better than specified ; because it gives both parties, the insurers and the insured, a fair chance of dealing with the least as well as with the most destructible portions of the property; because, by constituting the owner a partner in the risk, it makes him interested in saving the insured property when in danger from fire, and so converts the owners themselves into an excellent fire-police; and because the system of average insurance has been wonderfully successful in France. Apart from any speculations, however, as to the relative advantages of specified and average insurances, it may be mentioned that the latter, or floating insurances, as they are sometimes called, are supposed to have had their origin in the peculiar circumstances of merchants holding stocks of goods which are rapidly being bought and sold, warehoused and moved, and therefore not susceptible of being specifically insured for any great length of time. Such a merchant, having goods in different warehouses and on different quays, and these goods constantly changing, makes an average insurance with a company, which may cover either the whole or any portion of any loss by fire which he may incur, according to the amount of premium which he chooses to pay. Practically, the salvage, or property saved from the fire, is divided between the insurer and the insured in the same ratio as the loss is borne ; whereas in specified insurance, to which English householders and lodgers, shopkeepers and manufacturers, are most accustomed, the salvage belongs to the insurance company. Marine insurance, or the insurance of ships and cargoes, is effected on the average or floating system, as being the only one fitted for so fluctuating an element as the cargo of a trading ship. (3). We have said that there is a third mode, self insurance, adopted, different both from the specified and the average systems. The principle on which it rests is easily understood. When a man possesses a large number of insurable articles of one kind, isolated from each other so far as concerns danger from fire, it

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is not worth his while to insure such articles in any of the offices. He establishes a separate insurance-fund on his own books, out of which he pays for any losses that may occur. He is then sure that his actual payments will not exceed the actual losses; whereas at an insurance office he pays in addition for the frauds inflicted on the office, for the working expenses, and for the profits—the amount of which items will be noticed presently. If (to suppose a case) one house in fifty is burnt, the owner of one single house had better insure, because forty-nine other persons will help to bear his loss if his house happens to be the one that is burned down; but the owner of fifty houses had better bear his own loss himself—and so on in any other supposed ratio. The large shipping companies, such as the Peninsular and Oriental, usually act upon this principle-taking care to keep an insurance fund always at hand. This they may do all the more prudently, because they save the whole of the duty as well as a considerable part of the premium. Setting aside this self-insurance, however, and reverting for a moment to the other two modes, we may remark that the same property is sometimes subject both to specified and to average insurance, and that intricate problems thence result as to the proportions in which loss is to be borne by the various parties. A striking instance of this complexity was adduced by Mr. Atkins, of the ‘Sun’ office, in the ' Assurance Magazine' for 1857. In 1849, Messrs. Gooch and Cousens' wool warehouse in London Wall was burned down. The variety and number of interests involved in this large property” (the warehouse contained 3,606 bales of wool)

gave rise, as might be expected, to very important discussions, and brought to the test almost every known principle and form of settlement. No less than 73 owners (of the wool) appeared; some were owners in their own right, and others simply as factors and agents. Some portions were insured by specified, others by average policies, of every variety. Others again were wholly uninsured. Some of the proprietors had already put in their claim to portions of the salvage, being able, by the trade marks or otherwise, to identify those portions. With the exception of these, the whole body of owners were entitled to a pro ratâ share of salvage, whether insured or not.”.

And now arises the question, what amount is insured ? Until 1782, there was no percentage duty on the amount of property insured; the tax (varying frequently between the years 1694 and 1781) being only in the form of a stamp on each policy, whatever amount it might be. There were therefore no means, until 1782, of determining the value for which property was insured. Since that period, this value has gradually risen as follows, at dates ten years apart :

£. 1782

130,000,000 1792

162,000,000 1802

220,000,000 1812

358,000,000 1822

399,000,000 1832

499,000,000 1842

652,000,000 1852

769,000,000 1862


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