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-the remainder, about 1,141 millions, cannot be very far in excess of the insurable property which is actually insured; and that therefore the public do not require stimuli, either in the form of a reduction of duty or of a change of system, towards any considerable extension of the habit of insuring their property from fire.
Many of these sums and quantities are not only conjectural, but are disputed by Mr. Brown, Mr. Newmarch, and other eminent actuaries. It appears indisputable, however, that the sums for which property is insured are enormous; that the value of the property insured is very much larger than the insurance effected on it; and that the value of the wholly uninsured, because incombustible, is still greater than that which is combustible, whether insured or not. We see from the above that the whole property, insurable and uninsurable, is set down at a sum very little less than 5,000 millions sterling, or, in all the dignity of a long array of figures, 5,000,000,000l. It is curious to trace the manner in which the statistics are sometimes employed in matters of this kind: showing the necessity for caution in arriving at a conclusion. Thus, when a fire breaks out in London, how many persons are affected by it, either insured or uninsured? Mr. Coode took the list of fires in the month of November, 1862, and found the following results. There were 107 fires in the month, endangering or affecting the property of 236 persons; and of these 236, the distinction between landlords and occupiers, and insured and uninsured, was as follows:
If this be anything like a fair average of the whole metropolis, and of all the months in a year, it shows that nearly the whole of the landlords insure their houses, whether for the full value or not; whereas only one-third of the occupiers insure their furniture, personal chattels, or stock in trade. Other computers, resting on other data, arrive at results showing the ratio of insurances to be much smaller. When Mr. Newmarch, Secretary to the Globe Insurance Company, was examined before the Parliamentary Committee in 1862, he stated that, within six miles of Charing Cross, there is property liable to destruction by fire valued at 900,000,000l.; that 300,000,000l. of this is insured, and 600,000,000l. uninsured; and that as the fire brigade belonging to the companies puts out all the fires, whether insured or not, the owners of the 300,000,000l. virtually pay for protecting the 600,000,000l. also, so far as concerns the operations of the brigade. Mr. Drummond, Managing Director of the Sun Insurance Company, corroborated Mr. Newmarch's estimate of 300,000,0007. insured property within the metropolitan area, but had no data concerning the value of the uninsured: he, however, stated that scarcely any person insures for more than one-half or two-thirds the value of his property.
An estimate is made by Mr. Coode that the premiums paid to the companies are four times as large as would cover the actual average
losses by fire. This startling calculation is embodied in the following two statements that "All experienced officers of proprietary com panies declare that their necessary premiums might be reduced onehalf, but for the fraudulent demands they are compelled to comply with;" and that, "The premium of insurance paid to any proprietary company includes compensation and reward to the society for carrying on the operations, which in the best of those societies is equal to half of the entire premiums." The meaning of the first statement clearly is, that the demands made upon the offices are double what they ought to be, owing to arson in some cases, and fraudulent valuations of goods burned in others; and of the second, that the office expenses and the profits together usually equal the actual payments for burned property. "The premium paid by an honest policyholder, therefore," Mr. Coode argues, consists of four parts-of which one part is the price of the reciprocal insurance of himself and other honest policy-holders; a second part, equal to the first, is his contribution to the encouragement and reward of the frauds and crimes of dishonest policy-holders; and two other parts, equal to the two first, are the reward of the societies and their officers and agents in transacting their business. In the best and most economically-managed of these societies the premium or companies' price is at least four times, and sometimes five times, the natural cost price of the insur
The real losses by fire must, after all, bear but a small ratio to the value of the whole property which is liable to be injured, if not destroyed, by a conflagration. The companies often speak of their premium of only 1s. 6d. per cent.—that is, 1s. 6d. per annum paid by the insured for every 1007. covered by the policy of insurance; and if this, as Mr. Coode estimates it, is four times as much as the actual value of the property burned, we come to such a small fraction as 4d. per cent. But, in truth, the average premium is very much more than 1s. 6d. The offices, of course, charge more for insuring highly inflammable than less inflammable property; more for buildings in which hazardous than non-hazardous trades are carried on: it is only thus that fair-play can be established between the insurers and the insured. The lowest premium charged is 1s. 6d. per cent., and this is for the better and safer class of dwelling-houses in London and its neighbourhood. In the country such houses are usually charged 2s. or 2s. 6d. per cent. Agricultural produce, farmers' stock and implements, are charged 5s. per cent. In Liverpool, where cotton is often stored in vast quantities, and where at all times an immense variety of inflammable substances is kept, the charge varies from 3s. 6d. to 12s. per cent. for insuring warehouses, according to the materials employed, and the constructive features, in each building. Wharves and warehouses in London, with the goods stored in them, pay about 9s. 6d. per cent. on an average; while wharves and warehouses of special character range from 12s. to 21s. Sugar-bakeries pay two guineas per cent.; some other very dangerous trades three guineas; theatres five guineas; while there are some kinds of property so inflammable, or so much exposed to liability of fire, that no offices will insure them at any premium. Then comes the question, What is the
average, the extreme terms being 1s. 6d. and 57. 5s.? We are told in answer, "All the business of all the offices, including all the risks which the offices will undertake to insure at all, is now done (as is agreed by the most experienced officers of the companies) at an average premium of 5s.”
The total amount of the insurance effected is less than it might be, on account of most of the offices throwing obstacles in the way of insuring houses valued under 3007. Mr. Coode tries to estimate the amount of property thus left uninsured. He finds how many small holders of funded property there are compared with those who hold largely; and how many small depositors in savings' banks there are compared with large depositors. Drawing inferences from these two ratios, and from the property-tax returns on houses, he arrives at an opinion" that the operation of the restrictions placed by the insurance companies upon insurance under 300l. hinder insurances to the extent of one-third of their present amount; in other words, that they cut off at least 400 millions of property from the opportunity of insurance.' The "obstacles in the way of insuring" these small properties, above adverted to, are practically these-that the offices pay the stamp-duty, and charge nothing for the policy, for insurances at and above 300l.; whereas below that amount there is charged 1s. for the stamp and 2s. 6d. for the policy, and the premium is not taken at lower than 3s. per cent.
The purpose of the present article relates to fire insurances in our own country only; but before proceeding to a notice of the taxation to which it is subjected, and the controversies to which that taxation has given rise, we will say a few words concerning similar insurances on the Continent of Europe and in America. Mr. Samuel Brown, from an examination of all the printed documents available, and from direct correspondence with the managers and actuaries of insurance companies abroad, was enabled to prepare a very elaborate tabulation in 1857, which he laid before the Statistical Society, in the 20th volume of whose Journal' it was published. The particulars we need not give here; but he arrived at the opinion that the almost incredible sum of nearly 4,500,000,000l. is insured against fire by the several companies and societies of Europe and America; that 4,772,000l. would cover the actual annual losses; that 8,217,0007. is paid by the insurers in the form of premiums; and thus that profits, frauds, and working expenses run away with 3,445,000%. of these annual payments. These are the insurances accepted by recognized proprietary and mutual companies and societies; but Mr. Brown points out that there must be a very large though unestimated additional amount, protected by Governments and private associations. The different countries contributed to the magnificent total in the following proportions, in 1856 :
France, which began the fire insurance system much later than England, has advanced much more rapidly, and now far excels her in amount. The actuaries are examining how and why this should be, with a view to determine whether the public, the companies, or the Government, are to blame for allowing the United Kingdom thus to fall behind France. Whether the calculations are made in all the countries in the same manner, is not very clear: there is something strange in the ratio of losses to insurances in France and in Germany -being so much heavier in the latter country than in the former.
We now come to that knotty point, the duty or tax on insurances, the discussions concerning which have been the means of bringing to light so much of the curious matter noticed in the foregoing paragraphs. In the earlier days of this kind of taxation it was imposed only as a stamp-duty on the policy, uniform in amount, whatever was the amount of the insurance; but in 1782 a new method was introduced, by making the tax bear a certain ratio to the sum insured. Without giving long lists of figures, it will suffice to show what amounts this tax brought into the national exchequer at different times during the last eighty years. This duty, then, produced from 99,000l. to 202,000l. per annum between the years 1783 and 1795, when the duty was 1s. 6d. per cent. on the value of the property insured; from 138,000l. to 243,000l. per annum between the years 1796 and 1804, when the duty was 2s. per cent.; from 273,000l. to 593,000l. per annum between the years 1805 and 1815, when the duty was 2s. 6d. per cent.; and from 618,000l. to 1,609,000l. per annum between the years 1816 and 1862, when the duty was 3s. per cent. This is one of the few taxes which have never varied since the period of the close of the great war; and the increase from 1816 to 1862 marks, not a rise in duty per cent., but a rise in the value of the property insured. The last year was the greatest of all-1,400,000l. in England and Wales, 120,000l. in Scotland, 80,000l. in Ireland: making a total of 1,600,000l. This is irrespective of the still-continued small stamp-duty on policies, which brought in 13,000l. in 1862. In 1833 a change took place in the mode of assessing the duty, placing the farmers in a better position than other persons. The exemption of agricultural stock from insurance duties arose out of an exceptional state of things. Agrarian incendiarism, the burning of barns and ricks by the mysterious "Swing," prevailed very extensively somewhat over thirty years ago, spreading alarm universally among the farmers. They hastened to insure their farmingstock, and the companies raised the rate of premium on account of the danger-in some counties to three or four times the former rate. As the object of the incendiaries was to terrify and injure, not the insurance companies, but the farmers and landlords, it was urged in
Parliament that the object would be frustrated by relieving agricultural insurances from duty; farmers would insure more and more readily, and would care less and less for the machinations of "Swing." These representations prevailed, and this particular impost was abolished in 1833. Traders and manufacturers have ever since complained of this special favour to the farmers, and not without reason, One consequence has been, that the rate of premium on insuring agricultural stock has varied greatly within the last thirty years. When the duty on this class of insurances was removed in 1833, the agents of the fire insurance companies went among the farmers, pointed out the advantages that would accrue, and competed with each other in lowness of premium. They came down from 5s. per cent. to 2s.; they raised it to 3s. in 1844; and to 4s. in 1850, with an extra charge of 1s. for the use of steam threshing-machines. Business falling off at these premiums, they again reduced it to 3s. in 1853, and abandoned the 1s. on the threshing-machines; but they raised it again to 4s. in 1856, and to 5s, in 1859. When the premium was high, the insurances lessened; when it was low, they increased; and the present premium about equals that which is considered to be the average of the various duty-payable insurance premiums.
The circumstance which has brought Mr. Coode's opinions into collision with those of most other writers on the subject of fire insurance is this:-There has long been a conviction in the minds of the public that a tax on insurance is a tax on prudence-a punishment to a man for being provident, an encouragement to reckless negligence; it seems to say: "If you insure your property, I will fine you 3s. per cent. for your offence." All classes-writers on political economy, such as the late Mr. Porter and Professor Leoni Levi; eminent actuaries, such as Mr. Newmarch and Mr. Brown; members of parliament, corporations, public companies, private firms, individual traders have taken this view, and have advocated the abolition of the duty whenever the state of the public exchequer should render it possible. All classes have said this, though not all the members of each class; and as finance ministers are not very prone to give up lucrative taxes, they do not choose to admit that the insurance duty is really a bad duty, unless very strong evidence to that effect is adduced. After much agitation among tax-reformers, an inquiry was instituted. In 1856, Mr. Coode was requested by the late Sir George Cornewall Lewis, at that time Chancellor of the Exchequer, to prepare a Report on the operation of the fire insurance duties, and of the probable effect of some proposed modifications in them. The Report, presented in November of the same year, afforded a singular instance of the importance of a blunder-the serious mischief likely to arise from the placing of one single erroneous figure in a statement. The Report should have contained a reference to the statute 37 George III., c. 90; but, in transcribing his notes, Mr. Coode put 2 for 3—that is, 27 for 37. He knew nothing of the error till long afterwards, but proceeded to make tabulations, aggregates, averages, and reasonings, ranging over ten years' more time than they ought to have done. When it was pointed out to him by Mr. Samuel Brown, he saw how it had vitiated the conclusions made by himself and