824 NET RATE OF BUILDING OCCUPIED AND EXPOSED. BROUGHT FORWARD... 325 CO-INSURANCE ON "FIRE-PROOF" BUILDINGS. For insurance not exceeding 15% of the value of building, charge RATE PERCENTAGE OF INSURANCE TO VALUE. Schedule 20% 30% 40% 50% 60% 70% 75% 89% 90% 100% 66 66 66 66 cents. cents. cents. cents. cents. cents. cents. cents. cents. cents. 15cts. 12.95 10.35 8.67 7.45 6.52 5.77 5.46 5.16 4.63 4.20 16 13.81 11.04 9.24 7.95 6.96 6.16 5.82 5.50 4.94 4.48 17 14.67 11.73 9.82 8.44 7.39 6.54 6.18 5.84 5.25 4.76 18 15.53 12.42 10.40 8.94 7.83 6.93 6.55 6.19 5.56 5.04 19 16.39 13.11 10.98 9.44 8.26 7.31 6.91 6.53 5.87 5.32 20 17.26 13.80 11.56 9.94 8.70 7.70 7.28 6.88 6.18 5.60 21 18.12 14.49 12.13 10.43 9.13 8.08 7.64 7.22 6.48 5.88 22 18.98 15.18 12.71 10.93 9.57 8.47 8.00 7.56 6.79 6.16 23 19.84 15.87 13.29 11.43 10.00 8.85 8.37 7.91 7.10 6.44 24 20.71 16 56 13.87 11.92 10.44 9.24 8.73 8.25 7.41 6.72 25 21.57 17.25 14.45 12.42 10.87 9.62 9.10 8.60 7.72 7.00 26 22.43 17.94 15.02 12.92 11.31 10.01 9.46 8.94 8.03 7.28 27 23.30 18.63 15.60 13.41 11.74 10.39 9.82 9.28 8.34 7.56 24.16 19.32 16.18 13.91 12.18 10.78 10.19 9.63 8.65 7.84 25.02 20.01 16.76 14.41 12.61 11.16 10.55 9.97 8.96 8.12 25.89 20.70 17.34 14.91 13.05 11.55 10.92 10.32 9.27 8.40 30.20 24.15 20.23 17.39 15.22 13.47 12.74 12.04 10.81 9.80 34.52 27.60 23.12 19.88 17.40 15.40 14.56 13.76 12.36 11.20 38.83 31.05 26.01 22.36 19.57 17.32 16.38 15.48 13.90 12.60 (42.15 24.50l28 0021 8elor eso 25 28 29 30 35 40 45 50 66 66 ing rate to obtain its stock rate.' Hence the rate of the building occupied, minus one fourth of the deficiencies of the building, the amount determined upon by the framers of the schedule, is considered the "key rate" for all stocks in the building. To this key rate there is next added the figure in the second column of the occupancy table. All stocks are arranged alphabetically in a table of two columns, the figures in the first column measuring those features of the stock which will cause fires, and the second column containing those figures which measure the susceptibility of the stock to damage by water, smoke, heat, etc. It is clear that many stocks are much more apt to be the cause of severe fires, and should, therefore, materially increase the rate of the building in which they are located. On the other hand, there are many stocks, such as hardware and the like, which, while not hazardous as a cause of fire, are nevertheless peculiarly subject to damage by water or smoke, although the fire may never reach large proportions. Following this addition to the "key rate" for the susceptibility of the stock to damage from the resultant effects of fire, the method pursued in arriving at the final rate of the stock is very similar to that explained in connection with the rating of the building. As shown by the rating slip, deductions are next made for various fire appliances, giving us, as a result, the "rate on the stock in the unexposed building." Additions must next be made for the presence of an exposure or conflagration hazard, and then follows a deduction for the presence of automatic sprinklers. Following this, deductions or additions are made for the presence or absence of coinsurance, giving the net "rate on the stock with...... per cent coinsurance. To this rate additions are next made for adverse legislation and faults of management, just as was done in rating the building, thus giving the "final rate on the stock." The Advantages of Schedule Rating.-Schedule rating serves to show that the equitable apportionment of the fire tax requires a systematic consideration of the hundred and one features which make one risk different from another. It is designed to make fire-insurance rates accurate and equitable, and to enable the property owner to see how his rate is made in every case, and thus allay the suspicion of unfair treatment which has been so prevalent in the past, and which has led to endless friction between insurer and insured. Much of the unwise state legislation is traceable to. the failure of the public to understand the difficulties of just rating. "They reason," as Mr. Dean writes, "that when a number of competing corporations charge the same price for the same thing, it is a self-evident conspiracy in restraint of trade; in other words, a trust. The thing appears to be crooked when it is mathematically straight, and without the slightest effort to learn the truth, tariff and rating associations are declared unlawful under severe penalties. But quite as important as the alleviation of the opposition of policy-holders and legislatures to insurance companies, is the necessity of reducing the fire waste of the country. Every one concedes that it is to the field of fire prevention that activity should be largely directed. Schedule rating is admirably adapted to accomplish much in this direction, if only the property owners and legislators would acquaint themselves with the substance and purpose of the leading schedules in use. In fact, this is one of the chief advantages attributed to the Universal Mercantile Schedule by its chief founder, Mr. F. C. Moore. He says: "It encourages proper construction of buildings by intelligently charging for deficiencies from standards, and by recognizing exceptionally good construction by deductions. The architect, builder, and property owner, informed at the outset as to what can be saved by proper construction, will be led to avoid many of the faults now prevailing, which have grown, not unnaturally, out of the present system of conducting the insurance business." The advantage secured by such action on the part of property owners would not only in the long run affect the saving allowed by the schedule as it stands to-day, but would materially tend to lower the enormous fire waste of the country, and thus proportionately reduce the rates of to-day. If the owners of establishments can be made to see that by making improvements here and there in the construction and management of their property they will receive a reduction in their premiums, amounting to more than a good investment return on the capital expended, it is only reasonable to assume that such improvements will be made. If state legislatures and city councils can be made to see, as many have, that by improving a fire department, by passing proper building laws, and by introducing an efficient system of water mains, they may materially reduce the rate on all property in the city, it is reasonable to assume that they will act in the interests of the community. Any progress toward the reduction of the fire waste will not only lower rates, but will lessen that large loss, so often overlooked, resulting from the inconvenience, loss of time, and the demoralization of business, which follows in the wake of every large fire. To these benefits it should be added that schedule rating gives the further advantages of making inspections more thorough and discouraging the payment of excessive commissions for the writing of "preferred" risks. It is apparent that schedule rating will serve as a check upon the judgment and memory of the inspector, and will prevent important departures from the prescribed standards. On the other hand, a rating schedule reduces all risks, for rating purposes, to a common level, making them all equally desirable. The company is enabled to make as much profit in underwriting a poor risk at a high premium, as by insuring a good risk at a lower rate, thus removing the necessity of granting higher commissions for the procurement of preferred classes of risks. By making possible a full explanation of why a certain rate is charged, property owners can also be made to see the folly of accepting policies in companies which charge unscientific and inadequate premiums, thus in the long run preventing hurtful competition and cutting of rates. The Dean Schedule. -The "Mercantile Tariff and Exposure Formula for the Measurement of Fire Hazards," or the "Dean Schedule," as it is commonly called, differs from the Universal Mercantile Schedule in many important particulars. While affording the advantages of schedule rating, it is based upon principles radically different from those used in making the Universal Mercantile Schedule. Owing to its general use in many of the Western states, it will be our object to point out briefly the essential differences between the two schedules, as illustrated by that portion of the Dean Schedule devoted to the rating of brick buildings. 1. In the first place, Mr. Dean's schedule does not attempt to prescribe a basis rate for a standard building in a standard city, but instead, cities and towns are divided into six classes, varying all the way from those without any fire protection to those with excellent facilities along this line. Then, instead of adopting a "standard building" of ideal construction, Mr. Dean uses as a starting point in his rating system a one-story brick building of "ordinary construction, situated in a town of the lowest or sixth class." In adopting an ideal standard building for rating purposes the Universal Mercantile Schedule seeks to produce an educational effect; but Mr. Dean, on the contrary, makes no attempt along this line, but begins with the average building. Underwriters, it is argued, are familiar with this ordinary type of building, and are relieved of the necessity of making the large number of additions for de |