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fects required by the Universal Mercantile Schedule, which, as we have seen, assumes as a starting point a standard building much superior in character to the average building.
Unlike the Universal Mercantile Schedule the Dean Schedule also allows latitude in naming the basis rate, the raters in each locality being allowed to select that basis rate which is best applicable to the community in question, since, it is argued, the underwriters are best able to judge the basis rate that should be applied to their particular districts. To enable underwriters in the various localities to select a proper basis rate, Mr. Dean furnishes a number of tables indicated by the titles "60 cents," "65 cents," "70 cents," "75 cents," etc., up to 120 cents, these figures representing the basis rate for a one-story building in a town of the sixth class. He leaves it to the raters of the various districts to choose the table which they think best suited to the local conditions; but having selected one of the tables (i.e., having chosen a basis rate), it is recommended that the same be strictly adhered to in other particulars. As an illustration the 60-cent basis rate table is given:
In case the underwriter wishes to rate a three-story brick building in a city of the second class, and has decided to adopt the 60-cent rate table, it is only necessary in arriving at the basis rate for the building to glance at the column entitled "Class 2," and opposite the line entitled "3 story," where there will be found the figure 40 cents, which represents the basis rate for the risk under consideration. On the other hand, if, owing to local conditions, the rater decides to select the 120-cent table, he will consult that table, pursuing the same method used in the previous case, and will find the figure 81 cents as the basis rate to be adopted.
2. Having determined the basis rate, the rater must next make certain additions and deductions which measure the deficiencies or good qualities of the building in question. In making such additions, however, Mr. Dean uses percentages in all cases, while the Universal Mercantile Schedule, as we saw, provides for the addition of absolute amounts, such as 5 cents, 10 cents, etc. This is done so as to maintain relativity in charges and credits, because, as Mr. Dean explains, certain features, such, for example, as an open elevator shaft, are much more dangerous in a tall building of large size than in a low one of moderate area. If the addition for a defective elevator shaft is measured by an absolute amount, say, twelve cents, in the case of all buildings, it is argued that this charge will be twice as largo relatively for a building whose basis rate is 50 cents, as for one whose basis rate is $1. As a matter of fact, the situation should be reversed, and this, it is claimed, can only be done by making the addition in percentages, in which case the charge for the defect will be greater in the building rated at $1 than in the building rated at 50 cents.
3. Having entered on the rating slip the basis rate, and all charges and credits connected with the building, the next step in Mr. Dean's schedule is to refer to the classified list of occupancies, and enter the charges for occupancy found in columns 1 and 2. This table of occupancies differs very materially in form from the occupancy table found in the Universal Mercantile Schedule. The table consists of three columns, a typical illustration of which is herewith given:
A few words of explanation are necessary to show the application of this table as compared with the Universal Mercantile Schedule. As will be observed, Mr. Dean has divided his occupancy table into three columns, under the headings of (1) Cause, (2) Media, and (3) Effect. In the first of these columns is found the percentage to be added to the building rate for the particular occupancy because of its tendency to cause a fire; in the second column is found the charge which represents the combustibility of the stock, that is to say, the extent to which goods will contribute to the spread of a fire; and the third column indicates the grade of the article (the grades being represented by Dl, D2, D3, D4, and D5) with reference to its "damageability," that is to say, the extent to which the goods are likely to be injured by the effects of fire, such as smoke, water, heat, breakage, etc. This classification of occupancies, it will be observed, is very elaborate. As regards "cause," it is apparent that some occupancies are much more dangerous than others, some, according to the schedule, being '' inert,'' like banks, offices, studios, etc., while others are "active." Again, as regards the classification of "media," some occupancies involve merchandise of low combustibility, such as hardware, rubber goods, wool, and woolen goods; other occupancies involve merchandise which burns moderately, such as retail groceries, dry goods, and the like; other merchandise bums freely, such as straw goods, hay, millinery, etc.; other goods burn with great intensity, such as matches, saltpeter, celluloid goods, etc., but are not subject to spontaneous combustion or destruction, except through actual contact with fire; while other grades of goods are of an extremely inflammable character, because they are liable to spontaneous combustion or burn with an intensity amounting practically to an explosion.
Mr. Dean has also elaborately classified the "effect" or damageability of various classes of merchandise. Merchandise, represented by the insignia "Dl" in the table of occupancies, includes articles, such as leather goods, etc'., which are largely immune from damage from the indirect effects of fire, such as water, smoke, and heat; "D2" represents articles, such as retail groceries, dry goods, etc., which are but moderately affected; "D3" relates to merchandise, such as paper, butter, fruit, books, etc., which are easily damaged; "D4" refers to merchandise, such as millinery, florists' stocks, contents of cold-storage warehouses, etc., which are liable to heavy damage from slight effects resulting from fire; while "D5" consists of mixed stocks of goods, such as those contained in department stores and general storage warehouses, which require a personal estimate to ascertain the average damageability.
Having added to the building rate the charges for occupancy found in columns 1 and 2 of the occupancy table, the difference between the total of the debit and credit columns in the rating sheet shows the percentage of the basis rate, which is to be added to it in order to obtain the "occupied rate of the building.'' From the rate as obtained up to this point there are next deducted certain credits for protective features.
4. In order to get the rate on the contents within the building, reference must be made to the "contents tables" of the schedule, with a view to adding to the occupied building rate the amount indicated by the insignia Dl, D2, D3, etc., as the case may be, according to the grade of protection for the town and the location of the contents in the building. Mr. Dean's contents tables are very ingeniously devised, the tables being so arranged that they take into account (1) the basis rate used in rating the building; (2) the class of city according to the type of fire protection; (3) the location of the contents, whether in the basement, or on the ground floor, second floor, etc.; and (4) the nature of the contents to be rated, whether belonging to class Dl, D2, etc. Numerous tables are devised embodying the foregoing features, so that the rater need only look up the proper table with a view to finding the amount to be added to the occupied building rate, in order to determine the rate on the contents.
5. One of the most important features of Mr. Dean's schedule is the so-called "exposure formula." This has received much attention from underwriters, and has been commended very highly.1 His treatment of the exposure hazard is very detailed, and merely the general outline can here be presented. External exposures are classified under three heads, namely: "(a) Radiated Exposure, consisting of the proportion of its own hazard a risk radiates toward exposed risks; (b) Absorbed Exposure, consisting of the proportion of the radiating hazard absorbed by an exposed risk; and (c) Transmitted Exposure, or the proportion of the hazard a risk absorbs from one side, and which is transmitted by it to a risk on the other side."
In connection with the above classification Mr. Dean points out: "(1) That every exposing risk radiates some ratio of its own hazard toward exposed risks; (2) that every
^ee Richard M. BisselPs remarks concerning Mr. Dean's exposure formula in his lecture on "Rates and Hazards," published in the Yale Insurance Lectures, Vol. II.