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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.

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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 en

courages 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.

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The Dean Schedule. The "Mercantile Tariff and Exposure Formula for the Measurement of Fire Hazards, ' "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

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. illustration the 60-cent basis rate table is given:

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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 large 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 i 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

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