Page:Encyclopædia Britannica, Ninth Edition, v. 13.djvu/174

 162 INSURANCE [FIRE, century (IG9G) ; five date from the first half of the 18th century, the Sun (1710), Union (1714), Westminster (1717), London (1720), and Royal Exchange (1720); while only three date from the second half of that century, the Salop (1780), Phoenix (1782), and Norwich Union (1797). The first fire office in Scotland was established in 1720, the first in Germany in 1750, and the first pro prietary company in that country in 1779; the first office in the United States was established at Philadelphia in 1752, one of its early directors having been Benjamin Franklin ; the first in France dates from 1816, and the first in Russia from 1827. The growth of fire insurance business in Britain did not receive much assistance from Government. At a very early period, in 1694 under William & Mary, a stamp duty was imposed on fire policies (now reduced to the nominal rate of one penny), and in 1782, during the administration of Lord North, fire insurances were made liable to an annual duty at the rate of Is. 6d. for each 100 insured. This tax, which was collected by the offices along with their premiums and accounted for by them to the exchequer, was increased in 1797 to 2s. per cent., in 1805 to 2s. 6d., and in 1816 to 3s., at which rate it continued for about fifty years. It was strongly objected to as a discouragement to prudence, and as disproportionate in rate to the cost of insurance which it was tacked to ; but as it was easily collected, and yielded nearly two millions a year (1,714,622 in 1863), it naturally died hard. In 1864 it was partially remitted, and it expired finally in 1869. The returns of the duty enable us to measure in some degree the progress of fire insurance in the United Kingdom during the eighty-five years of its incidence. Some descriptions of property, such as agricultural produce, were exempt from duty and do not appear in the returns, nor do the sums insured on property situated out of the United Kingdom; but the amount insured by British offices on which duty was paid was In 1783 about 135,000,000 In 1840 about 645,000,000 1800 200,000,000 ,, 1860 ,, 1,000,000,000 ,, 1820 ,, 427,000,000 ,, 1868 ,, 1,430,000,000 At the present time (1881) there appear to be about sixty offices established in the United Kingdom for insur ing against loss by fire either alone or in conjunction with life or marine insurance. A few of these are of very recent origin. The number does not include several foreign companies doing business in Great Britain. Excepting by the imposition of the duty now repealed, the British legislature has not interfered with the busi ness of fire insurance. Any number of persons may at the present time engage in this business with or without capital, nor is there a necessity even for the publication of their accounts, By the Life Assurance Companies Act of 1870, a deposit of 20,000 is required on the establish ment of a life office ; certain returns also must be made to the Board of Trade for presentation to parliament, and these regulations apply to offices which conduct fire in conjunction with life insurance, as well as to purely life offices. One consequence is that, while the results of the fire insurance business of these compound offices are pub lished regularly, those of purely fire offices need not bo published, and several of the oldest and most important fire companies do in fact keep their accounts strictly private. There is no reason to suppose, however, that their experi ence differs materially from that of the compound offices whose figures are open to us. From the returns of thirty of these it appears that their aggregate income from fire premiums in the seven years 1870-76 was as follows : The increase in six years was therefore nearly two millions and a half of yearly income, the premiums in 1876 being about 63 per cent, more than in 1870, There are no means of ascertaining how far this increase arises from the insurance of property abroad, which is no doubt a considerable item, or from an increase in the quantity of insurable property within the United Kingdom, or in the proportion of it which is insured, or in the average rates charged for insurance, but no doubt all of these causes were at work. It may be mentioned here that the thirty offices to which the above returns relate have a subscribed capital of about 40 millions, and cash assets available for fire losses, not including their life assurance funds, amounting to 20 millions. They have therefore funds in hand equal to more than three years income from premiums. Another return gives the premium income of forty-five jBritish offices in the year 1879 as 8,271,000, their losses as 4,349,000, their expenses as 2,426,000, and their net profits irrespective of interest as about 1,500,000, or 18 per cent, of the premiums. The whole premium income of British fire offices is probably nearly 10 millions sterling, and the amount insured may be taken at from four to five thousand millions. The returns of the London Fire Brigade enable us to approximate to the amount of insurances effected on pro perty within the metropolitan area. In 1866 the sum insured was about 316 millions; in 1871, 440 millions; in 1878, 605 millions; and in 1879, 624 millions. The essential principle of fire insurance is the distribution of loss. It does not aim, directly at least, at the prevention and only in a secondary way even at the minimizing of loss ; but what it seeks to accomplish is that such losses as do occur shall not fall exclusively, and possibly with overwhelming effect, on the owner of the property de stroyed, but shall be borne in easy proportions by a largo number of persons, who are all alike exposed to the risk of a similar catastrophe. This work of distribution is capable of being effected in more ways than one. It might be undertaken by the state or by a municipality, and this plan has been tried in several countries, notably in the canton of Zurich. There it applies to buildings only, not to their contents. The Government insures, and raises the necessary funds for meeting losses by a ratable tax on the owners. Where, as in this case, the exact sum needed is raised and no more, the system is practically one of mutual insurance administered by the cantonal authorities. Such a system yields this collateral benefit that the authorities, and indeed all house owners, become interested in the prevention and extinction of fires, and in Zurich accordingly the construction of build ings is carefully watched and regulated ; but the results do not indicate any remarkable measure of success. The rate of assessment in 1870 was nearly equal to 2s. 6d. sterling per cent. The difficulties of carrying out such a system with equity, especially in a great community, seem almost insuperable. To assess the cost fairly it would be necessary, not merely to value each individual building, but to measure the degree of risk it was exposed to from its construction, its surroundings, its uses, and its contents. To place in the hands of public functionaries the power to do this, as well as to adjust the amount of compensation to bo paid in the event of a fire, would be a course attended with manifest evils. Still greater would be the difficulty of applying the same principle to household goods, mer chandise, and machinery ; and, if these must be insured on some other plan, there seems little to be gained by setting up a different system for the insurance of buildings alone. There is, however, a natural temptation presented to particular classes or communities to speculate in the insurance of their own property, in the hope of making a