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FILE NAME Insurance Industry INS DATE 1935 Aug 16 DOC INS021 DOCUMENT DESCRIPTION Article from The Eastern Underwriter - Many Protests Over Dust Disease Rates At Crowded N.Y. Hearing Page 30 Aug 16 Retain CASUALTY AND SURETY ae Many Protests Over Dust Disease Rates At Crowded N. Y. Hearing Final Decision Up to Superintendent Pink L. S. Senior Defends Proposed Plans as Foundry Granite and Stone : FREDERICK RICHA JAMES F. MITCHE Cutting Employers Fight for Existence ,, GENERAL BUILDIN . PHILAI PHILAI we writing ing was the despairing attitude taken by The attention of compensation all of the spokesmen for employers Faced they described as ruinous rate carriers in New York State is focused what words in telling this week on the two occupational disease Superintendent increases they minced no the Superintendent that such treatment In rating plans submitted to the state of Insurance Louis H. Pink for his ap- . would force them to leave an invitation rel fact one speaker said that Pi proval under which coverage will be pro- has already been received to locate in Bennett Ellison Visits vided to industrial workers for diseases Pennsylvania Another L. L. Balleisen Grand Coulee to silica and other director of the Gray Iron Foundries of Big Dam resulting from exposure the Greater New York was frank in saying harmful dust hazards These plans that if the higher rates went into effect EA BY FINE PR^ GRESS product of the actuarial brains in the Com- his organization would probably institute IMPRESSED Which is Cov- pensation Insurance Rating Board of New court action against them He said on Project must become effective We're fighting for existence We think Writes Report Bond . Divided York if approved when the inclu- the proposed rates are confiscatory and ered by 5,000,000 Twenty Sureties on September , 1935 disease act passed by the they'll simply mean increasing for our own product the price Among & Ellison New $ sive occupational becomes operative By Bennet Ellison of Hoey Finl 1935 legislature and the insurance L. S. Senior Defends Plans York City general agents of the Massa- agreement the employer is most Senior general manager Com chusetts Bonding & Insurance Co. visit- bids carrier may select the plan which Leon S. Insurance Rating Board of New - the Grand Coulee dam project in the tal suitable to the parties and to the peculiar pensatiounnder whose supervision the two ed early this summer whi conditions of the risk bear- York first to speak plans were prepared was Accurately speaking Mr. Senior explain- state of Washington and was so impressed by the magnitude and for old With no time to be lost a public held on Monday in the State OF the law really begins to operate on of the job that he turned reporter ifincge w Ba uislding 80 Centre Street New York eSedptember 3 following Labor Day and prepared a memorandum of his observa- yest at which the two plans came uinnddeusrtrtihael on that date workmen in injurious occuexposed to the dust hazard will tions which would do credit to an old man Mr. Ellison's reac whi critical surveillance of large employers particularly in the foundry nations acquire new rights The feature which which time daily newspaper currently in the and cutting fields As was has caused underwriters and makers story which appears granite representatives significant to be expected their the were difficulty is that even though workmen Concentrator is all the more have caught the disease years ago when it is recalled that he took the lead- pur increases outspoken in protests against against may will be entitled to indemnity if the underwriting of the 5 Pin whom rests the they of the disease extends after ing part in the of : Superintendent Piuk upon responsibility of reaching a quick decidisapproval of duration September 3. And once afflicted the pros- of the patient is not 000,000 contract bond a year ago covering of the dam which is divided is it construction sion for either approval or the plans submitted presided Faced by pect for recovery at all favorable Under the law such up among twenty surety companies ing an of his first serious casualty problems workmen will be entitled to permanent on a surety basis o sinnece taking office he created a good im- and total disability . Ellison returned from his visit the pression by his attitude of fairness his The disease extends itself into ninety- wiMtrh . the distinct impression that the cou willingness to face facts no matter how four classifications of the manual and by Grand Coulec dam is not only well in rejr completion disagreeable One of the biggest points of example proposed rates under but that its successful V he made was the need for rates both way Plan T and Plan II for four major class- hanmderely a matter of time He says tak ariequate and reasonable His final word ifications are given below is There have been many problems and wei was we'll do the best we can II that they have been met with intelligent tiot People Silent PLAN Per Capita Rate and forceful decision is evidenced by the ---- -- Insurance PLAN I to date There is no The hearing was significant in several Rate _ Includ Exclud accomplishment doubt that there shall be many more per wel respects First although insurance comincluding top casualty execu- per 100 of Payroll Kate ink Aqui sition ing Aqui- sition problems but from my contact with the officials and consulting engineers I would tor anc pany people there in large numbers none CLASSIFICATION Payroll that there was no tab tives were Their attitude for the 2.35 211 169 most certainly say that whatever problem of them spoke 9 moment seemed to be to sit on the side- Foundry .. Quarries .. 2.64 - 238 190 aqruiessetsiownill bbuet met with an intelligent and pot val lines But it is no secret that the casualty cancelling compensa- Stone crushing no quarrying 10 Radiator Mig 7 2.94 2.06 264 185 211 148 successful solution fact that nearly 8,000,000 cubic Cc for companies have been of sili- tion policies wherever the threat rate The of excavation had been removed cosis is seen lurking in the background to con- Mr. Senior said that the proposed schedule had been arrived at only after yards at the time of Mr. Ellison's by last June the estimated the engineers Such cancellations are expected an intensive study of all sources available visit as against cubic yards and that tinue Secondly Elmer F. Andrews Commis- Massachusetts of New as to actual experience Plans in the states of Wisconsin and total of 6,605,500 the tremendous cofferdam has been com- by him as a great sioner of Labor of the State legislative action were examined and the research extend- pleted was threegaabridleidty of the executives to York hinted that some Atkinson Co. is probable early next year which might inclusive act - cd even to foreign countries Massachusetts did not offer much he explained tribute of the of leading contractors take silicosis out of the and set it up separately He pictured an 1 to it has an elective act But in both as the cost for death and total perm- the combination which are doing the work He emphatime that has elapsed emergency period from September states is lower than in New sized In the short organization February during which industrial ern- anent disability in Wisconsin be- since work commenced the ployers would have to get along as best He said he would even wel- York the average cost in ing 5,000 as compared with 7,400 has the been improved as is evidenced from selection of foremen down to the drive tchoemye ctohueldestablishment of a special fund New York drivers of the trucks The men who for silicosis claims Explains Plans the various units of the belt conveyor Commissioner Andrews was reassuring that he had instructed Mr. Senior then outlined the features described on Page the stacker unit the main hopper and all the other constituent parts have been the when he stressed his referees to allow no claims that were of both plans fully I follows the tra- much improved The men driving the not proven beyond a reasonable doubt the assurance of em- 33 saying that Plan of charging a fixed rate ditional method the liability electrical and Diesel powered shovels men driving the caterpillar bulldozers all 41 Furthermore thheerheaswill be no quitting by per 100 of payroll to cover resulting have improved in their technique and ployers thaatfter September 1 in order to of the employer for diseases Plan II pro- this improvement in the technique of the workmen silicosis indemnity under the new from specific dust hazards lines and men handling these mechanical devices claim has been feared by the insurance ceeds along entirely different logical one will go a long way toward increasing act as in his opinion is the more is that the the efficiency of the job companies Attitude to use Its biggest feature I could not help but be impressed by e 34 Employers Take Despairing hear- Continued on Page MET The third significant feature of the 3 menatat August 16 1935- iy < THE THE UNDERWRITER ren P33 Occupational Disease Plans ; Designed to Cover Dust Diseases Under New York's All- Inclusive Comp Act Plan I Has Fixed Rate Plan II _ Provides Employers Deposit Fund The major portion of Leon S. Senior's time before the dust disease public hearing on Monday in the State Office Building New York was taken up by a description of the two rating plans proposed under the inclusive occupational disease act which becomes effective September 1. Quick on his feet and decidedly the master of his subject Mr. Senior outlined the principles underlying the two plans explaining such items as claim frequency average cost per claim schedule of rates and cancellations He also discussed the flexibility of Ilan 11 stressed that a supplemental occupational disease rate might be added to the rate for any individual risk where the occupational disease hazard is abnormal His outline in full follows PlanI This plan provides for charging a fixed rate per hundred dollars of payroll to cover the liability of assured for di- Re seases resulting from specific dust hazards The rates have been calculated on the following assumptions - 1. For each hundred persons employed in the foundry industry it is expected there will to be a loss equal in cost one serious ia claim per annum : Bats 2. The average cost per serious claim will be equivalent that of death and permanent total disability cases 3. The average wage is 1,500 per annum 4. The average value of a serious claim has been discounted so as to provide for a specific premium charge of 300 which the employer shall be required to pay for every case resulting in death or causing disability lasting cific premium four months or longer This spe premium charge is designed as a de- advantage of TWO PLANS The advantage of having two plans was summarized by Mr. Senior as fol- lows Operating two distinct plans should widen the scope of the insurance market providing a freer choice of carriers who at the moment are apprehensive lest no premium rates will prove adequate to cover the risk of insuring lives exposed to serious occu pational disease hazards and more particularly assuring the unknown accrued liability of the risk Instead of a rigid inflexible rate schedule under a single plan the parties to the contract are given freedom to exercise judgment and decide on the extent of responsibility each is willing to assume during the experimental period of this . new legislation terrent to discourage the employer from _ discharging suspected cases claim frequency may run from 1 to % yerase . Plan 11 Silicosis is a progressive discase which ON takes a number of years to develop from the early to the final stages when the re- SA spiratory tract of the patient becomes so Ly affected as to cause permanent disability or death Medical opinion holds to the view that prospect of recovery is not fav- Under Plan 1 where practically the entire cost is covered by a fixed rate the minimum probable frequency has been adopted thus giving the policyholder the benefit of the doubt Under Plan II which provides for an adjustment of premium on the basis of actual claims neither the highest nor the lowest probable frequency has been used On the con- e e orable It is assumed that the time of trary the middle ground is selected for progression covers a period of seven years When the carrier issues a policy to cover the obligation of the employer the determination of the premium payable in advance If it should develop that the frequency or cost of claims has been over- pe on September 1 1935 sevenths of the liability is considered as having already estimated the policyholder will reap the benefit in the form of a return of the accrued this Under this plan it is provided that such accrued liability limitetdo a maximum appropriate part of his deposit fund If the actual cost is greater than the estimated the policyholder will be called figure case may be carried by the em- ployer under a suitable guarantee the upon to pay his share not beyond the limits of the stated excess but company assuming the remaining sey- above enth and the excess over and maximum An appropriate rate the per hun- dred dollars of payroll is fixed for this part of obligation Insofar as the sevenths assumed by the employer is concerned it is provided that the em ployer shall deposit with the company a contingent premium determined on a per . capita subject to the following con- ditions . held This contingent premium be held to establish a deposit fund against which . will be charged sevenths of the cost of each claim subject to a maximum limit pclaim based on the average cost of death and permanent total disability cases The deposit fund is to be treated as a Average Cost Per Claim The average cost per scrious claim has been taken as the equivalent of the average cost of death and permanent total disability cases In Massachusetts and Wisconsin the average cost of dust disease claims approaches that of death and permanent total cases and there is good reason to believe that because of the benefit provisions of the New York Act the cost in this state will be even closer Furthermore the claim frequency is based on the expected number of serious claims There will obably be some minor or temporary claims which will add to the total cost but for which no specific provision has been made * Other reasons for using the full death revolving fund to be replenished when impaired or exhausted If the deposit ; fund exceeds the amount of the claim charges the surplus will be returned to 1 the policyholder If the deposit fund is insufficient to cover the amount of claim charges the deficiency shall be paid by the employer to the carrier The rates . under this plan are based on the assump- tion of 1500 anal wage _ pectancy of losses equal in ' and the ex- cost to two senous claims per hundred employes val- ued at 7400 per case . ' and permanent total value are that no specific allowance has been made for med- - ical costs which may run into high figures especially if prolonged care in sanitarium 1s prescribed and that silicosis cases are of such nature that they tend to develop into permanent total disability and finally death when they have once reached a serious stage Thus every serious claim may be expected to require payment of both disability and death benefits This is seldom the case on claims resulting from industrial accidents ; ' Principles Un, erlyingthe Plana Claim Frequency Plan I is based on an Schedule of Rates have previously indicated that in determining rates for dust disease hazards foundries have been expected claim frequency of % while Plan II is based on an expected claim frequency of % While the statistical evidence on the element of frequency is not conclusive sufficient information has been developed by studies made from Massachusetts and Wisconsin experience to lead to a belief that the incidence of used as the basic industry Relative rates for other affected industries have been developed by Committee on our Safety the basis of Engineering relative ex- posure to dust conditions in each industry The rates for Plan I include the standard expense loading The payroll rates for Plan II are similarly constructed The * DOWNTOWN Refreshing hot weathe ... tall frosty drinks ... co in a restful club a Golden E RESTAURAN Fulton and William In the parlance Golden Hill Convenience . tizingly varied other liquid che ers " .Skillful cozy club | delight you Room for new | meal Join y private ro ..Or ..Or drop in at the Lunch assured of delic beverages and i always Get | .And after business hous WINE DINE and DANCE at ( PARAMOUNT RESTAURANT Broadway & 43rd Street SP 12 FOUNTAIN Broadway 73rd Street RA 103 No cover charge at any Childs Usua -THE NATION'S HOST FROM COAS THE EASTERN Cc August 16 1935 shown isition isition r each cL UNDERWRITER Dust Disease Rate Hearing in N. Y. Continued from Page 30 R34 R34 gation would be correspondingly smaller ' the proportion greater for the employer He explained Under the present plan we are favoring the employers Our two alternative plans are based on death and Plan II finally under ns are efunds payroll in acof the deposit to this celling he asion of claim ssured employed practically a self insurer will carry sevenths of the load for ac- crued liability while the insurance com- succeed- pany assumes seventh It was point- ed out however that the plan contemnplated shifting of the responsibility from the employer to company over a sevenyear period going on the assumption that the time of progression of silicosis covers seven years Thus each the insurance company would ing year additional seventh of the assume an liability until at the end of the seventh the employer would be relieved of year his responsibility If no claims have arisen during the seven period the policyholder shall be entitled to complete showing a possible claim ratio from all causes of one per 432 employes Out of \ 19,039 employes there were only twenty cight deaths he said No evidence of pneumoconiosis prevalence of silicosis or was revealed As for partial and per- total permanent disability only and we have made no provision for temporary - disability or medical cases hazard To those who saw no silicosis hazard in in their particular field Mr. Senior recommended that Plan II be taken as t manent total disability deaths the ratio was one death per 142 employes Thus he felt the rating board's estimate to .be from four to eight times worse than conditions actually reported by the foundryfoundry industry Granite and Foundry Speakers Henry J. Benisch of Benisch Bros. Jamaica Long Island discussed granite and stressed that employers in his rates in for a 450 increase un- industry were you become practically a self insurer it and fare better He was frank under that the casualty companies in saying are not at all keen about carrying sili- cosis risks that making Plan II available clearly indicated this to be the case Finally Mr. Senior emphasized that pure premium experience not rates of other states had been used in preparing his own schedule and he said The only compensation experience worth a nickle . is that which has come other states return of his money der the proposed schedule His objective as pure premiums Mr. Senior said the board was uncer- was to prove that New York State work- - Convention tain as to one point whether under Plan ing conditions were better than those - White Sulphur II the per capita deposit should be treat- prevailing in Wisconsin Massachusetts October 10 ed as trust fund or as a premium In and Vermont Therefore granite rates Set for 8 to here its opinion as a premium it should carry as a trust fund it should not be based on experience in the other states For example he said The annual joint convention of the International Association of Casualty & an expense National should not loading He also indicated that the granite work in New York is done out- Underwriters and the board considered the problem of schedule doors or in sheds open at least at work is done Surety Association of Casualty & Surety Agents rating and decided that for managed gathering rate credit would one end Since no winter sheds need no heat There are no crowd- will be held October 8 to 10 at White Springs W. Va This foundries appropriate be given ed poorly ventilated factories Further- in other states Sulphur always well attended by prominent exec ount to Daly Sees Serious Dilemma more the granite people do a wholesale business whercas in New utives and agents comes at the heightSulphur Springs social sea- proved to the Mark A. Daly secretary of the Asso- York for the most part they are retailers silicosis of the White The program is now being pre- TC the ciated Industries of New York was for the opposition the He Mr. among Benisch declared that his workers is not a disabling son and attractive features are prom: Formal pared ay ap- first speaker stressed that most employers of the state discasc More than % of the granite ised Edward C. Stone United States man- working ccupa- realize that this dilemma is the work of and not of the insurance workers in New York have been fifteen to twenty years and are earning As to ager Employers Liability is president of the International association and classifiterials the legislature companies We appreciate what the 10 to 12 daily he emphasized in New York R. Millikan Fidelity & Casualty reating in the companies are doing to ease the situation but it does not require a rating expert the common law experience he said We have not had one single James general agent in Cincinnati association heads the to know that if these rates go into effect concerned they case L. in suit under that law L. Balleisen director Gray Gray Iron agents so far as companies are might as well be called off because We there don't Foundries of Greater New York incens- ed over the proposed rate increase of 1-5-1 AUTO POLICY won't be any risks to cover afford from 110 to 220 for the gray iron in- Sold by Far West Companies at Below think that industrial assureds can argued that our foundries should Manual Rates Alcoholic Re- Job e to pay such rates after five depression dustry be classed by past performances and not striction Endorsement It is no secret that many plants by the experience in other foundries Several far western companies includ- ouncil ; several years in the hands of the banks they are now the To back this up he gave long term ser- ing the Associated Indemnity of San local just can't raise the money to pay vice figures of 546 productive employes Francisco are writing in a number of , premiums , showing that 29.8 of them have been states an automobile insurance contract at consid- ranized Mr. Daly left no doubt that he was with their employers for thirty years or called the 1-5-1 policy rates minent opposed to any expense loading which more Certainly these men can not be erably below the manual It provides 1,000 re pre- is manifestly an energency proposition from silicosis now and decided- 1,000 public liability and suffering added field He also objected strenously to any acqui- included in the ly will not after September 1. A survey of twelve iron foundries he property damage limits and permits a reduction of % from the pleasure car Queen street sition cost charge being rate setup He urged Superintendent gray indicated silicosis to be practically non- rates for an alcohol^>c restriction enand of the Pink to look upon the situation as an and to do his best to devise existent as an insurable disease to Mr. Senior's point that dorsement The 2 and 3 towing service riders may also be attac, hed if e Witt of emergency a plan along such lines as would permit Responding silicosis a progressive disease goes into desired employers to remain in the state Before its final stages after seven years the et OHIO CASUALTY a ma- closing he disagreed with Mr. Senior's speaker said If this be true it only LEAVES Archambault has resigned as Pa- nd ac- basis of 1,500 as the average yearly proves our point that we should not be G. A. Coast manager at Los Angeles for vacation- Route wage in foundries thought it was more year and said This charged such a rate of increase in view of this long service record Mr. Senior's cific the Ohio Casualty and is Canada now It is reported field is nearly 1,000 per may make a difference in the rate was that long service of em- ing in western office that operations un- El- Later Mr. Senior set him straight on prleosypeosnsdeoesn't prove anything as the im- at the Los Angeles will continue as hereto- en he : In- that point by saying that if we had fig- the rate would portant thing is the number of employes who have been retired and what had be- of the company forc in charge of J. C. Hook as mana- the coast New wed on a lower payroll have been higher He denied that the come of them when they did ger on ABROAD foundry yearly payroll rate per capita The final speakers were I. L. Jones P. T. SHERMAN ABROAD had been exaggerated But he agreed treasurer International Heater Co. who P. Tecumseh Sherman advisory_coun- advisory_coun- & with Mr. Daly that the per capita de- represented the radiator manufacturers sel Association of Casualty Surety posit should not be tied up over a long and who said it was unreasonable to ap- Executives who is considered one of the anager York jeriod of time stressing We will be- ply the 7 rate to the entire induswth ryo great authorities on workmen's compen- nt gin to liquidate the deposit one year Samuel Squibb of Quincy Mass State sation laws in this country is vacationing expired after the policy has came to the support of New York ointed Results Given foundry employers in their protest Questionnaire rtment against the high rates in a highly com- J. W. Blakely petitive of the One of the most emphatic points made industry J. A. Gauthier of the -k suc- . by Roger Williams district committee- Queen City Foundry & Machine Co. of 32 mpson National Foundries Association the Buffalo who saw going on the relief Continued from Page > after Ca- m neaxn t speaker was that all foundry class- as the only salvation if the rates had to West Virginian To people who have r ifications be considered on their own go into effect and W. A. Netter of had the good fortune to be born hompand experience Calling the rates un- Camilus Rubber Co. Camilus New York n aontd to live in Welch he extends his g group he said that under Plan I an in- whose record is only one silicosis case in and at the same time a cordial icLean just of 146 is indicated over the thirty years of continuous opera- sympathy to visit him as early and as : been instance ion of crease total premium in one ; tions invitation and share the joys of often as possible under- parnedseunntder Plan II the rate increase is Rebuttal by L. S. Senior life amid the West Virginian hills 340 unperturbed by the many Meantime he continues to demonstrate such fire Apparently Mr. Williams came to the hearing armreturns from a ques- objections to the two plans L. S. Senior the floor in rebuttal and he his superiority as an agent to companies as the Aetna the Continental the Glens ING ed with the partial tionnaire sent to 400 foundries and in was given first cleared the confusion as to the the Norwich Union the Dixie of which Graves giving the results to the Superintendent up amortization period for the Falls and various others most for a rating orrest he requested that no final action be the returns were all in takThe seven deposit If the period of progression of is extended at the request of he has quarter represented continuously of a century He is also an for recent obli- Ryan en until opportunity for another conference was He presented a year silicosis industry beyond seven years it would that the insurance company's agent of the Massachusetts Bonding casualty lines ints is also sought policy experience picture 1930 to 1934 mean agents