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FILE NAME Insurance Industry INS DATE 1935 Aug 23 DOC INS019 DOCUMENT DESCRIPTION Article from The Eastern Underwriter - Three Months Test Period Ordered By Pink for Dust Disease Rates 5 i t } me dite Lege pe am ven tne ibe tekians an ie Page 26 alti alti pas UNDERWRITER wi Le UNDERWRITER er | CASUALTY and SURETY Three Months Test Period Ordered Rates By Pink for Dust Disease N. Superintendent in Approving Silicosis Plans Recognizes Need for Experimentation Before Satisfactory Scientific Plan Is Worked Out After a careful study of the entire dust disease situation and duc recogni- believed tion to the experience available in certain other states Superintendent Superintendent of Superintendent Superintednt states Louis H. Pink has decided decided ance InsurInsur-to ap- ers affected as well as to the insurance carriers The situation tnust be vainedwedif primarily from its social aspects that be done it is that the many problems which will arise during the next few months may be satisfactorily solved Senior's Explanation prove temporary compensation premiumi State for silicosis L. S. Immediately following Mr. Pink's deci rates New York Rating test in a period of three months covering 1. On that date dating from September amendment to the law becomes effec- an tive which extends the benefits of the compensation act to workers who may be disabled or dic as result of the occupa- tional disease known as silicosis The decision which proved Superintendent's of conversation in casu- one of the topics alty circles this week views being both hour hear- pro and con SftoaltleoweOdffa ice Building 80 ing in Centre the Street New York last week at which the proposed rate schedule sub- nitted by the CompensatitoonothInasnudrannaciel Rating Board was fought byTh inedustarpiparlovetendploryaetres schedule with charges averaging lower than the board's for is based upon the assumption proposal the affected factories and plants are that well maintained standard risks which are been taken to and in which steps have extraordinary or unusual prevent any of the silicosis hazards Recognition fact that some risks will be entitled to rates and others should bear high- lower decision of the er rates is given in the that de- Superintendent by a provision from the approved rates may partures in individual cases by the Rat- be made approval of the ing Board subject to the . Superintendent of Insurance sion the Compensation Insurance Board through Leon S. Senior its gen- advised its member com eral manager to the approved rates for cov- panies as submitted It erage under the two plans load- was explained that the expense have been modified so as to provide and field ings an allowance for acquisition of % under Plan 1 and % supervision The capita deposit under Plan II per loading is not subject to any expense Mr. Senior gave added emphasis to the fact that the rules will permit carriers to the make application for departure from published rates so as wt hoerperotvhiedree aexsiuspt-s plemaebnntoarlmaslurchhaazragred or the elimination a ofn the occupational disease charge where the hazard is existent He sug gested Application departure should be filed with the Board with the supwhere data and will be granted porting justifiable upon approval by the Insur- ance Department Studies designed to provide a system schedule rating foundries and other for risks in the dast hazard group are under and will be announced when per- way : fected . Manual rules and appropriate en- dorsements to be used in connection with both plans are in the course of prepara- tion and will be sent out within the next days few days JAMES MITC GENERAL BUILD PHIL . 40th Anniversary of .. J Loyal Protective A. & H. COMPANY IN BOSTON > Celebrated Milestone to be at Agency S Convention from Aug. 27 to 29 Finish President's Month Drive of The Loyal Protective Boston 1S old this month and in ob- forty years con- 4 servance of this milestone an agency vention is being held at Boston from August 27 to 29 inclusive with approxi- mately eighty in attendance from United States and Canada Business session Further Review at End of 3 Months Basis Basis for Approved Rates Because these rates are based to rather than large extent upon judgment has de- experience the Superintendent of three cided that at the expiration will months a further review and study be made with a view to making what- ever modifications conditions at that time may require + The point is made in the Superintend- ent's decision that both industry and the insurance companies should wbheiarchinbrmiinngds that the sudden transition law will silicosis under the coemxppeenrsiamteinotnation be- require fcionanlsiadcecruarbaltee rating basis can be fore a period devised During the temporary to work out a satisfactory necessary scientific plan full cooperation on all is of vital sides is essential The matter to the industries and work- importance In reaching his decision Superintendent that cer- Pink was motivated by the fact in the were apparent tain inconsistencies of the rates submitted by development the Board His decision reads at this . point Although under under both plans the carrier is primarily primarily liable liable for the full benefits is primarily ex- and must perform the same functions for the differences in partial reim- cept from the assured the expense bluoradsienmgeni tn both plans has been calcu- lated as a percentage of the purien prPlea-n Since the pure premium mium based II is on net costloawfetrerinreitmebrumrsseo-f ment it is materially rate than under Plan I. payroll the Granting therefore that under both Continued on Page 30 Rates Proposed Approved ee Examples of and Typical PLAN i Rate Proposed by Compensation Insurance Rating Board Industry per 100 of payroll $ 8.00 Foundry Excavation Quarrying and Rock Excavation 9.00 20.00 Silica Grinding Polishing Stone Cutting and Polishing 18.00 2.00 Rates Rate Approved by Supermilendent of Insurance per 100 Payroll $ 4.63 5.21 11.58 10.42 1.16 Sand or Gravel Digging se. PLAN PLAN II Proposed Rates a Per 100 Per Capita Payroll Deposit . Quarrying Foundry Excavation Rock & Rock Excavation Silica Grinding Polishing Stone Cutting and Polishing Sand or Gravel Digging .. 2.35 2.65 5.88 - 5.29 .59 127 143 317 285 32 Rates Approved Rates Per 100 Ap roved Per Capita Payroll Deposit $ 1.88 64 2.12 72 4.70 159 4.23 143 .47 16 JOHN M. POWELL will be held each forenoon with enter- in the afternoon and evening tainment be a lobster din- One of the features will ner combined with historical rsiidgehstsebeaisneg- Other features will be boat ball and golf Protective has just organized As Loyal namely Loy- an associated life company work al Life Insurance Co. educational will be conducted along life insurance convention lines during the has also just completed The company President's month contest in a succeosfsfiutls leader John M. Powell who and health honor is widely known in accident circles Indicative of the trheatnurndooufblbeetttehre times there was more health applica number of accident and tions turned in during the contest with the same period last year compared from July 20 throug The campaign ran : August 20 his President Powell began with the Travelers in career after five years service with insuranc 1915 an that com TH THEEEASTER=N UNDERWATER August 23 1935 030 man- rance treasHealth sident Dwight Mead Leader On Coast For 25 Years NEW PRESIDENOTF A. & H. ASS'N Has Been Pacific Mutual's General Agent in Seattle for Quarter Century His Prominence Dwight Mead recently elected president of the National Accident & Health Association is observing this year his thirtieth anniversary in the business His present post is with the Pacific Mutual Life as general agent of its commercial Forming Arex Indemnity The proposed formation of the Arex Indemnity Co. of New York became known this week It is sponsored by Ernest W. Brown Inc. attorney and manager of the Associated Reciprocal Exchanges who for some years past has been urged by subscribers to enter the casualty business The new company which will be organized on a participating stock plan will serve the insurance needs of subscribers of the Associated Reciprocal Exchanges and will not undertake a public busi- ness start " Disease Dust Disease Rates . Continued from Page 26 . plans there is an accrued loss to be con- sidered in the rate it appears only proper that the loading should be based upon the proportion of the rate representing the hazard of future exposure and de- velopment to a claim status circumstances the expenses Under these that are not required in a fixed ratio to the premium should be adjusted to a comparable basis in both plans This results in a reduc- tion in the expense loading to 20 in Plan I. rm at carly ttendeft his arried accident department at Seattle Wash and his connection with that company The Arex Indemnity will start off with 1,000,000 capital and incor- porators directors and officials will be chosen from outstanding individ- uals in industry and trade In the The average cost of a death and per- manent total disability claim should be fixed at 7250 based on New York State experience After credit for the employer's contribution in Plan I this becomes as a formation of the company President 6950 This would result in a basic rate cpartars he Ernest W. Brown viser William B. has had as his adMann for many for the foundry classification of 5.79 under Plan I. Permission has been re- id enreach- years with the Ocean Guarantee & Accident and a widely known cas- quested however for authority to increase the rate where the occupational oted a - high ualty and surety executive Under disease hazard is abnormal the circumstances it must be assumed that * uently on and age at W. B. Joyce Continued from Page 26 the standard risk for which basic rates are established is for industrial plants in which abnormal hazards are not present and in recognition of this fact the basic th the earned enter & ot the estimated cases and for the enormous sum 2,500,000,000 to 3,000,000,000 of which of there more than 70,000 administrators executors guardians other fiduciary and court honds with a hability of more than 350,000,000 rate should be 80 of that indicated herein for the average before the exclusion of the abnormally hazardous exposure The resulting basic rate for foun- nomics ed his e Mis- Marys- f com- The plan preserved the reinsurance exchanged between various other companies and the Na- tional both ways involving an estimated amount of more than 1,500,000,000 It does not re- quire a very active imagination to realize what would have happened had such companies lost all of such reinsurance * dries should be 4.63 Plan II Plan IL involves an assumption of double the primary benefit costs used in osition Not only would the companies have been re- Plan as an arbitrary method of pro- quired to buy new reinsurance but much of it could not have been obtained at any price Not to be protected on losses under that huge amount ducing a net premium sufficient to bear the burden of losses exceeding the aver- of reinsurance might have been a serious mat age cost per claim and as a means of ent of 3. On ter to some of the companies It assured all patrons for losses occurring on 100 and cents after on the dollar May , 1933 remedying the maladjustment of expense loadings Reconstructing this rate on Busi of field of the DWIGHT MEAD of and this amounted to several million dollars the basis the same factors used in These losses would have been borne by the Plan | and loading the rate sufficiently 4 obligees and assureds unless they expended probably several million dollars for premiums to defray losses in excess of the amount Ictober Washmpany Seattle and is usiness 1 Pro- dates back to 1910 when the late Danford M. Baker then president of the Pacific Mutual induced him to come out to the coast Prior to 1910 Mr. Mcad had been with Moore & MacElwee then general agents of the Fidelity & Casualty in Washington D. Mr. Mead stands life insurance and C. high in Pacific Coast accident and health circles having occupied many executive position in association work during the have on of bonds in other companies to take the place those which would been valueless and further other company would have made all such bonds retroactive which was done by the 6,000 National Surety Corp. Saved 5,000 to National Surety agents their agency connection enabling them to con- tinue their business with only a little interrup place tion and with little loss of confidence on of their patrons Had liquidation taken part theu maty agents and insurance brokers would probably have felt a moral obligation to protect their patrons against loss for a large part of the approximate 8,500,000 of unearned premiums which with other financial difficulties agents upon which the assured contributes would produce a rate of approximately the same amount As in Plan I recogni- tion should be given to the fact that - plants involving an abnormal hazard will be submitted for surcharge The basic rate after recognition of this fact by a discount of 20 from that proposed by the Board should be 1.88 The standard per capita deposit for the basic foundry classification should ven- past twenty years Earlier this year and brokers were then have seriously crippled having would probably It is estimated not however be based upon assumed re he was chairman of the State Life several agencies and many insurance brokers each loss costs and other factors greater than ct and Congress conducted by the Seattle Life would if they so decided return 100,000 to those underlying the rates in Plan 64 ational Underwriters Inc. Since 1912 he has 200,000 as uncarned premiums to their clients This per capita deposit should be and many others of 25,000 and upward It can instead of 127 as contained in the erwrittember served this organization as secretary president and then president in clearly be seen this in the agency field would have : meant disaster Board's proposal The per capita de- Income at the 1914 and as general chairman of the Saved 12,000,000 Premium posit which shall be returnable to the erican orthopedic endowment campaign which Kept in force estimated over 12,000,000 assured in full or in proportion as it is Louis was conducted ten ago In 1916 annual and term of profitable premium income unused for the payment of claims and years on the books much of which is now income for specific allocated claims expenses as- mental erican- Mr. Mcad obtained national prominence when he was elected chairman of the the new corporation The profits now enjoyed by the new corporation are made possible largely sessed against the assured under Plan II ntion membership committee of the National if not entirely husiness which because of such undoubtedly will old company continue on will be varied by the Board subject to the approval of the Superintendent all will Association of Life Underwriters the books in future years with large profits where the hazard of the risk and the accident and health activity he was Thus it retained almost the same clientele built i cakin In 11p largely by me over a thirty period a circumstances of the assured justify such A hundred ion of the organizer of the Scattle Accident conservative estimate being one hundred thou- a iddress & Health Managers Club in 1928 and sand patrons loyal to the new corporation who adjustment 4 nd the served as its first president When the were loyal to the old company After terminations and cancellations and giv giv confer National Association of Accident & ing effect to any new obtained the 4 premiums 1936 Auto Rates in Mass vehicl Health Managers Clubs was getting un- new corporation wrote for the eight months of May Be Filing vane! Late in . Hall der way he served as second presi- 1933 it started business May , 1933 about 5,714,000 and nearly 9,000,000 for the entire lerove dent then first president and last year of 1934 thus around 75 of the 12 ally it year was elected to this office Under 000,000 above mentioned seems to have been should Present indications are that the 1936 bene t Rav his leadership as president the associa- held In 1935 and future years it materially m- automobile liability rates in Massachu- of tion is expected to enjoy an active con- crease The very actual underwriting and investment investment in- in- setts under its compulsory law may bc & er come for 1934 was more than one million dollars later than usual in filing due to the de- .t con- structive growth and for the first six months of 1935 was about lay of the state legislature in passing the didates The of the INDIANA SAFETY DRIVE 600,000 The increase in surplus including appreciation was about 800,000 for the first six guest elimination bill Bay A campaign to reduce accidents on months of 1935 had the corporation corporation not State's insurance department is now working Indiana highways has been launched It been seems clear so created the new creditors would have lost overtime to get the rates Brake and light tests on automobiles will as a minimum the total sum for which the stock in such shape that tentative announce- of the new corporation will be sold The value ment may be made of them right after announced be made by state police who also will of the new corporation was appraised at more Labor Day They must be vincial look for other mechanical deficiencies than 8,000,000 under law so that final promulgation attain The accident ratio in Indiana has been may be made by September 15 for the ckness high this year SEEK HOLD RATE CHANGE ensuing year . n done kely to FITZPATRICK VACATIONING The Investment Dealers Association Canada is negotiating with the Ca- It looks as though there will be average increase in the rates over % those ording Leo F. Fitzpatrick National Surety office at its 118 of nadian Casualty Underwriters Associa- in force this year and possibly the At the hold peg in Corn who is William Street New manager York branch office West tion for surance more uniformity in rates which now vary in- widely elimination of a number of zones but no official information has as yet been given 1g this is now on his vacation in the far what ~ the location of an office in out by Commissioner De Celles on to Heath His itinerary includes Yellowstone Park according will be done : a toba Banff and Lake Louise any one building