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tall buildings of large size than in low ones of moderate area. If the addition for a defective elevator shaft, for example, is measured by an absolute amount, say, 12 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 100 cents. 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 100 cents than in the building rated at 50 cents. (For a sample calculation of a building rate see page 274.)

Occupancy table classified under "cause," "media" and "effect."-Having entered on the rating sheet the basis rate, and all charges and credits connected with the building, the next step is to refer to the classified list of occupancies, and enter the charges for occupancy found in columns 1 and 2. (For a sample section of the Alphabetical Occupancy Table, see p. 275.) 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 brief typical section of which is herewith given:


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Cause Media Effect



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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, the Analytic Schedule divides the 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 of the basis rate 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 percentage charge of the basis rate which represents the combustibility of the stock, that is to say, the extent to which goods will contribute to the spread of a fire. The third column indicates the grade of the article (the grades being represented by D1, 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 burns 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 still 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.

The Analytic Schedule also classifies elaborately the "effect" or damageability of various classes of merchandise. Merchandise, represented by the insignia "D1," 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."

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Contents tables.-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 D1, 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. (For sample illustration of a contents table, see p. 276.) The contents tables are very ingeniously devised, 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 D1, 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.

Treatment of the exposure hazard.-One of the most important features of the Analytic Schedule is the so-called 'exposure formula." This has received much attention from underwriters, and has been commended very highly. The 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 radiated 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 exposed risk absorbs some ratio of this radiated exposure; (3) that every risk transmits some ratio of the hazard it absorbs; and (4) that radiated, absorbed, and transmitted exposure is modified by structure, clear space, and fire department protection." Mr. Dean next submits elaborate tables of alternative standards, with recommendations as to their application in the case of different classes of property, with reference to the clear space between the exposing and exposed buildings, and the grade of municipal fire protection.

The Experience Grading and Rating Schedule.1-Both the Universal and Analytic Schedules, as previously noted,

For a detailed explanation of this schedule, see Dr. Robert Riegel's article on "Problems of Fire Insurance Rate Making," Annals of the Amer. Academy of Political and Social Science, Volume 70, 1917.

are judgment systems, and are not based upon actual statistical evidence. Although representing a great improvement over previous methods, they are open to attack on the score that rates on different classes of risks should be in accord with actual experience, whereas the existing systems merely base the charges or deductions for defects or good features upon underwriting judgment. Policyholders and legislators have become increasingly insistent in their demand that rates on the various classes of property should have a close relation to the actual fire losses experienced in such classes.

To meet this demand Mr. E. G. Richards devised a system, known as the Experience Grading and Rating Schedule, or the "E. G. R. Schedule," which has for its purpose the determination of rates on the basis of actual tabulated experience. The task of doing this, it will be recognized, is gigantic, and space limits forbid more than a very general outline of the proposition. Briefly stated, the plan involves "the provision of an 'insurance written' 'and a 'loss' card for every risk, showing the state and the city or town in which located, the occupancy class in which the risk falls, the amount written, the term of the contract, the expiration, the grade of building, the grade of occupancy, the grade of internal exposure and external exposure, etc." With the actual experience thus recorded on cards for all insured risks and losses in the country, it will then become possible, through the use of modern tabulating machines, to sort out any combination of cards with respect to any set of circumstances.

Without attempting a presentation of the many classifications undertaken in the E. G. R. Schedule, it should be stated that the schedule emphasizes three principal features

2 Robert Riegel: "The Problems of Fire Insurance Rate Making," p. 213.

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