in the classification of experience for the determination of a rate, namely, the inherent hazard, which represents "the danger of loss due to inherent qualities of an occupancy after making proper allowance for the character of the building"; internal exposure which relates to "the danger of loss due to the presence in the building of occupancies other than the risk under consideration"; and external exposure which refers to "the danger of loss by reason of surrounding hazards outside the building of the risk in question." The total hazard comprises the sum of the three hazards as just outlined. The plan also undertakes "(1) to ascertain the ratio of losses, expenses and a fair profit to the insurance written on all risks in the United States, (2) to obtain a similar ratio for the average risk in each particular state, (3) to ascertain the average United States' rate on a risk of a specific class. With all this statistical experience at hand, the general method of procedure is explained by Dr. Riegel with the following illustration: "Thus an inherent loss cost of 87 cents, an internal exposure cost of 35 cents and an external exposure cost of 23 cents compose the total loss cost of the risk, $1.45 per $100 of insurance. But such cannot be the rate on the risk for it would make no provision for expenses or profit. A study of expense statistics leads the schedule's author to the conclusion that expenses are about 411/2 per cent of all costs; therefore the loss cost, $1.45, must be 581/2 per cent of the total cost. On this basis $1.02 would have to be added to the loss cost for expenses, giving $2.47 as the total cost. Add The above definitions of inherent hazard, internal exposure, and external exposure are those of Dr. Riegel in his article on "The Problems of Fire Insurance Rate Making." 'Robert Riegel: "The Problems of Fire Insurance Rate Making," p. 214. ing to this per cent of itself, or 12 cents for profit, the final rate is $2.59 for a risk of this particular nature in the United States. But losses and expenses on risks vary with the state in which a risk is situated. One of the complaints against other systems of rating, as was noted, was the failure to give sufficient consideration to the loss record of the state. It is necessary to proportion this rate of $2.59 to the loss record of the state in which the risk is situated, which we may assume to be New York. The average rate of premium for all risks in the United States is found, by reference to statistics which are available of stock companies' underwriting experience, to be 112.5 cents, this figure including expense and 5 per cent profit. The average rate of premium for all risks in New York is found to be 75.1 cents. The risk in New York should pay only about 751/1125 of the average rate of a particular class of risk in the United States. For a risk of the kind for which figures have been assumed here, situated in New York state, the rate would, therefore, be 751/1125 of $2.59, or $1.73 per $100 of insurance." In arriving at the average rate for a state unusual conflagration losses are apportioned among all states. California's loss cost would be 2.327 if it bore the total conflagration loss itself, but is considered as only .716 per cent after the conflagration loss is distributed among all the states." COPY OF THE UNIVERSAL MERCANTILE SCHEDULE FOR NON-FIREPROOF BUILDINGS N. B. For full explanation refer, by No. of item, to the Schedule KEY-RATE OF CITY (See page 13.) 38 Charge for EACH 4 INCHES deficiency in average from standard (if bldg. over 4 stories high, double the charge) ...02 39 On buildings over 3 stories high if average thickness less than 12 inches, add (in addition to No. 38) not less than.. .08 If two independent walls adjoin, 4 inches may be deducted from average of these requirements. Charge for one wall only-the most deficient. A STANDARD INDEPENDENT WALL (p. 11) should be 40 PARTY WALL-Charge for EACH INCH defi- .10 A STANDARD PARTY WALL should be 16 inches at the top story, increasing 4 inches for each story below. Average required for 3 story bldg., 20 inches; 4 story, 22 inches; 5 story, 24 inches; 6 story, 26 inches; 7 story, 28 inches, etc. 42 WALLS NOT PARAPET, each exposed side. .05 43 POOR BRICKS or poor quality mortar.....20 44 IRON FRONTS, for each not backed up with bricks and mortar.. 45 IRON FRONTS, for each backed up. .05 ..02 for each adjoining in row, in addition to above..... .02 No. Charge .Street Bldg. 50 MANSARD with wooden frame, 4 story or lower ROOF SPACE, BLIND ATTIC, COCK-LOFT, ETC.-52 Take maximum height if slanting roof, and add for each vertical foot .03, not exceeding a total of.. .10 FLOORS-53 Double flooring less than 3 inches thick, or single 2-inch flooring, add 54 Single flooring less than 2 inches.. .03 .05 55 FLOOR BEAMS OR JOISTS less than 3×10 inches.... .03 CEILING OR SHEATHING-56 Wood or straw board CEILING, one story. .05 each additional story. .03 57 Wood or strawboard SIDING, one story.. .05 each additional story.... .03 If side walls FURRED and plastered, half 57a Cloth or paper ceiling or siding on wooden studs, each story. AREA (Ground floor). Total. 58 2,500 sq. ft. to 5,000 charge for each 1,000 in "10,000, 3 stories, in excess of 2,500 sq. ft.... .02 "10,000, over 3 stories, in excess .03 or more, 3 stories, in excess of ...025 or more over 3 stories not over (Not exceeding a total of 200 cents.) 62 10,000 sq. ft. and over 6 stories, double the area charge. (Not exceeding a total of 300 cents.) AREA 62-FORWARD (OVER) .05 UNIVERSAL MERCANTILE SCHEDULE-Continued No. Charge AREA 62-BROUGHT FORWARD. If building is of standard fire-resisting construction throughout, halve the area charge. ONE-STORY BUILDING, one-half the charge for 3 story. TWO-STORY BUILDING, two-thirds the charge for three-story. IF CURTAIN, CROSS OR DIVISION WALLS, sub-dividing and Strengthening the building, even though with arched openings, deduct 10% of area charge for each wall so dividing the risk, not exceeding a total deduction of 40% of the area charge. Communications with adjoining buildings unprotected, charge for area both buildings, and rate as one (allowing for division wall.) If fire doors on communications are not standard, rate as if standard and make an additional charge under "Exposures" for defective doors. SINGLE OCCUPANCY-If only one tenant (outside of dwelling and office tenants) twenty per cent. (20%) of the area charge may be deducted. HEIGHT (......Stories) 63 add... 64 Sixth story. 65 Seventh story.. For fifth story, .05 .10 .25 .40 66 For each story over seven, add. These charges cumulative; for example, a sevenstory building would have 40 cts. added. If any story double height, charge for two. STANDARD BUILDING may be seven stories without charge if in town whose key rate is not over 30 cts. 66a Eighth story on standard building..... .24 66b Ninth story on standard building. .40 ELEVATORS-67 Enclosed in lath and plaster shaft or hallway, or if provided with approved .05 67a Fire-proof shaft, but defective doors, or walls not through roof. .03 68 Open.. .12 69 Wooden shaft without approved automatic traps.. .15 70 One-half above charges for elevators in buildings otherwise standard, or in office buildings. If more than one elevator, charge for worst and add one-fourth charge for each additional. STAIRWAYS-71 Enclosed in lath and plaster hallway or provided with automatic trapdoors in floors.. .07 71a Similar to above with traps closed only at night.... STAIRWAYS-FORWARD (OVER).. 12 |