its resignation is effective, accept through any office, agent, or other representative of the association any direct business for its own account in the class or department in which it participated as a member of the association.

The rate-recommending associations comprise the American Hull Underwriters' Association (relating to ocean-going hulls), the Atlantic Inland Association (relating to inland vessels and coastwise tugs and barges), the American Schooner Association, the Provincial Underwriters' Association (relating to hulls and certain types of cargo in the particular traffic referred to), the Yacht Association (relating to yachts and motor boats used exclusively for pleasure purposes), the Steam Schooner Agreement (the Pacific Coast), and the "Postal Insurance" and "Tourist Insurance" Underwriters' Conferences. These associations or conferences differ from those mentioned in Chapter XIII in that they do not exist for the purpose of effecting reinsurance or otherwise distributing risks. While participating in some of the functions performed by the other group, especially the adoption of uniform policies and forms, their distinguishing feature is the recommendation of rates to their members. In nearly all cases, however, strong emphasis is placed upon the "mere recommendation" of rates, thus affording a strong contrast to the general practice prevailing in the fire insurance business. many instances, however, particularly with reference to certain trades or types of risk, it is clear that the practice of "recommending rates" through marine underwriters' associations is equivalent for all practical purposes to their general adoption by all members. There is, however, no definite obligation which binds the members to observe the rates as recommend. Instead, officials of the several associations have emphasized the point that, while

the conferences recommend rates for the guidance and mutual benefit of the members, they are not bound to accept these recommendations and are at liberty to withdraw from the association at any time. It should also be observed that in nearly all instances these rate recommending associations are very informal in character and do not operate under a constitution and by-laws.

CHAPTER XX

FIRE PREVENTION

American Fire Waste Compared with that of Europe. -Fire prevention in the United States presents problems of a totally different character from those met with in other leading countries. In Europe buildings are comparatively low, of limited area and frequently with wide spaces between them. They are, as a rule, of solid masonry construction and provided with comparatively small window openings. In the United States, on the contrary, business exigencies have not been conducive to the adoption of such precautionary measures. American cities have been built rapidly and, until recent years, as cheaply as possible. Wood, because of its cheapness and abundance, has been used extensively in the construction of floors, roofs and walls. The congestion of business sections in our large cities has also become alarming and has often not been marked by a corresponding effort to prevent conflagration. Moreover, as contrasted with the United States, good building regulations have long been used by European countries and are strictly enforced. Usually also, all fires are thoroughly investigated by the police authorities with a view to imposing full responsibility upon those whose negligence may have caused the loss. In fact, many European cities follow the plan of having the police assume immediate possession of the premises in the event of fire and of deferring the collection of insurance money until assent has been obtained from the proper city authorities.

In view of the conditions just outlined it is only natural that there should result an enormous fire waste in the

United States, aggregating annually about $300,000,000, despite the most efficient fire department protection in the world. In our largest cities property owners are complaining loudly of the heavy insurance tax and insurance companies are confronted with much opposition from policyholders and legislators. The total tax is unquestionably excessive, but any effort to make the same smaller must be directed to the reduction of excessive fire waste itself. Too much emphasis has been placed by property owners on insurance rates and too little on ways and means of reducing the fire loss, despite the fact that rates bear a direct relation to the size of such loss. As previously noted, our factory mutuals emphasize fire prevention above everything else, and the remarkably low insurance cost of these companies (representing less than one-tenth of the cost prevailing before such fire prevention efforts were undertaken) is the result of the rigid enforcement of stringent rules relating to fire prevention.

In European countries, like England and France, the per capita fire loss is only between one-third and onefourth of that prevailing in the United States. As reported by the Special Committee on Fire Waste and Insurance of the United States Chamber of Commerce, the average annual per capita losses for leading European countries for the years 1912-15 were as follows: France 74 cents, England 64 cents, Norway 55 cents, Italy 53 cents, Sweden 42 cents, Germany 28 cents, Switzerland 13 cents and the Netherlands 11 cents. These figures compare with an annual average per capita loss in the United States, during the same years, of $2.26. Canada alone among other leading countries showed a larger per capita loss, viz., $2.96. Mr. F. H. Wentworth, of the National Fire Protection Association, reports that the fire waste of the United States and Canada is roughly ten times as much per person as in Europe. Our annual loss means a direct

annual fire tax of between $11 and $12 for every family of five in the country. But if to the actual loss there is added the cost of maintaining fire departments and other equipment, this tax per family easily reaches twice that figure.

Fire underwriters are agreed that it is in the field of fire prevention that the main solution of present difficulties must be found, and for years the experts of insurance companies have studied American conditions in detail and have devised methods of construction and facilities for prevention, which, if generally adopted, would bring about a decided improvement. In fact, fire prevention has assumed such importance that there has developed a special science, called "fire insurance engineering," that concerns itself with the construction of buildings from a fire prevention standpoint, the hazard connected with the occupancy, the exposure from surrounding risks, and the installation of fire protection facilities.

Expenditures for Fire Prevention a Good Investment. -Granting the truth of the foregoing, the question will naturally be asked: How may property owners, who are always viewing their affairs from the standpoint of profit, be induced to adopt improved methods of construction and fire prevention facilities? The answer is that the surest way to bring about reform in these particulars is to appeal to the selfish interests of property owners. If the owner of a business establishment can be shown that the installation of an automatic sprinkler service, for example, will mean a large reduction in his fire rate, and that the saving in his fire insurance bill will amount to considerably more than a good investment return on the capital expended for such a service, it is only reasonable to expect that the improvement will be made. That there is a decided saving along many lines can easily be demonstrated by consulting any rating schedule in common use.