13. Premium.—The policy implies that the pre mium is paid as soon as the policy is issued. As a matter of fact, however, custom governs the payment of the premium. On an average thruout the United States there is usually a credit of two months. Like all other commercial transactions some credit prob ably would be necessary. Insurance may be wanted on any day during the month by the busy merchant, but as in the case of purchases, he would not expect the bill to be rendered until at least the first of the month. The policy, therefore, whether the premium be paid or not, may reasonably be expected to be in force when it has passed into the possession of the in sured. If the premium is unpaid the cancellation no tice must be furnished in the same way as tho the premium had been paid. The fact that the company has waived its right to immediate payment of the premium will not enable it to deny liability if a loss occurs.
14. Loss settlement—We have set forth on previ ous pages the steps which the insured must take in the event of a loss. These need not be recapitulated.
The person who settles the loss for a company is called the adjuster and for strictly business reasons, even if it had no higher motive, the company has every in ducement to make its loss settlement promptly, equi tably, and we might almost say, liberally. Neither agent, broker nor insured would wish to do business with a company that was a laggard in settling its losses. Hence it follows that a company cannot af ford to be behind in any one of these things, if it hopes to continue in the business. The losses under fire in surance policies are settled in 99 per cent of the cases without the necessity of going to court. The man en gaged in fire insurance, like the merchant, knows that to continue in business, he must pay his bills and he does so.
15. Underwriters' associations.—While the label "combine" has, generally speaking, been removed from fire underwriters' associations by legislatures in the United States, the position is somewhat different in Canada.
During the sessions of the British Columbia Fire Insurance (government) Commission in 1910, some evidence was directed against the Mainland Board of Fire Underwriters, designating the same as a "com bine." It was then pointed out by the underwriters that the name was wrongly applied for the reason that in no other manner can equitable and just rates be made, and proper credits given for improvements in risks, or charges made for increases of hazard. Every encouragement is given to each individual property owner to improve his own risk so that he can obtain a lower rate. He is shown just how his building is
rated and advised as to what he can do to make it better and safer. Each change for the better thus secured serves to minimize the fire hazard not only of his, but the surrounding property, and so the whole character of a city or town is gradually improved. In this connection tariff associations, with very carefully prepared schedules for rating all classes of risks, have done more than all other causes combined to improve the conditions, to secure better buildings, improve old ones, to increase the efficiency of the fire departments, to provide better water supply, larger mains, improve streets and alleys, reduce the possibility of fires, in crease the facilities for fighting the same and minimize the conflagration hazard, which at the present time exists in every town or city in a greater or less degree.
An insurance company may be willing to fix rates upon its own experience or classification record—and this has been done by many companies—but experi ence and the records prove that such a policy gener ally results in catastrophe; as evidence, 1,800 com panies have failed in America since 1867.
It unquestionably takes the aggregate experience of a large number of companies to insure absolute protection, for the reason that such enlarged experi ence offers a better average, and rates based thereon will be more equitable than those based on individual experience. One company may make a profit upon a certain class of risks, while another may lose heavily, but the average experience of all the companies affords the best criterion on which to base equitable rates. Many merchants, manufacturers and business men find it necessary to estimate their fixed charges from year to year, and it is therefore of great importance that the insurance rates be not only equitable but stable as well. If individual rates were to take the place of association or uniform rates, the fluctuations would be great, and general business would become disturbed and unsettled. If individual rates prevail, those companies which have little or no experience of their own, and having the most meager resources will naturally offer the lowest rates, because they cannot otherwise dispose of their policies, and when the day of adversity comes, it will be found that they have not received sufficient income to pay even their normal losses, and the confiding policyholders, as has often been demonstrated, will find that there are no funds or securities to satisfy their claims.