tPPORT OP THt COMMISSIOXER OF INSURANCE.


17


CO-INSURANCE RATES.
Any equitable adjustment of rates requires that the propor-
tion of insurance to value be recognized in the rate.. The great
mass of losses are partial and small. Unless otherwise provided
by endorsement on the poliey, the small losses must be paid in
full, whether the insurance is one-fifth or four-fifths of the
value, though in the latter case the insured pays four times the
premium. It is in the public interest that the insurance should
be fairly adequate to meet the exceptionally large loss, but
plainly the one who insures for four-fifths the value is entitled
to a proportionately lower rate than the one who insures for
considerably less. Especially is this so where the kind of prop-
erty or efficient fire protection largely precludes the likelihood
of a large loss. It is thus desirable that a knowledge of co-insur-
ance and its use should be encouraged. A law enacted at the
last session requires that the rate with and without the co-insur-
ance clause be quoted upon every policy. As both rates are not
in practice actually made in all cases, this does not apply to
certain classes of risks. It does, however, place before the owner
of mercantile, manufacturing or other business property the
differenee between the two rates. This is likely' to, lead to in-
quiry and a better knowledge of the increased protection which
can ordinarily be had at a, lowwer rate by the use of the, co-insur-
ance elause,
CREDIT FOR PREMIUMS.
A contributory cause to high commissions and large expenses
may b;e found in a growing practice of granting long credits by
the agents to large property owners and others. Interest is
rarely, if ever, collected and the practice is in affect a rebate.
The, difficulty of dealing with it arose from  the fact that,
somewhat for the sake of convenience, a usage had grown Alp) or
colleetinig premiums after the delivery of the policy.
To settle the question, as to what should constitute a rebate
and correct the practice, the law was amended by defining an
extension of credit for 60 days and thereafter in writing with
interest at the legal rate as not constituting a rebate. Agents
must therefore see that these premiums are collected within the
sixty days or such written agreement is secured, or if this can
not be done, that the insurance is cancelled.