92      REPORT OF THE COMMISSIONER OF INSURANCE.


thus be seen that, as the premiums are accumulated up to $4,000
bje^fore any savings can be reoturned tol f the subseribers, there is
,lI! einlrene(y1   id ()|d f $2,O)(O over a11(1 al)o le- the SUbSeri)er 's
lial)ility. As only merehant0si of very high commercial rating
are accepted by the exchange, the limit of liability in case of a
conflagration can hardly be brought into question.     Under
ordinary  conditions  there  is always   a  sufficient amount
in the emergency fund, which, as we have stated before, consists
of at least $2,000 for each subscriber, to pay promptly the
largest amount at risk.
COMMISSION
The attorney-in-fact receives a commission of 25%o, which
is in full payment for all underwriting expenses.
MORAL HAZARD
The advisory committee passes upon all risks accepted by
the exchange and in all cases a thorough inspection of the risk
and survey of the property is made before the applicant for in-
surance will be admitted to the exchange. As only merchants
of known financial standing and business integrity are accepted,
the moral hazard in consequence is reduced to a minimum. This
is borne out by the fact that the cost of insurance in this ex-
change has been very low.
LINES COVERED
This exchange insures only risks that are properly equipped
with automatic sprinklers, and its lines are limited to mercantile
risks. It insures onlv one risk in any bloek, so that in case of
a conflagration the limit of the liability of the subscribers will
undoubtedly never reach the amount of $20,000.
FINANCIAL STANDING
The financial standing of this exchange is shown by the fol-
lowing statement as of June 30, 1913:
Ledger assets, December 31, 1913:
Book value of bonds ...... ........  $427,475.00
Cash  .............. ...............  1,432,538.36
Uncollected premiums ...... ......  8,717.92
$1,868,731.28