REPORT OF THE COMMISSIONER OF INSURANCE.


Xxi


the Wisconsin Inspection Bureau has been much more active
than heretofore in making complete reratings of cities and vil-
lages. These reratings, on the average, result in a reduction of
rates and premiums. This makes it still more inevitable that the
premiums collected on the 60% basis will be insufficient.
It is true that on the mutual plan this insufficiency may be met
by assessments; but assessments are unpopular and tend to dis-
satisfaction and to destroy confidence in the company. The
policyholder, who may have had his insurance for years at an
annual saving of 40% of the board premium, immediately objects
and denounces mutual insurance, if for a single year he is asked
to pay an assessment of 50%o, which would hardly bring his rate
to an amount equal to the ordinary board rate. If the assessment
be repeated he forgets all about the savings of the past and often
cancels his insurance and resists payment of the assessment.
Experience proves that if mutual companies are to be success-
ful, the rate must be placed sufficiently high to practically obviate
the necessity for an assessment. It is generally felt that in the
mutuals the rate should be at least 80%o of the board rate.
Such an increase certainly is not unreasonable, and a saving to
the insured of 20% annually on the board rate surely justifies
him in carrying this insurance, and justifies the existence of
this form of companies. Besides, the insured cannot be harmed
by paying the increased rate, because the company being mutual,
whatever saving there may be from the rate being excessive may
be returned to him in dividends.
The most desirable plan, undoubtedly, for a mutual company
is to collect the full board rate. This has been done by the
Hardware Dealers Mutual Insurance Company for years, and
at the end of the year the actual savings have been returned
in dividends. Operating on this plan, the Hardware Dealers
Mutual, paying no commissions to agents and thus saving
what virtually amounts to 15% of the board rate expended for
this purpose by the city and village mutuals, has been able to
return to policyholders annually 50% of the board rate. Tak-
ing into consideration the amount paid out by the city and vlle
lage mutuals' for commissions, this is equivalent to a return of
35% by the city and village mutuals. On this basis, the Hard-
ware Dealers Mutual Fire Insurance Company has, since 1904,
built up a surplus of over $40,000 in addition to holding the full