CURRENT NOTES A. N. MATTHEWS~ CURRENT NOTES EDITOR

104 CURRENT NOTES CURRENT NOTES A. N. MATTHEWS~ CURRENT NOTES EDITOR DEVELOPMENTS IN 1936 Although the annual statement figures for calendar year 1936 are not yet available, the present indications are that 1936 was a very satisfactory year for the casualty insurance companies. The improvement in underwriting results which began in 1932 and resulted in a modest profit in 1935 may be expected to continue into 1936. The Workmen's Compensation line which has produced substantial underwriting losses during the last fifteen years is expected to show further improvement in 1936 due to the fact that general business recovery has resulted in higher wage levels. The premiums increase in direct proportion to wages, but losses increase to a much less extent than wages on account of the limitations on weekly Compensation rates and medical benefits. For this reason, increasing wage levels should result in improved Compensation experience whereas decreasing wage levels result in increasing loss ratios. During 1936 the trend in the Compensation manual rate level was decidedly downward because of the effect of the improved experience of recent years. If these rate decreases continue, as they probably will, it will be necessary that the underwriter use the utmost diligence in selecting the business in order to avoid writing at the reduced rates risks which have not enjoyed wage increases. Although the Automobile business produced fairly satisfactory results in 1935 and probably also will produce a profit in 1936, this line is still faced with the problem of increased accident frequency. There is little or no evidence that the energetic activities to reduce automobile accidents have had any appreciable effect. The work that the companies have been doing in collaboration with public officials in eliminating the fraudulent claimant and the ambulance chasing lawyer has doubtless been more effective in controlling the cost of Automobile claims than have attempts to improve the driving habits of the motorist. The General Liability line produced an underwriting loss of 3% for all stock companies combined in 1935. It is expected that this condition will show some improvement for 1936 on account

CUrrENT ~OTES 105 of rate increases combined with the efforts which have been made to eliminate the claim racketeer. This line as well as the Auto Liability line has been the victim during recent years of shyster lawyers and dishonest doctors and claimants. The Casualty companies are conducting a vigorous campaign to detect and prosecute persons attempting to defraud the companies. The Fidelity and Surety business made very substantial underwriting profits in 1935 and it is expected that these profits will be even greater in 1936 as the result of general business improvement. The salvage recoveries on losses paid in previous years will also contribute substantially to the profits for 1936. AUTOMOBILE AND O. L. & T. RATE REVISIONS The National Bureau of Casualty & Surety Underwriters announced a general revision of O. L. & T. rates for area and frontage classifications throughout the country with the exception of New York State. This revision became effective November 2, 1936 except for the state of Washington, for which the effective date was November 9, 1936. In this revision several new territories were created by separating certain large cities from the remainders of their respective states for rate making purposes. The revision was general in nature, resulting in increases as well as decreases for individual classifications and territories. A revision of automobile rates became effective irl New York State on December 24, 1986 for all except public automobiles; the revised rates for public automobiles became effective December 31, 1936. A separate territory was established for New York City, this being the first time that New York City had been separated from the remainder of the state. INSU~nNCE OF MOTO~ VEHICLES IN INTE~STnTE COMME~CE The "Motor Carrier Act, 1935" empowered the Interstate Commerce Commission to regulate motor vehicles engaged in interstate commerce in much the same manner as it regulates the railroads. One of the provisions of the Motor Carrier Act is that all motor vehicles subject to the regulation of the Interstate Commerce Commission must file an insurance policy, or a surety bond, or give other evidence of financial responsibility before being given a certificate or permit to engage in interstate commerce. Rules and regulations governing such insurance have now been

106 CURRENT NOTES issued by the Interstate Commerce Commission, to take effect February 15, 1937. These rules provide that all trucks must be insured for Public Liability limits of at least 5,000/10,000 and Property Damage limits of $1,000, and that the Public Liability limits for buses shall range from 5,000/15,000 for buses carrying seven passengers or less, to 5,000/50,000 limits for those carrying 31 passengers or more. All vehicles carrying freight must have Cargo Liability Insurance providing indemnity of $1,000 for goods lost or damaged in one motor vehicle, and of $2,000 for losses or damages in one accident. CHANGES IN COMPENSATION ~IANUAL RATE LEVEL According to the National Council on Compensation Insurance, the following changes in manual rate level, exclusive of changes caused by law amendments, became effective during the period from January 2, 1936 through January 1, 1937: State Alabama... Colorado... Connecticut... Delaware... District of Columbia... Georgia... { Idaho... Illinois... Indiana... Iowa... Kansas... Kentucky... Louisiana... Maine... Maryland... Massachusetts... Michigan... Minnesota... Missouri... Montana... Nebraska... New Jersey... ] New Mexico... New York... North Carolina... Oklahoma... Pennsylvania... Rhode Island... South Dakota... Texas... Vermont... Virginia... Wisconsin... Total Change in Effective Date Manual Rate Level 1-1-37 --19.2% 3-1-36 + 9.1 3-31-36 -- 1.0 12-31-36 -- 4.5 7-1-36 + 4.4 3-1-36 --12.2 12-31-36 --10.2 3-31-36 --19.2 10-1-36 -- 1.4 7-1-36 -- 7.4 4-30-36 -- 1.2 4-30-36 + 2.3 6-30-36 -- 4.6 3-31-36 --14.1 3-1-36 + 3.9 4-30-36 -- 6.1 5-1-36 -- 6.0 12-31-36 -- 2.8 1-1-37 -- 8.3 12-31-36 --.9 3-31-36 + 6.7 6-30-36 --11.6 6-30-36 -- 3.0 12-31-36 -- 2.0 3-31-36 +10.3 7-1-36 -- 1.4 6-30-36 -- 9.1 2-15-36 +22.0 12-31-36 -- 2.2 3-31-36 +.2 5-31-36 --14.8 3-1-36 + 1.0 1-31-36 + 6.4 4-1-36 + 2.1 11-1-36 --10.0

CURRENT NOTES 107 The decrease of 1.4% shown for Illinois effective October 1, 1936 represents the relationship of the manual rates effective after that date and covering injuries resulting from accidents only, to the manual rates effective prior to that date which covered not only injuries resulting from accidents but also injuries and disabilities resulting from certain occupational diseases. RETROSPECTIVE RATING PLAN ADOPTED The retrospective rating plan for Compensation risks producing $5,000 or more in annual premium has been adopted in the following states : S%ate Effective Date Connecticut... Sept. 1, 1936 Idaho... Illinois... " IOWa... c~ Montana... " Nebraska... " New Mexico... " Rhode Island... " Oklahoma... Nov. 5, 1936 Alabama... Jan. 1, 1937 District of Columbia... Maryland... " South Dakota... " Vermont... u Although there are minor variations in certain states, the retrospective rating plan in general follows the form adopted in Massachusetts on May 1, 1936. An outline of the Massachusetts plan was given in Proceedings XXII, page 378. ILLINOIS OCCUPATIONAL DISEASES AcT The "Workmen's Occupational Diseases Act" which became effective in Illinois on October 1, 1936 was outlined briefly in Proceedings XXII, page 383. This Act has produced new problems for casualty insurance companies because the methods of providing insurance for occupational diseases differ in so many ways from those used in other states. It is now necessary, if the employer elects to insure his obligations under the Occupational Diseases Act, for the insurance companies to use a special form of policy in Illinois or else provide two policies, one for the Workmen's Compensation Act and one for the Workmen's Occupational Diseases Act. The special form

108 CURRENT NOTES of policy shows a separate set of rates for each Act. Coverage under one Act may be canceled independently of coverage under the other Act. The rates to be used for occupational disease coverage range from $.01 to $,05 except for certain classifications which have special disease hazards. For these classifications the rates include a "Specific O. D. Element" which varies from $.01 to $8.27. This Specific O. D. element is removable for certain classes if it is determined that the specific disease hazard is not present. Special treatment is accorded the classifications included in the Chemical and Dyestuff Rating Plan. Provision is made for employees who contracted silicosis or asbestosis prior to October 1, 1936 to remain at work if they waive their rights to full compensation on account of disability or death resulting from these two occupational diseases. If such disability or death actually occurs the benefits paid to the disabled men or their dependents are 50~o of the regular benefits. Under the new procedure it is possible to obtain either full occupational disease coverage or the so-called "Co-Insurance Coverage." Under the former, full coverage under paragraph 1 (a) of the policy is provided for all occupational diseases covered by the Act up to the standard limits of $5,000 for occupational disease suffered by any one employee and $25,000 for all occupational disease suffered during the term of the policy. "Co-Insurance Coverage" may be provided if the policy includes a classification carrying a specific occupational disease element for silicosis or asbestosis. In this form of coverage the employer obligates himself to participate in the loss on each occupational disease claim covered by the policy to the extent of 50~'o, subject to a maximum liability on the part of the employer of $1,000 per case. The rates for all classifications covered by a policy which has been endorsed to provide co-insurance coverage are 757o of the rates used for full coverage. PERSONAL NOTES Edward J. Bond, Jr. has been elected the President of the Maryland Casualty Company, Baltimore, Maryland. Howard G. Crane is now the Treasurer of the General Reinsurance Corporation, New York.

CURRENT NOTES 109 Joseph P. Gibson, Jr. has been elected the President of Excess Underwriters, Inc., New York. Harold J. Ginsburgh is now Assistant Vice President, American Mutual Liability Insurance Company, Boston, Massachusetts. Robert S. Hull is now Field Representative of the Social Security Board, with office at Portland, Maine. Carl L. Kirk, heretofore Actuary, has been appointed Assistant U. S. Manager of the Zurich General Accident & Liability Insurance Company, Chicago, Illinois. William Leslie is now General Manager of the National Bureau of Casualty and Surety Underwriters, New York. Henry Moir is the Chairman of the Finance Committee of the United States Life Insurance Company, New York. Walter E. Otto has been elected the President of the Michigan Mutual Liability Company, Detroit, Michigan. William R. Williamson is now Actuarial Consultant, Social Security Board, Washington, D. C. Charles N. Young is now Special Consultant, Central Statistical Board, Washington, D. C.