On the Scientific Application of Data to the purpose of deducing Rates of Premium for Fire Insurance

It may at first sight appear strange that while life insurance more especially, and some other branches of insurance at least theoretically, are based upon exact statistical details, fire insurance has never attained to anything like such scientific exactitude. But it will be remembered that, in its first inception, fire insurance was to be a State or municipal institution, wherein it is customary for the insured to pay a certain nominal rate at the time of entering into the contract; and at the end of the financial year the cost of insurance, as measured by the losses and expenses, is ascertained in the aggregate, and an assessment made over the whole property of the town or district for the balance. Under these conditions, the ascertainment of an exact rate in advance is not necessary. Then, again, many of the early fire offices were based upon the “contribution plan.” Here also a nominal payment is made in advance, or annually, and a call or assessment is made either annually or on the happening of any serious calamity. Here too the necessity for exact rates did not arise.