TRIAlS ANDTRIBULXI10NS(1910-1920)

CHAPTER IV

Sir wilfrid Laurier, Prime Ministerof canada, 1896-1911.

Between 1910 and 1920, thecanadian Fire Underwriters'Association reached a level ofmaturity that allowed for changesto the organization without jeop­ardizing its existence. Had it notbeen so firmly established, CFUAmight have had difficulty emerg­ing intact from Ontario InsuranceInvestigation, the most seriousthreat to date in its histoty.

For several years the associationhad attempted to reach an agree­ment with the Goad Company foruse of its fire insurance plans;either Goad would supply themexclusively to tariff companies, orthe association would purchase acontrolling interest in the firm.But the Goad Company placedsuch a high value on its plant andgoodwill that the partiesremained far apart in their negoti­ations. The CFUA committeeappointed to pursue the matterpersisted, and in December 1910,decided the association shouldproduce irs own insurance plans.The proposed Plans Department

would engage a surveyor andassistants as required, and sell itsown plans at cost to membercompanies. Since Goad could notafford this challenge to itsmonopoly, in October 1911, thetwo parties reached an agreementthat pledged the Goad Companyto produce and revise insuranceplans for the exclusive use ofassociation companies. Theagreement stated that:Any Company, member ofthe Asso­ciation. retiring therefrom or ceasingto do business in a place for which ithas purchased plans, may sell ortransfer any or all such purchasedplans, which it no longer requires, toany other Company, a member of theAssociation. For the purpose ofrevisions, extensions and fe-issuessuch other Company shall beregarded as the original purchaser.Under terms of the five yearagreement, the Goad Companyrevised plans evety three years,except in larger cities such as'!bronto and Montreal whereupdates would be carried outevety 18 months. The associa-

tion's embryonic Plans Depart­ment was reduced to a skeletonstaff, sufficient only to funnishplans for such small places requir­ing specific rating and for largemanufacturing risks.

William Mackay, CFUA President,1911.

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,aNNISSlflH or t:(JNS£RVATltr"

Canada's Parliament Buildings, Centre Block, were destroyed by fireFebruary 3, 1916.

The agreement between the GoadCompany and the associationoperated smoothly for its fiveyear duration. As the terminationdate drew near and the associa·tion prepared to negotiate a newcontract, Goad again attached ahigh price tag to its services. InDecember 1916, CFUA decidedto allow the agreement to expire.Tariff companies purchased plansthat had been loaned to themand a full complement ofstaffwas reinstated in the PlansDepartment in the association'sThronto office. Goad received$22,000 for the loaned plansabout the same time the associa·tion decided to incorporate thePlans Department under a new

name, the Underwriters' SurveyBureau. By June 1917, the bureauhad surveyed seven towns andplans were ready for distribution.But Goad was not to be dispensedwith so easily. He recalled allplans loaned to agents in theMaritimes.This challenge was met sharplyand decisively by CFUA. Theassociation dispatched thebureau's full staff to New Bruns·wick to draw up surveys andproVide plans for towns previ·ously mapped by Goad. Again,

bold action by the associationforced Goad to reconsider itsposition. The inconveniencelasted only a short while. Asatis·factory agreement negotiated latein 1917 gave the bureau the rightto revise and reprint Goad's plansfor the use ofassociation memobers. In March 1931 the bureaupurchased all assets of the GoadCompany, inclUding the copyrightto insurance plans. This did notend confrontations over insuranceplans; in the 1930s, the copyrightwould be challenged in a majorcourt case.

(Opposite) A typical single sheet Goad fire insurance plan of a small town.Between 50 and 100 copies of such plans were produced for each ofseveral hundred minor localities across Canada.

-or· ---,

~--: 6p,---

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The Electdc Department keptabreast of the modernization andexpansion occurring in otherCFUA departments, and nowturned to new challenges andproblems. When the '!brontoHydro-Electdc Company declareditselfa dval to the '!bronto ElectdcCompany, keen competition oftenprompted the two companies tobypass safety precautions. InmaI)Y cases, they electdfiedbuildings without waiting for theassociation's blessing. Inspec­tions revealed that numerousinstallations were unsafe, and insome cases, rates were Increased.In 1915, the Ontado Hydro Elec­tdc Power Commission assumedmost of the duties of the ElectticDepartment, using its staff ofinspectors to oversee inspectionsfor the entire province. Thischange proved detdmental to fireinsurance companies when sev-

eral sedous electtical firesoccurred. The trouble arose ftomthe fact that the commissionrequired but did not receive reve­nue from re-inspections.Although both the commissionand the neWly-appointed FireMarshall, E.P. Heaton, agreed onthe importance oforganizedinspections ofold installations,nothing was done. This unsatis­factory state ofaffairs continuedfor several years. In 1919, 539fires were caused by faulty electd­cal installations creating an insur­ance loss of $330,656.In Quebec, the situation wasdifferent, and relations with thepower companies continued to beamicable. In addition to inspec­tions ofall new installations,door-to-door checks of old electti­cal hardware were catded outpedodlcally, with extra premiumsbeing charged for defects. This

inspection work benefited boththe public and the insurancecompanies. At times, cause offires was atttibuted to faultyelectdcal wiring when there waslittle evidence ofother factors.Association representativesbegan studying reports of firesevery morning so that any ofparticular interest to the bureaumight be fully investigated andunsubstantiated claims detected.The association extended itsmandate to include work onbehalfofthe Chicago-basedUnderwdters' Laboratories. Thisconnection was first mentionedat the 1908 annual meeting withthe report that fire preventionappllances had been tested,passed and labelled on behalfofthe Underwdters' Laboratodes.The Secretary observed that, "Wehave, of course, neither the staffnor appliances available in Chi­cago for odginal examination and

"'v hen I think of what might happen to these kiddies,"the principal said. "I feel as though I'd like to have

- a Fire Department •In Every Room"

Let Us Tell You More About It and Quote Prices

We told him how he could have just about that. And you canh'lve the same in your present or your new school.

The Booth-Coulter Copper & Brass Co.Toronto, Ontario Ltd.

-is identical (exct>pt in size) ,vith thechemical engines used by the city and townfire departments.

-is the essence of simplicity. Has nopump or valve. Turn upside down and it isat work immediately.

-is approved by the Underwriters'Laboratories.

-is safe, dependable, certain.

The 1"!S~~~A~dI~~"

Fire :Extinguisher

THE STANDARDFDR FORTY YEARS

Advertisement for approved school fIre-fighting equipment, circa 1915.

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J. Gardner Thompson.LIverpool-Globe President,1915.

tests, but the supplementarywork taken up will certainly resultbeneficially to our members andto the public."

As an agent for the Underwriters'Laboratories, the association didan ever-increasing volume ofinspection and labelling. CFUAspoke candidly in a 1912 reponabout the attitude of some Britishmanufacturers: "The question ofsubmitting English goods forapproval to the Laboratories hasagain come up on a circular sentout by the Birmingham ChamberofCommerce. The circular showsa great want of knowledge of thereal conditions here, and itentirely misrepresents the atti­tudes of the Underwriters in thiscountry."

The report stated it was probablydifficult in Europe to appreciatethe tremendous devastationcaused by fire on this continentyear after year, and to understandthe checks and safeguardsadopted by CFUA to reduce firewaste. It went to considerablelengths to explain that Britishcompanies could not expect to begiven special privileges vis-a-visCanadian and American compan­ies. The British manufacturer, "ifhe wishes to supply the market,must be prepared to make hisgoods suit it and not expect thattested regulations required in thiscountry should be waived tomeet his custom of manufactur­ing".

During this period, the associa­tion faced more imponant prob­lems than the unwillingness ofBritish manufacturers to complywith standards. Like the rest ofthe world, the attention of theCanadian Fire Underwriters'Association was diverted by thecalamitous events in Europe. Inhis 1915 presidential address to

the association, J.G. Thompson(Liverpool and Globe) painted apessimistic outlook follOWing theoutbreak of'MJrld War I:

VIe have lallen on evil days: ourEmpire is at war. As a businessassociation it is not our province todiscuss the war in so far as it affectsow panicular interests. \I\e must.however. record that many ofourmembers have made great sacrifices­human sacrifices-for the defence ofour King and country and for thecause of libetry, and others ofus willdoubtless suffer likewise, for the endis not yet. ..The war has accentuatedthe financial depression from whichwe have been suffering for sometime,and we have the narural resuLt ofahigher loss ratio. Profit·making in fireinsurance is increasingly difficult intimes like these. Tho many, whenfotced to the wall, are unable toresist the temptation of preferring themisfonune of fire to the ignominy offailure. we must, however, be pre­pared to suITer with the other finan­cial interests, and we hope that thereare prosperous years in the nearfurure which will repay the Compan­ies for the unfavourable experiencethrough which they are now passing.The domestic situation was notas serious as Thompson had

.feared. At the 1916 meeting inSI. Andrews, New Bnmswick,E.F. Garrow (British America)pointed out that tlhings at homeand abroad looked more optimis­tic than they had the year before.It is with gratefuL heans that, withthe help ofour Allies and through theindontltable spirit ofour people inthis and other Btitish Lands. we maynow regard with patience and everyhopefuiness the steady progress ofthe war toward victory and a lastingpeace. So far as the war's relation wour business is concerned, our fearsof its adverse effect have so far notbeen fully justified. The year 1915proved a fairly profitable one to theInsurance Companies. and whilst theearly months of 1916 have shown asomewhat higher loss ratio. it isthought the six month petiod mayprove as favourable as the first halfof 1915 and that the gradualimprovement in the general tradeconditions of the country offers areasonable prospect for anotherprofitable twelve months.Membership in the associationhad by then reached 78 compan­ies. This represented a 100 per­cent increase in 18 years.

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The year 1916 was also signifi­cant in CFDA annals because itbrought the beginning ofone ofthe closest investigations of thefire insurance business ever con­ducted. The association had beencontinually condemned by manu­facturing interests in Canada ongrounds that it acted as a monop­oly to fix insurance rates at anartificially high level. In responseto mounting criticism, the Ontariogovernment appointed theHonourable Justice C.A. Mastento launch an investigation intothe business practices of theassociation.CFDA had nothing to hide, andthen President E.F. Garrow coun­selled members to keep in mind:... the duty ofthis Association is toinstruct its officers to alford theConunission every facility in theirpower sc that the knowledge of ourrules and practices gained by it, andthrough it by the public of the Prov­ince, may be thorough and compiete.Publicity of this nature is to bedesired and encouraged.At the June 20th annual meetingGarrow expressed his belief thatthe investigation presented theperfect opportunity to dispelsome of the myths about theassociation. His only lament wasthat such a probe invariablycarried with it a stigma of wrong­doing.The Ontario Insurance Investiga­tion began August 1916 andcontinued until April 1918. Fifty­five sessions were held through­out the province at whichinsurance agents and municipalauthorities recorded their discon­tent with the key rates fixed bythe association. The case for t',eCFDA was ably handled by JohnB. Laidlaw (Norwich Union) andJohn A. Robertson under theguidance ofassociation solicitorLeighton McCarthy. John Laidlawattended every sitting of theinvestigation. His diligence placedfellow association members, thenand now, forever in his debt.

John B. Laidlaw, CFUA PresIdent,1920.

John A. Robertson, CFUA Secretary

Justice Cornelius Arthur Mastenconducted tbe Royal Conunlssion,1916.

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-'--._. ~

To laugh at pain and ttouble and keep his grit.

KEEP YOUR GRIT AND STICK AT IT!

Folks die 100 easy-they sort of fade away:

Make a little error and give up in dismay.

Kind of man that.'s wanted is the man of nerve and wi!,

Cultivate Stick-at-it-iveness. It is an extremely valuable asset and it willgrow money for your older days.

Don't be merely a dreamer. Occasional day dreams or visions of thesuccess you hope to attain are inevitable. but they materialize 0 LY THROUGHWORK and inflexible purpose. Some men dream or success, but the trulysuccessful go out and drag it in-by the tail, if need be. II I slept and dreamtthat life was beauty, I woke and found that life was duty.n

Get rid of fear. Don't be a 11 faint-heart 11 or 11 timorous." Face the facts andblow the sparks of your ambition and enthusiasm into a roaring fire of doggedwork, and success is assured.

Confidence, Tact; Geniality-these are all desirable adjuncts, but it is thedogged, steady daily grind that tells. THEREFORE-keep at it! hang on! cling

on! push on! sing on!

When a prospect says "I am too busy to discuss the matter with you to-day.'remind him pleasantly of the fact that in his hurry and BECAUSE of his beingso busy he may forget the law of self-preservation for one little second andthereby have on his hands more time than he can use-AND NO INSURANCE.

Every solicitor knows how easy it is to stick-at-it when his visit is pleasant,his appeal heeded and the applications are coming right along, but when thereverse comes, when you go a week or more with little or nothing to show foryour going, Stick-at·it-iveness has its testing, and it is just at such times that thissame quality is most valuable.

How are they built? Just by persistent, patient work. Just as the HeadOffice Building grew, and just as the three other adjacent sky-scrapers were built.Steady, continuous work, summer and winter. storm or sunshine. No II Let up r"everlastingly-at-it from foundation to top-stone.

ties and Schedule Rating, by which give this service without tremen-the defects are brought to the atten- dously increasing the cost ofinsur-tion of propetry owners, tends in the ance to the public. It is equally plain .long run to effect a considerable that no single company could be in abetterment of the physical conditions position to bring about improvementswhich are largely responsible for our that can be effected by many of thelosses by lire. No individual company companies acting in cooperationcould maintain a staffof expens to with one another... On the grounds

Words ofencouragement from a major insurance company co its"trave/lers," (i.e. salesmen). 1914.

Hap-hazard, spasmodic soliciting brings SOME returns. but it does not buildlarge, profitable agencies that are worth more money every day. Such agenciesexist and are well worth the effort it costs to build them.

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, ',---------------------------------------------------------------------------~

,--------------------------------------------------------------------------,

i STICK-AT-IT-IVENESS. i, ', ', ': No compounded word in the English language is of such vital importance :, ': to the casualty solicitor as our heading. To have a well rounded and well :: developed bump of Stick-at-it-iveness which keeps the owner everlasingly-at-it is I: an absolute guarantee of success.

E.O. Ryan, in his "The History ofthe First Seventy-Five Years ofCUK, criticized the need for the1916 investigation especially inlight of the world-wide problems.1b any readers of these pages, toanyone conversant with the record ofpublic service of the AssociationCompanies. the reason for this attackwill remain a mystery. In addition, itwas wartime. This country and thewhole of the Empire was engaged ina struggle which in 19I6-when theinvestigation staoed-looked asthough it might be fatal. One may beforgiven for thinking that at such atime all our energies might have beendirected toWllds the preservation ofour country and of our soldiersoverseas instead of to this petty andineffectuai back-biting. There aresome who think that the action mayhave been influenced by those who,waving the flag of patriotism, weremaking handsome profits from thewar and wished to direct attentionaway from themselves. They mayhave been successful in this objectivebut in the attempt to disrupt thework of the Associated Companiesthey failed entirely. The case for theAssociation, presented matter·of­factly in these pages, was broughtout much more fully and effectivelyby Counsel.The findings of the commission,published in an BO-page report,vindicated the Canadian FireUnderwriters' Association. Mas­ten, who approached the investi­gation under the impression therewas widespread dissatisfactionwith the existing state of affairs,soon realized there was very littlepublic interest in rhe inquiry.After carefully considering aU theevidence presented, he ruled infavour of the association. Hisfindings read in part:One of the strongest points in favourof an insurance organization such asthe canadian Fire Underwriters'Association is the fact that its methodof conducting business is not onlyeconomical and effiCient, but indi­rectly bringa about an improvementin conditions that directly benefitsthe public. The inspection of proper-

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which Ihave herein set forth, Iam ofthe opinion that the operations of thecanadian Fire Underwriters' Associa­tion have been, and are, to theadvantage and in the interests of thepublic, and that such a combinationtends strongly to maintain the sol­vency of companies, to stabilizerates, to eliminate discrimination,and assist in controlling the expensesof carrying on the business...Thisconclusion accords with the findingsofthe strongest Commissions in theUnited States that have consideredthe question.

While the commission substanti­ated the basic claims of the manu­facturers' association that theorganization exercised considera­ble monopoly power, Mastenargued that it functioned in thebest interests of the general pub­lic.

He also found rhat although theactions of the CFDA oftenappeared aimost dictatorial, "thecharacter of the work necessitatesdefinite aild precise rulings, andthese rulings not unnaturallyappear to those seeking insurancearbitrary and autocratic" . Mastenexplained that rates establishedby CFDA had to be governed bypast results through the aggregateexperience ofmany companiesworking together. In this manner,the association was better able todetermine rares commensuratewith the risk insured.

The tariff companies did not earnunreasonable profits. The Reportof the Superintendent ofInsur­ance for the Dominion of Canadashowed that for the period 1875-

Overhead wiring was a major handicap to these firefighters, circa 1915.

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Hose Cart (for Fire Department PurpoauJ

Solid wrought_iron rram~, 6(l..jnch whetls, drag rope and reel. ax~ andcrowbar. noule holder. with ca.rrying capacity or 500 r~t standard fire ho~.

Exceptionally strong. conveniently equipped. Ttll us your wants; Wt' ca.n5('rve )·OU.

191 7 figures submitted bylicensed canadian insurancecompanies were as follows:Premiums Received .$617,863,000Paid for Losses. $380,446,000General Expenses .$194,757,000

Simply stated, for every $100premium received $60.30 waspaid for losses, $33.00 forexpenses and $3.75 was carriedto conflagration and unearnedpremium reserve funds, leaving$2.95 for dividends on capiralstock. This does not, however,take into account the profitsderived from investment.

Justice Masten pointed out thatthe operation of CFUA wasdifferent than a combine in thegrocery or manufacturing sector.This same distinction was madefive years later by R.S. Gillespiein the Monetary Times. He wroteit would be:...wise to remember that in dealingwith insurance one is not dealingwith a commodity such as wheat,machinery orclothing. In the latterit is easy to calculate the cost andrhis is done before the article issold. In selling insurance we areselling indemnity and we neverknow what the indemnity is goingto cost us until after it has beensold. The purpose of these organiza­tions is to obtain, by a pooling ofasmuch experience as possible, theprobable cost to the insurers of theindemnity he proposes to sell.(Monetary Times, June 29. 1923.)In addition to the external stresscreated by the insurance commis­sion investigation, the associationcontinued to deal with internaldissension. The chronic problemof agents' commissions wouldnot be laid to rest. The existingset of rules governing payment ofagents who dealt with CFUA inOntario (except ThrontO) limited

commissions to 15, 20 and 25percent according to the class ofrisk. Such restrictions presentedproblems for the agents in theirselection of business. ).5. Pater­son presented the case for theagent:

Most vital ofall is the methodadopted by the company in compen­sating an agent. Ifyou are faithfulyou are penalized; ifyou are unfaith·ful you are rewarded. I assert thatthere is not one act that you can dofor the protection of the companywhich does not diminish your com­pensation. Ifyou refuse or cancel ahazardous risk you get nothing. Ifyou seek to eliminate the moralhazard by reducing the insuranceyou reduce your commission. Ifyouaid your company in resisting afraudulent claim you lose your rus­tomer. Ifyou over4 msure you getyour share of the profit. If you refuseor cancel a hazardous risk you losethe business and the commission toyour less scrupulous competitor.Under these conditions what chancehas the faithful agent when in compe·tition with an unfaithful one?Gouena! of Commerce, June 21.1916.)While commission regulationswere widely ignored, Thromo wasthe prime offender. Competitionhad intensified with the establish-

ment of new companies, andcommissions ranging as high as40 percent were now common.At the 31st annual meeting of theCFUA, President Harold Hamp­son lamented:In lbronto there are no limimtions asto the commission payable, and theresult has been, as far as 1can infonnmyself, that the cost ofbusiness isvery much greater than it is in Mon~

treai, and that without saving busi·ness to the tariff companies. Iunderstand that the Thromo Commit­tee is endeaVOUring to adopt rule-s...On more than one occasion someofme members have consideredthemselves at Uberty to decline inadvance to submit to proposedruIes...lfindividual members will notagree to the decision of the majoritythey run the vety serious risk ofeventually, by their actions. disrupt­ing the Association.President J. Gardner Thompson(Liverpooi and London andGlobe) reported to members thefollOWing year the adoption ofnew commission rules for Mon­treal. He expressed hope that theparticipating companies wouldabide by both these and thegeneral rules, believing thatuniversal adherence to thesestandards would serve to instill asense of increased confidence

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LII : f ••

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CFUA Annual Meeting. July 1917.

1, W. Davis (North British & Mercantile); 2, J.R. Stewart (Aetna); 3, J.H. Riddel (British Crown); 4, Geo. A. Sherrin (St. Paul);5, Harold Hampson (Ins. Co. of North America); 6, C.C. Hall (National of Hartford); 7, W. Robins (German-American); 8, O.S.Minty (Rochester Underwriters); 9, W.E. Baldwin (Continental); 10, H.S. Angas (British Dominions); 11, C.E. Corbold (CanadaNational); 12, H.M. Lambert (Guardian); 13, John Jenkins (Employers); 14, A.C. Baillie (Nova Scotia Underwriters); 15, F.W.Evans (Home); 16, W.S. Jopling (Commercial Union); 17, Geo. W. Pacaud (National of Hartford); 18, T.O. Richardson (NewYork Underwriters); 19, J.E.E. Dickson (Law Union); 20, C.L. Scofield (Manager Sprinklered Risks DepL); 21, Lyman Root (Sun);22, T.F. Dobbin (phenix of Paris and General of Paris); 23, M.C. Hinshaw (Atlas); 24, J.E. Hounsom (London Guarantee); 25,J.B. Laidlaw (Norwich Union); 26, John MacEwen (Norwich Union); 27, W.A. Wilson (Union of Paris); 28, A.M.M. Kirkpatrick(Home); 29, P.M. Wickham (Yorkshire); 3D, a.E. Moberly (Northern); 31, Alfred Wright (London & Lancashire); 32, SecretaryFoster (Vancouver Mainland); 33, Secretary Noble, (Vancouver Island); 34, J. Murphy (Springfield); 35, P .A. McCallum(Hartford); 36, J.W. Binnie (Globe & Rutgers); 37, J.W. Tatley (Equitable); 38, J.H. Labelle (Royal); 39, A.C. Gaur (Phoenix ofLondon); 40, E.P. Garrow (British America); 41, J.H. King (Canadian; 42, T.L. Morrisey (Union); 43, Colin E. Sword (Quebec);

44, J. Gardner Thompson (Liverpool & London &Globe); 45, John A. Robertson (Secretary, Toronto);46, Thos. H. Hall (General of Perth); 47, John G.Borthwick, President (Caledonian); 48, Alr. W. Had-

(Chairman Executive Committee); 49, L. How­gate (Secretary, Montreal).

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London. Ontario's last steamer, and first motor truck, circa 1925.

within the association. Thompsoncautioned, however, that theorganization should not attemptto establish too many rules, "forIn so doing, we give increasedoppottunities for dissension andnaturally weaken the bondswhich unite us" .

Meanwhile, troubles continued inThronto and the situationremained chaotic. When opinionswere solicited on new rule pro­posals 23 Thronto companiesaccepted them without reserva­tion, five had qualifications, twowanted action postponed, 18declined to accept them, fivewere Indefinite and 20 did notanswer.At the semi-annual meeting inDecember 1917, commissionrules for Thronto, prepared bychiefagents there, were adoptedby a vote of 49 to 13. The ntinor­ity refused to accept the decisionand mounted a strong protestagainst the rules. The followlng

extract from a letter read into thentinutes of a special meeting inMarch 1918 Indicates the polar­ization ofattitudes to the issue:Ifeel constrained to register mystrong protest against the rules asadopted, and to denounce them asbeing unfair in that they discriminateagainst certain classes of companiesand agents and in that the vote intheir favour was largely cast by'!bronto Chief Agents in their ownfavour...1protest against the absenceof any limitation on terms to be paidto the Chief Agents on '!bronto Citybusiness. In the absence of this thelegislation just passed is plainly byChiefAgents for Chief Agents, andwith no possible saving in expenseto the Companies or to the public asso ingenuously assumed in thepreamble to the rules.Facing such strenuous opposition,the committee decided to shelvethe rules for the moment.

The problem confronting theassociation In Thronto was obvi­ous. With no general agreement

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I •

'11on commissions, Insurance com­panies were forced into a biddingwar to attract business beingplaced by the agents. The com­panies could only afford to nego­tiate an agreement to which allfirms adhered. The commissionsissue attracted much attention,including that ofa MonetaryTimes editor:

Thomas H. Hall. CFUA President.1918.

Ryan described the basis of thedifficulty:...not only on aCCOtmt of the upset­ling effect of rate discriminationbased on what they could get: notonly because theY profited 1T0m thefire preventative work done by theAssociation without making anyconuibution towards it; but alsobecause theY hampered the publicservice of the Association by weaken­ing that unity in which lay its powerfor good.Much to its credit, CFUA refusedto compromise its principles tofight increased competition. In191 7, one manager wrote to theMontreal committee saying hehad appointed a general agent towork the local field and this manwas doing very well. But much ofhis business was raken from non­rariffs, and he was insrructed byhis clients not to pay a higherrate. Consequently, he had toplace it with non-rariff companiesagain. This manager's literarystyle was nothing ifnot colourful!Ihave lTequemly urged before theAssociation the shonsightedness of

J. G. Borthwick. CFUA President,1917.

in many quarters as the solutionto skyrocketing' costs. The draw­back was that such a strategycould not effectively be under­raken by individual companies.Widespread cooperation wasrequired for its success. Althoughthe CFDA did discuss the possibil­ity of implementing contingentcommissions, it was decided thatthe loss of business would notjUstifY the move. Justice Mastenhad in the course of his investiga­tion said commissions were toohigh, and he considered thepossibility of recommendinglegislation be passed putting aceiling on commissions if theinsurance companies could findno alternative solution. Thedilemma ofcommissions was toremain unresolved for some time.

Competition from non-rariff com­panies was another preoccupa­tion of the CFUA. In his historywritten in honour of this associa­tion's 75th anniversary, E.O,

The root of all evil of the insurancebusiness, and one of the greatestfactors in the excessive fire waste inCanada, is undoubtedly the methodofcompensating agents solely on acommission basis. The report (Com­mission of Conservation: Fire \t\astein Canada) declares that the 'care­less agent is paid equally well withthe careful agent' . This tends toover-insurance, carelessness in theuse of property, and arson, all ofwhich cause heavier fIfe waste. Theremedy for this, the Commissionstates, is a profit-sharingcommis­sion for agents whereby those whowrite good risks would be morehighly remunerated than those whowrite bad ones...The canadian FireUnderwriters' Association. it ispointed out, has attempted butfailed to enforce a similar system ofcontingent commissions on accountof the disadvanrage under which itwould place its members in competi­tion with non-board companies.(MonetaryTimes,July19,1918.)Contingent commissions, that iscommissions based on profirabil­ity of policies underwritten, pro­vided an incentive to agents toplace good risks and were hailed

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r: ."

.'

· t,

\ ."Why insurance ratcs are high. Carelessness causes over seventy percentof Canada '5 losses. The above conditions were discovered in a basementtwo days after insurance policies for $23,000 were issued upon thecontents of the building," (1916).

maintaining conditions that enablethese vampires to suck our lifeblood...My remedy is to grant reliefto a company finding itseif up againstsuch competition, whereby ail thatwould be necessary to enable it tocompete would be to file the policy ofthe non-tariff company that itreplaces with the Association, orsubmit other satisFactory evidencethat its policy replaced a non-tariff.The association refused to accedeto the suggestion. 1b the best ofits ability, CFUA based rates onthe medt of the dsk and soughtfurther knowledge.

The rules established by CFUAwere enforced by the InfractionsCommittee which met regularlyto investigate aliegations ofwrong-doing. In 1913, one groupreported that only a small portionof infractions under scrutinyappeared to be anything morethan the mistakes ofsubordi­nates. It cdticized delays in cor­recting and cancellingquestionable policies. In 1917,

the Infractions Committeereported that:

... it would again draw attention tothe excessive and in many casesinexcusable delays that occur on thepart of the offending offices in dealingwith infractions. The mere 'Naste oftime involved in me almost imermi­nable correspondence is a mattermat itself deserves anemion, but theirritation to aggrieved members andthe pernicious effects on the Agentsand Companies of tile examplesbrought before them are much moreserious. The Committee believes thata general Stamping system wouid bethe most effective means that couldbe raken to improve the situation.Stamping was frequently sug­gested as a remedy for the inter­nal problems of the association.Under such a proposal, a copy ofeach prospective policy had to besubmitted to an officer of theassociation. Policies judged toconfonn to the tadff rates, rulesand conditions established by theassociation were stamped

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'Approved'. Those not meetingthese requirements were 'tagged'and a notice sent to the companyand agent indicating the (ottec­tions necessary to bdng thepolicy 'into line'. At the 29thannual meeting in 1912, it wasagreed that Stamping should beadopted for all business in bothprovinces (at this time it was onlyloosely enforced in a few cities)to ensure uniformity and stan­dardization within the associa­tion. The president appointed acommittee to arrange the detailsof its implementation. Althoughmembers at the meeting seemedto favour stamping in general,opposition was suffiCient to post­pone introduction of the system.

At the semi-annual meeting inJanuary 1917, a motion thatstamping be introduced immedi­ately to the entire business wasagain cartied almost unani­mously, and the committee wasrequested to being the system

into effect as quickly as possible.Funher opposition nevenhelessdelayed irs implementation untilthe next decade.

The creation of the UniformForms Department was anothermeasure designed to standardizeand economize on CFDA opera­tions. Three companies initiallyobjected to the department onthe grounds it would interferebetween company and agent anddestroy individualiry. But thecompanies could not deny rheobvious waste in the currentsystem, which overstockedagents with printed matter andsupplies from every company herepresented, guaranteeing heavyexpenses for printing. In June1918, authorization was given tobegin work on forms, with pur­chasing and distribution t9 behandled by the Underwriters'SUrvey Bureau. By June 1920, 33different forms had b'een issued.The three Maritime provincespurchased forms from the associ­ation, while the Winnipeg andBritish Columbia boards printed

their own, copying associationforms as far as their own provin­cial conditions would allOw.

The association's energy was notcompletely devoted to keeping irsown house in order. In a businessso vulnerable to the repercussionsofgovernment policy, CFDArepresentatives had to remainvigilant.ln 1914, members cau­tioned in Montreal that unless aninvestigation of the water depart­ment was held without delay andprompt action taken, CFDA wouldbe compelied to increase theciry's rates steeply. The fuli textof the resolution read as follows:That the Underwriters have enduredmuch anxiety from the repeatedshortages and stoppages ofthewater supply in this City, particularlyduring the last eighteen months-theexperience recently culminating in acatastrophe by which large areas ofthe City were entirely deprived ofwater, and others were left. with avery sparse supply...Thar the unsatis­factory condition ofthe waterworksplant, emphasized by the numerousaccidents hereto, has been the sub-

jeel of repeated representations tothe civic authorities, and abouttwelve months ago a strong appealwas made by the underwriters,supported by the Board ofTrade andother leading commercial organiza­tions, that a committee ofindepen­dent engineers be appointed toenquire into and repon on the condi­tion of the system and the manage­ment thereof.(Insurance and Financial Chronicle,January 23, 1914.)

This urgent request elicited anequivocal response. A few super­ficial improvements were carriedout, but no effort was taken toinvestigate the underlying prob­lem ofmanagement. The associa­tion granted Montreal everyopponuniry to improve condi­tions, and postponed a hike inrates.Strikes became a regular featurein canada in the post-war yearsand the CFDA was not immuneto their effects. At the annualmeeting in 1919, President P.M.Wickham complained about theurrusually large number of labour

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Toronto

HElD IN THE

OF THE

FIRST ANNUAL MEETING

troubles over the past year. A36­hour strike by Montreal policemenand firefighters was followed bythe much more alarming Wmni­peg General Strike of 1919. Wick­ham stated that:The extensive collective or sympa­thetic strikes. still unsettled in Winrti­peg and other western cities. whichin Winrtipeg include fIremen. follow­ing our experience in Montrealemphasize the necessity of a lawmaking it criminal for Fire and Policeemployees absenting themselvesfrom their duties. and seriousiyexposing the lives and property ofthe dtizens.Between 1910 and 1920, theinsurance business joined thetwentieth century trend towardsamalgamation and companymergers. The first to repon thistrend was the Insurance andFinancial Chronicle, which com­mented in 1915 on the numberofsmall Canadian companiesbeing absorbed by larger organi­zations. These included theLiverpool and London and Globetaking over the Hamilton Fire;the North British and Mercantile.absorbing the Occidental; thePhoenix ofLondon, taking overthe Acadia; and the Royal, pur­chasing the Hudson Bay ofvancouver. Amajority of thecompanies absorbed continuedto operate under their ownnames. while under CFUA rulesa company could only have one'wholesaler' or general agent ina given city. each companymerged with a larger organiza­tion was permitted to hire anadditional general agent.

British insurance organizationshad pursued this policy ofamal­gamation more aggressivelythan their American counter­parts. In the United States.legislative restrictions preventedthe development of powerful•omnibus' insurance organiza­tions. The organizational andfinancial resources of theseemerging giants was felt uneas­ily by the smaller companies:The large companies have them at a

2 o'clock

AFTERNOON SESSION

10. Report of Committee onResolutions.

11. Address: "Fire Preventionfrom a Patriotic Standpoint"HON. DR. H.J. CODY.

Minister of Education.12. Confum Articles of

Association and Regulationsfor the Management andControl of the Corporationand Govern the Election ofthe Committee to managethe Corporation, as set forthin the Charter.

13. Election of NominatingCommittee.

14. New Business.1'. Report of Nominating

Committee.)6. Election of Officers.17. Adjournment.

"To co-operate with the Provincial Government and the OntarioFire Marshal's Office for the purpose of promoting the science andimproving the methods of Fire Prevention and Fire Protection; toobtain and circulate information on these subjects; to assist in securingproper safeguards against loss of life and property by fire; to keep thesubject before the people, especially the young, and endeavor toinculcate the idea that '''it 1J a patriotic duty to prevent fires."

NATIONAL ANTHEM

1. Roll Call.2. President's Address:

ARTHUR HEWITT.3. Report of Secretary-Treasurer:

GEORGE F. LEWIS4. Minutes of Organization

Meeting.S. Minutes of Special Meeting.6. Appointments of Committee

on Resolutions.7. Resolutions.8. Five-minute Reports from

Local Chapters andOrganization Members onWork in Fue Prevention.

9. 11 a.m. - Adjourn to theTheatre, Physics Building,University of Toronto.

Address: "DustExplosions"(Illustrated by MovingPictures).DR. H.H. BROWN.Explosive Section,

Department ofAgriculture, Washington,D.C.

MORNING SESSION

10 o'clock

PROGRAMME

RECEPTION ROOM. PARLIAMENT BUILDINGS. TORONTO

THURSDAY. SEPTEMBER 4. 1919

Ontario Fire Prevention League, Inc.

~---------------------------------------------------------------~

Public awareness of lJre prevention resulted in the start of tbe OntarioLeague. 1919.

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disadvantage at aU points, in super­iority of organization. in their abilityto secure the most skillful underwrit­ers' in proportiona~ly lowerexpenses and in the magnitude oftheir resources and the scale of theiroperations enabling them safely totransact business of a characterwhich would be fatal to a smallcompany.(Insurance and Financial Chronicle.October 11, 1915.)This movement toward largerorganizations did not result in an'insurance trust'. Companiesremained competitive, their keen­ness not blunted by the acquisi­tion of 'smailliy' .The constitution of the associa­tion was amended at a specialmeeting, Juiy 13,1915 to permitthe appointment of an ExecutiveCommittee to exercise virtuallyail powers of the association(with the exception of orderingthe withdrawal of a member, oramending the constitution).Meetings were to be held aiter­nately in Montreal and Toronto.

Alfred Hadrill withdrew from hisposition because of his advancingage, but agreed to act as penma­nent chainman to the committee.The salary for this newly-createdposition was fixed at $3,600 perannum and Hadrill was voted abonus of$3,000. LeonardHowgate was appointed secretaryin Montreal at $3,000 a year andthe salary of Secretary Robertsonin Thronto was increased to$5,000. The appointment of theExecutive Committee wasdesigned to streamline the workof the association. in future,instead of regular quarterly meet­ings, the fuil membership wouidonly be called on to attend theannuai and semi-annual meet­ings, as well as any special meet­ings that might be called.The Western Canada Fire Under­writers' Association left the Cana­dian Fire Underwriters'Association in 1912, a decisionmade with the fuil consent ofCFUA members.

Special privileges had alwaysbeen avoided as far as possibleby the association. At the thirty­third annuai meeting it wasresoived "That it be a rule of theConstitution that ail Company

P. M. Wickham, CFUA president,1919.

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Members shall be placed on anequal footing as to rate and regu­iations, and that any existingarrangement or privilege not inaccord therewith be, and herebyis, rescinded." As the WaterlooMutual was the oniy memberthat had any special privileges(appllcabie to three year businessonly), the secretary asked thatthey confonm with general regula­tions. The Waterloo was notrepresented at the meeting whenthis resoiution passed, and thecompany later made two effectivepoints: (1) that it had beeninduced to join the association byagreement it should have certainprivileges; and, (2) with theknowledge and sanction of theCFUA, it had entered into anagreement with other cashmutual companies based onthese privileges. CFUA admittedthese facts, and in recognition ofthe company's discretionary useof its privileges, penmitted theWaterloo to carty on as before.At the 1917 annuai meeting,President John G. Borthwickattributed difficulties in achievinga nationaily unifonm rate to theexistence of numerous autono­mous boards. He suggested thata centrai bureau, composed ofthe executive officers of the com­panies operating in the field,might provide a solution.Although a practical and progres­sive idea, the association wouidnot become truiy 'national' formany years.