Standing timber is one fire risk that hitherto has not been regarded
with favor by the fire insurance companies. Some insurance of this sort
has been written in Canada by the London Lloyds on separate limited
tracts and an excess loss only, the insured bearing all losses below
this limit. The Phoenix Insurance Co., of London, is, however, this
year writing some insurance upon green standing timber in Oregon and
Washington, with certain restrictions, and at rates varying from 1
and 1½ per cent. The timber must be accessible to markets, not unduly
exposed to fire hazard, and only one risk is taken in each fire zone or
area indicated by the Company. No risk is written greater than $17,500
in any one such area.
W. R. Brown in an article on this subject in “American Forestry” goes
in to some detail in discussing the possibilities of this subject. He
summarizes the fire experiences within the territory of various fire
prevention associations, and his figures include the 22,000,000 acres
under the supervision of E. C. Allen in the twelve western private
fire prevention associations which he supervises; the New Hampshire
Timberland Owners’ Association with 1,000,000 acres; the Northern
Fire Protective Association of Michigan with 2,000,000 acres; the St.
Maurice Valley Fire Protective Association of Quebec with an area of
8,000,000 acres--the total of the four associations being 33,000,000
acres. The expenditure for forest ranging and fire prevention is
approximately 1 cent an acre for the first three and ¼ cent an acre for
the Canadian organization. In the western associations the fire loss
for the year 1910 was one-half of 1 per cent. In each association since
that time it has been much less than that figure, except for 1914 in
the Canadian association, when one fire got away and the fire loss of
the year was three-fourths of 1 per cent. upon the timber valuation.
Taking all four areas together and summarizing the figures for each
which Mr. Allen gives, the average yearly losses respectively were as
follows:
1910, .005; 1911, .000171; 1912, .0002328; 1913, .0012636; 1914,
.00253; 1915, .00427.
The writer concludes from these figures that in such protective areas
fire insurance should cost for the loss ratio not over one-half
per cent. annually, with another one-half per cent. added for
administration cost of the insurance plan. He gives some further
experience upon which to base this conclusion. In Minnesota during the
last ten years, with its forest wealth of $280,000,000, the average
fire loss has been about $100,000 or one-thirty-fourth of 1 per cent.
annually.--American Lumberman.