676 FEDERAL RESERVE BULLETI N. JUNE, 1922.

may readily bo understood by every mer-
chant and every banker. For the insured,
the chief operative features are but three in
number, viz, (1) The "coverage" clause,
prescribing the limit of insurance in dollars
on each rating; (2) notice to the company of a
past due or insolvent account; (3) the method
of adjustment. These indicate to the policy-
holder his method of procedure in all cases.
Present use.— Credit insurance policies are
used by manufacturers and jobbers of all sizes,
from those doing a business of §50,000 a
year to those doing upward of 875,000,000.
In number, the medium-sized houses, who do
a business of from $200,000 to $2,000,000
yearly, constitute the majority of the policy-
holders. Those known as the "millionaire''
sales houses, however, form a large and.grow-
ing part of the business of the companies.
Credit insurance is used in almost all lines
of trade. It is perhaps most frequent for
lumber, iron and steel, coal, hardware, tex-
tiles, paper, advertising agencies, printing
and stationery, shoe and clothing manufac-
tures, etc. A few lines arc considered extra
hazardous and are not solicited. This is due
to the profits, nature of the merchandise, and
type of individuals sometimes found in them.
These lines include diamonds and jewelry,
furs, scrap iron, patent medicines, and jobbers
of woolens. The retail jeweler, e. g., receives
the stock of diamonds which he needs to dis-
play, on terms averaging about eight months,
and if he has not sold them by that time, re-
ceives additional time, so that he may even
be carried for several years. What insurance
is written in such lines is confined to the best
firms, and is not written on the regular basis.
The amount of such business written has been
so small that it affords no reliable actuarial
basis upon which to write these lines.
Premiums and losses.—The general growth of
credit insurance during the past 10 years may
be observed in the following figures, showing
net premiums received annually. The table
also gives net annual data for losses paid and
expenses incurred in adjustment. Returns
for the three companies are consolidated.
COMBINED EXPERIENCE
PREMIUMS AND
Year.
1912
1913
1914
1915
191(5 . . :
1917
1918
1919
1920
1921
or THE THREE COMPANIES FOR
LOSSES FOR TEN YEARS.
Premiums.
..'• SI. 611.352
1,506,827
1,487,506
1.395.713
. . : 1,413,566
1.665.915
1,856.703
2,219,679
3,695,954
3,498.161
Losses.
SI
3
195,840
923,293
732,339
939.765
293,423
97,07ft
194,182
72,552
637,318
100,782
Per cent.
74
61
49
67
21
6
10
3
17
89
It will be noted that losses differ greatly
from year to year. They roughly parallel the
changes in general business conditions, being
at a peak for some years after a crisis. During
the vears 1912 and"l913 and for 1915 and 1921,
the losses were large, but during the years 1916-
1920
;
inclusive, the reverse was true. In 1921,
the year following the crisis, they reached a
peak, being greater than in. any previous year.
The losses are expected gradually to decrease
as business revives, but it is believed that it
will probably be a year or two before they are
back to what is regarded as normal.
CLASSIFICATION OF BUSI NESS LI NES.
Group.
1
1
3
4
1
1
4
2
1
2
2
4
A
2 I
2 !
1 '•••
• I
?
4 !
2 :
2 i
3
2
2
2
2
1
2
4
1
4
1
3
2
2
2
2
Line.
?!
S I
2
3
3
3
4
1
2
1
4 I
2
4
4
2
2
2
4
1
2
1
3
2
4
Advertising, books, printing, stationery, and lithographers.
Agricultural implements.
Ammunition, hardware, and cutlery.
Automobiles, automobile accessories, bicycles, and bicycle
parts.
Awnings and tents.
Bagging and bags.
Bags and trunks.
Bakers,.confectionery, and candy.
Barrels and cooperage stock.
Bedding and upholstery.
Belting (leather), machinery, and machine supplies.
Bicycles, bicycle parts, automobile accessories, and auto-
mobiles.
Blankets.
Blinds, planing mills, sash, and doors.
Boilers, stoves, heating appliances, and furnaces.
Books, printing, stationery, lithographers, and advertising.
Boots and shoes (jobbers).
Boots and shoes (manufacturers).
Bottles.
Boxes and crates.
Boys' and men's clothing.
Brass, copper, and metals.
Brick, cement, lime, plaster, terra cotta, buiiding and roofing
materials, and sand.
Bronze powder, wallpaper, and window shades.
Brushes, celluloid goods, and combs.
Building and roofing materials, sand, brick, cement, lime,
plaster, and terra cotta.
Butter, eggs, and cheese.
Buttons.
Candles, grease, and soap.
Candy, confectionery, and bakers.
Canes and umbrellas.
Canned goods, grocers' sundries, and fancy groceries.
Caps, straw goods, and hats.
Carpets and floor coverings (manufacturers).
Carpets and floor coverings (jobbers).
Carriages and wagons.
Car wheels, foundry, iron, steel, and heavy hardware.
Celluloid goods, combs, and brushes.
Cement, lime, plaster, terra cotta, building roofing materials,
sand, and brick.
Chains (iron), manufacturers.
Cheese, butter, and eggs.
Chemicals.
Children's and ladies' clothing.
China, crockery, and glassware (jobbers).
China, crockery, and glassware (manufacturers).
Cigars and tobacco (jobbers and manufacturing).
Cloaks and suits.
Clothing (ladies' and children's).
Clothing (men's and boys').
Coal, fuel, and ice.
Coflee, spices, and teas.
Coffins and undertakers' supplies.
Collars, shirts, and cuffs.
Combs, brushes, and celluloid goods.
Commission dry goods
%
Commission woolens.
Commission, provisions, fruits, and produce.
Confectionery, candy, and bakers.
Converters (cotton), selling jobbers and retailers exclusively.
Converters (cotton) selling in whole or part to manufacturers.
Cooperage stock and barrels.
Copper, metals, and brass.
Cordage and twine.
Corsets.
Cotton converters, selling jobbers and retailers exclusively.
Cotton converters, selling in whole or part to manufacturers.
Digitized for FRASER
http://fraser.stlouisfed.org/
Federal Reserve Bank of St. Louis
June 1922

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