Insurance Historical Development
Burglary, theft and robbery insurance originated in England and it is in that country that the earlier development of the insurance must be traced. In this process, the student will find a record of great value in a book entitled “Outlines of Burglary Insurance” by P. D. McMillan* which not only presents an
*Charles and Edwin Layton, 56 Farringdon Street, E. C. London.
BI~RGLARY, THEIST AND ROBBERY INSI~RANCE 45 historical outline but also describes in some detail the actual methods employed in the present conduct of the business in England.
Mr. McMillan attributes the responsibility for the first plan of burglary insurance of which there is record to Mr. William Weller, of London, who proposed the establishment of “The General Insurance Office” in 1787 with the idea of providing means for insuring against “Loss of Property by Burglaries, Highway and Footpad Robberies, andPublic and Private Thefts.” His application for a Royal Charter and for the exclusive rights under the “invention” for a period of fourteen years, were denied by the Attorney-General because of a suspicion that such a company, if organized, would find itself unable to cope with the moral hazard, and that it would tend to make insured persons lax “in preventing, resisting, detecting, and apprehending thieves.”
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This was not the only plan devised by Mr. Weller, because upon failure to secure a Royal Charter he attempted to organize a company by another process, only to meet with failure again. The time was not ripe for the successful organization of a carrier in this line of insurance.
There were other attempts to organize companies in the century which followed, but these were apparently unsuccessful, for while several companies were registered during this period, it is not known that any company actually commenced transacting business. It is not likely that there was any considerable number of policies issued until 1889, when the Mercantile Accident and Guarantee Insurance Company of Glasgow, Scotland, undertook
the transaction of modern burglary insurar~ce. The idea upon which this action was taken originated with a Scottish ex-police constable named Allan who approached several companies before he came to the Mercantile Accident and Guarantee Insurance Company, where he succeeded in interesting one of the officers and later the Board of Directors. The first policy was issued on June 1, 1889, and at the end of the first Fear 1,045 policies had been issued at aggregate premiums of £1,090. The business was successful, as the losses for this period amounted to only £213.
With this start, other companies began to interest themselves in the line, and several entered the field in 1890. The business was then established and has continued to develop ever since.
In these earlier plans Residence burglary only was covered in 46 BURGLARY, THEFT AND ROBBERY INSURANCE an amount to be determined at the option of the assured, subject to a minimum limit of ~I00 “or one-third of the total value of the contents of the house.” The rate was 5s per £I00 for a policy to
cover “theft of articles following forcible entry into the premises by day or night.”
In addition, if the assured wished to do so, he might also cover property damage caused by the burglary.
The rate for this was quoted separately at 9d per £100. Later, business establishments were written. These were originally rated on the same basis as residences, but it was soon discovered that differences in hazard demanded recognition, and two classes of risks were established at different rates. Class I, embracing such risks as bakers, butchers, and confectiOners, was rated the same as residences. Class 2 included such risks as bookshops, silk merchants, tailors, and laundries. For this 50 % was added to the residenc~e rates for burglary insurance, and the 9d rate for damage to the premises was applied without modification.
Complete coverage for mercantile risks in Class 2 was therefore quoted at a rate of 8s 3d p~r £100 of coverage.
The first known attempt to write burglary insurance in this country was made as early as 1885 by a company known as “The American Protective Mutual Insurance Company Against Burglary.” This company was organized to write mercantile open stock coverage against loss by burglary restricted to forcible entry. It transacted a limited volume of local business at Reading, Pennsylvania. A rate of $5.00 per thousand of coverage was charged regardless of the class of merchandise covered.
In 1892 the Fidelity and Casualty Company of New York undertook to insure banks, bankers and other users of safes against the loss of money, securities and other valuables from their safes through attacks by burglars, and, for a number of years, had the field practically to itself. Gradually other companies entered the field until, in 1900, the business had grown from a premium volume of $48,360 written by one company in 1894 to a premium volume of approximately $450,000 for the five companies then transacting this form of insurance. Other companies became interested in this time, and the business was extended gradually to cover other hazards such as theft, larceny, and robbery.