· ,_.- ,- ',~ ~.' -... ~ ...."';; .. ~. -.....

rrORONTO, OLD AND NEW.

THE FORMATIONAND THE EARLY YEARSOF THE CFDA (1883-1900)

1bronco viewed from the Lake Ontario harbour frone. 1880's.

CHAPTERIl

In 1883, Robert McLean of theBritish America Company decidedto take action against the graveproblems confronting the fireinsurance industry. He sent circu­lars to all stock fire companiesconducting business in Ontario,inviting them to a meeting inThromo on June 26 to discuss thedangerous conditions created bythe mulripliciry of companies andtheir diverse methods of opera­tion. The circular proposed thatcompanies associate and devise asystem ofequitable rates to haltthe serious downward trend.McLean's proposal met with afavourable reception and all thestock companies contactedagreed to assemble in Thronto.

Shortly after the start of the meet­ing, Mclean reported the unani­mous vote of aU 30 companies

present to participate in the pro­posed association. These com­panies included,

1. Aetna Insurance Company ofHanford. Connecticut

2. British America Fire AssuranceCompany. lbromo. canada.

3. caledonia Fire Insurance Com­pany of Edinburgh. SCotland.

4. Citizens Insurance Company,Montreal, canada.

S. City of London Fire InsuranceCompany, London, England.

6. Commercial Union AssuranceCompany, London, England.

7. Fire Insurance Association,London. England.

8. Guardian Fire and Life AssuranceCompany, London, England.

9. Hanford Fire Insurance Com­pany. Hanford. Connecticut

10. Imperial Insurance Company,London, England.

11. Lancashire Insurance Company,Manchester, England.

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12. uverpool and London and GlobeInsurance Company. Liverpool.England.

13. London and Lancashire FireInsurance Company, Liverpool,England.

14. London Assurance Corporation,ofLondon. England.

ts. Mercantile of Waterloo. canada.16. North British and Mercantile

tnsurance Company, Edinburghand London.

17. Northern Assurance Company.Aberdeen and London.

18. Nonyich Union Fire InsuranceSOciety. Norwich, England.

19. National Assurance Company ofIreland.

20. Phenix Fire Insurance. Brooklyn.United Stares.

21. Phoenix Fire Assurance Com­pany of London, England.

22. Quebec Fire Assurance Company,Quebec, canada.

23. Queen Insurance Company.uverpool, England.

Later discussions focussed on theclassification ofcities and townsin Ontario according to bUildingconstruction and firefightingequipment. They were rated asfollows:Class A-Guelph, London, Ottawa, Hamilton,SI. catharines.Class B-Brantford, Kingston, Samia, SI.Thomas, WindsorClass C-Brampton, Lindsay, Mitchell, Niag­ara Falls, Orangeville, Owen Sound,Oril!ia, Port Hope, Seaforth, Ganano­que, Tillsonburg, Wingham and'MJodstock.Class 0-Amherstburg, Barrie, Berlin, Bel­levllle, Bowmanville, Brockville,Brussels, Chatham, Clinton, Cobourg,Collingwood, Cornwall, Desoronto,Dundas, Dunnville, Dresden, Galt,Goderich, Harriston, lngersoll,Kemptvl11e, Listowel, Napanee,Oshawa, Parts, Pembroke, Petrolia,Point Edward, Prescott, Peterbor­ough, Ridgetown, Stayner, SI.Mary's, Srtdths Falls, Stratford.Trenton, Thorold, \\eIland, Whitby,Strathroy.

evening ofJune 28, McLean metwith representatives of five com­panies to discuss the basis forformulation of tariffs or schedulerates for Ontario in places wherenone yet existed. A spirit ofcoop­eration facilitated the discussions,and the next day, the committeereponed it had drawn up tariffsbased on five classes oftowns,ranked according to their fireprotection, as follows:A-Preferred.B-(Or No.1).....With first class

appliances and waterworks.C-(OrNo. 2) With waterworks.D-(Or No.3) With steamers but

no waterworks.E-(OrNo. 4) .....Hand engines or no

fire protection.It was further resolved that themanagers of head offices and therepresentatives of American firecompanies in the province ofQuebec establish a Montrealcommittee and that a '!brontocommittee be formed on thesame basis.

On June 29, this new and long­awalted institution was namedthe Canadian Fire Underwriters'Association.

G.Re. Smith ofthe liverpool andLondon and Globe InsuranceCOmpany; First President,1883-1887, otthe CFUA.

24. Queen City Fire Insurance Com­pany. '!bronto. canada.

25. Royal canadian Insurance Com­pany, Montreal, canada.

26. Royal Insurance Company,Liverpool, England.

27. Sovereign Fire Insurance Com­pany ofcanada.

28. Scottish Union and NationalInsurance Company, EdInburgh,Scotland.

29. Standard Fire Insurance Com­pany, Hamilron, canada.

30. \\estern Assurance Company,'!bronto, canada.

Thomas Davidson (North Britishand Mercantile) followedMcLean's general openingremarks with a resolution outlin­ing the need for an insuranceassociation:That the present unsatisfactorycondition ofthe insurance businessin Ontario, ourside of places wheretariff organizations now exist, ren­ders it most desirable that an Associ­arion should at once be fonned, toinclude all Stock Companies doingbusiness in the said Province, theAssociation ro establlsh tariffs ofrates for all the cities, towns andvillages, making due allowance forconstruction and the fire appliancesofeach, and to make rules for thedue regulation of business generally:that Companies represented at thismeering do now pledge themselvesto form an Association, and strictlyto observe the rules and rates whichshall be decided on.

On June 28, G.EC. Smith (liver­pool and London and Globe) wasnamed president of the newassociation, William Thtley (TheRoyal) having declined for per­sonal reasons. J.J. Kenny (west­em) and James W. Thylor(Northern and Caledonia) werenominated as vice-presidents.The driving force behind theassociation, Robert McLean,became executive officer. On the

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~ -

~ Li~B'~~~R~~~: ~O~~~~yn::'QI~--====~ ~

Invested Funds, $40,000,000 Invested in Canada, $900,000

Total lones Paid by the Company sincecommencemenl, $119,395,000

~*~

MONTREAL OFFICE, 16 PLACE D' ARMESCo,,,., 0/ St. J..... St.• "!,p,"Il' Bonk of ~M/'<a' .,,0 I1M.,.1 Po,l Of!io.

Assurances Affected at lowest Current Rates. .

~Applications are Solicited.

PRE;9,1:fHE;D BY

. F. J. T" Naftet. G. F. C. 8M ITH,~ AC£NT eM.! "g,nt and R.,I_onl ~.c,.la,~, I

.. Goderich, Ont. ~ 4:

1taveHer'S card from tbe company managed by the CFUA's first president.

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Class E-All places having hand enginesonly or no fire protection.These rates applied to mercantilerisks only and did not extend toprlvate dwellings.The city of'!bronto was not classi­fied because it remained underthe jurlsdiction of the '!brontoBoard of Fire Underwtiters. Thisboard operated as a separate~ntity, a,nd it was not long beforeIt came mto conflict with the newassociation.On November 29, 1883,Sidney Crocker resigned as secre­tary of the TBFU and the mem­bers proceeded to discuss hisreplacement. Much to their irrlta­tion and anger, they found thatthe Ontario Board (as they some­what contemptuously called thenew association) had alreadymade an appointment, RobertMcLean. Alfre9 W. Hadrlll ofthe Montreal office ofthe CFUA,wrote, quoting an extract fromthe minutes of the last meeting totheeffect that, "it was thoughtdesl!able to combine the secre­taryships of the '!bronto localBoard and the Canadian Associa­tion; and from this position theMontreal Committee was notprepared to recede" .The objections of the '!brontoboard were made in response tothe threat to its autonomy anddid not reflect reservations aboutMcLean. The board passed aresolution starlng that it did notrecognize the rlght of the CFUAto interfere with its affairs, point-

ing out it had been in existencefor a number ofyears prlor to theorganization of the CFUA.

Nevertheless, members wereaware that the decision of thechiefagents of the companiesmust ultimately govern the actionof the TBFU and on receipt of aletter from Mr. Hadrill stating thateach head office would instructits representatives in '!bronto tovote for Mclean, they gave ingracefully. McLean was appointedsecretary of both boards andremained so until his death inOctober 1896.Early actions of the Canadian FireUnderwtiters' Association heldout the promise of solving manyof the problems plaguing the fireinsurance industty. The August1883 issue of the Insurance andFinancial Chronicle applaudedthe efforts of participarlng com­panies, and offered an optimisticoutlook for the future:Being purely voluntary, its existencewill depend entirely upon the loyaland good fuith of its members. Withthe results of past expetience beforethem, it is hoped that there will be nobacksliders found among the mem­bership ofthis organization, so thatthis period ofgood-will and manifes­tation of fiiendly confidence andharmony following so closely uponmutual distrust and bitter rivalry, willneed no other or more binding obliga­tion than this voluntary agreementamong the companies to work forthe common good, which cannot butresult in the benefit ofeach.(Insurance and Financial Chronicle.August, 1883_)

At the association's first annualmeeting, held in '!bronto January25 and 26,1884, membersadopted a constitution and a setof rules. It was resolved unani­mously that the Montreal commit­tee arrange for the immediateformulation of tariffs for thewhole province ofQuebec inorder that "new and renewalbusiness may be brought undertheir operation, if possible by thefirst of March next".By September 1884 the associa­tion was well established. Aspecial meerlng held in Montrealon the 24th was attended byrepresentatives of29 companiesand the president, ISmith,commented on the highly satis­factory working of the associa­tion. Standard requirements forelectrical lighting, as set by theNew York Board of Fire Under­wrlters (12 January, 1882) wereadopted at this meerlng. The'!bronto commiUee subsequenllyengaged 1he services of A.B.Smith, an electrical inspector,

James w. '1lJylor, CFUAVice-President, 1883.

.. IWD&I'SWDDrT POunCAL ....D SATlaJCAL r~AL

Publishocl by tbe Grip Prio1tnr aDd PubUahiD, Compu,of Toro::ato. SubKriptiOIl. $, QO per aDA. i.D advaoce.All bJu,.,.,u communications to be IIddreAed \0

S. J. Moo••, M...,.,-.

ErOHTB PAOL-Mr. OltlP i. aware that In­auranC8 men have 10Dg bun in the lin of vic.tiDlJl of th&t ..wlol fiend, the modern hnmorid.,and that tbey have been J*nted .. the em·bodiment of everythwg that g uDlovely. Butwho IUlur&lIce men come forward promptly.pleua.ntly, and in & thoroughly buaineu Wh·ion, &11(1 hand in their checks in .eLtlement ofa c1aim-aa the gentlemen ill our pic.:ture did.in the c.&.Be of (tKO"S fire-·we awefOp aaide tbecalumnies of the ","ould·he funny mao, and de.clare boldly that InIUrM-DC(! Agent. a.re brfclta;and. what I, more, we do our best to makepretty ph..turea of them.

and also approved a set scale offees. Smith was empowered togrant certificates signifying thatappliances conformed with asso­ciation requirements. With elec­tricity barely out of theexperimental stage, it is interest­ing to note how quickly the asso­ciation adopted protectivemeasures.

This service was of immeasurablevalue to the public, particularlywhen the country was vuinerableto fly-by-night operators doingfaulty installations with poormaterials. For many years, theinspections sponsored by theassociation were the only protec­tion available to the generalpublic.

From the outset, it was clear theassociation had not been formedjust to maintain exorbitant rates,as some historians have sug­gested. Electrical inspection wasonly one ofmany beneficialworks catried out in the publicinterest. Other services includedinspection ofmunicipal water­works, protective appliances and

individual risks (with a systematicreduction ofrates for good fea­tures, and an increase in rates fordangerous ones). The overallobjective was improvement ofconditions for the general public,regardless of who was or was notinsured.

The association boasted greatprogress dUring the second halfof the 1880s. The CFUA held aspecial meeting in Ottawa onOctober 13, 1885 - a change inthe policy ofholding their meet­ings in either 1bronto or Montreal.Numerous repons were made bycommittees examining variousaspects of the fire insuranceindustry, and the CFDA consid­ered several suggestions andpassed resolutions taking thisnew information into account.

GRIP. canada ~ best known humourmagazine, suffered a major fire In1883. SOme oftbe Insurance menfeatured in this drawing wereactive In tbe start of the CFUA.Small figures flanking the ravenand ink bottle are Edward Blake.Uberal/eader, and Sir John A.Macdonald, Prime Minister ofcanada.

J. W. BUOOVGHF.lII:D. SWJRI!:, B,A.

Ul....Ats«i.JI Htii/Dr.

GRIP'S LEVEE.FORMAL RECEPTION OF SYMPATHETIC INSURANCE MEN (WITH CHEQUES) BY THE SINGED RAVEN.

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First, it was moved that the classi­fication ofspecial risks be refined,Special risks included operationsespecially susceptible to fire,such as foundries and planingmills. Until this time, all specialrisks, whether in Class Aor ClassE(ranked according to the fire­fighting capabilities of towns orvillages) were similarly rated.This caused great consternationamong factol)' owners in rhespecial risk class who operated intowns with adequate fire protec­tion, but were forced to pay thesame rates as theIr counterpansin towns with no firefightingequipment. The associationdecided to bring special risksunder the schedule rating systemand thus make allowances forevel)' improvement in risk.Second, the rating schedulecommittee suggested that a bodyshould be established at eachbranch ('!bronto and Montreal) toconsider complaints on an indi­viduallevel brought by thosewho felt their rates to be out ofline. (Schedule rating had not yetbeen fully implemented and someobserved that the rating systemfailed to do justice to specificrisks whose merits were abovethe average of their class.)

Third, the committee studyingelectric lighting recommendedmore thorough and frequentinspection of installations. Onemember pointed out an instancewhere a light had cleared originalinspection, but later, for lack ofproper protection, the droppingsfrom the carbon burned numerousholes in goods stored below.The annual meetings of the CFDAwere valuable for transactingbusiness, exchanging ideas,reiaxing in a comfortable setting

while renewing old acquaint­ances, In many cases, representa­tives of the host cil)' tried tooutdo the hospitality extended atprevious meetings - a notableexample being the 1886 meetingin Montreal. Following athoughtfully-planned andexquisitely-prepared meal, mem­bers settled back into their chairs,restful and contented. The smokeofexpensive cigars mingled inthe air with the strains of musicplayed by the hired band, Familiarsongs were occasionally punctu­ated by jovial cheers as some ofthe insurance men waxed elo­quent in their toasts to God andCountl)'. Robert Mclean, a well­known temperance man, mistookthe rum punch sherbet for icecream, and before discovering hisdessert was in fact laced withalcohol. returned to his place atthe table. When the truth wasrevealed, McLean was highlyaffronted and proclaimed that"the cleverly disguised dessertwas but an insidious device ofthe evil one to ensnare him" . Thebanquet continued until one a.m.when the reluctantly-depaningrepresentatives made enthusiasticplans for next year's meering andfestivities.The fourth annual meeting of theCFUA was not so convivial.Following the discussion of theusual business, "irrefutable evi­dence was brought forward toshow that large lines had beenplaced below tariff rates by amember of the association". Asproof ofeach irregularity wasproduced, the attack on theunnamed company intensified.This posed a serious problembecause any movement awayfrom the tariffs formulated by theassociation threatened its exist­ence.

]. J. Kenny. second President(1887-88) of the CFUA.

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The Insurance and FinancialChronicle, in commenting on thesinration, expressed hope that"all those who joined in adminis­tering, we presume justly, reproofand admonition to the erringbrother, have themselves recordsso clean, and 'overSights' inratings, if any, so few as to justifythem in condemning another'sillegal practice". After the 'heateddiscussion', the members of theassociation had a cold lunchwhich prompted one man to quipthat, "having so effectivelybasted and roasted a memberthat morning, they were in nohumour for anything beyond acold collation" ,President G.F.C. Smith declinedre-election at the 1887 meeting,having piloted the CFDA woughits first four years ofexistence.During his final address heremarked on the system of sched­ule rating, as applied by the rulesofthe association:That the introduction of such aradical change (from the minimumrates to schedule rating) was to beeffected without a little diJliculty andfriction was hardly to be expected,

and how to facilitate and improve theworking of the system has receivedyour attention. The benefits andadvantages of the new system tocompanies over the old minimumrate tariff, in adjusting the rate inaccordance with the physical hazardofeach tisk, and its tendency togenerally improve tisks by inducingthe insured to remove dangerousfeatures with a view of obtaining areduction in rate, cannot but provesatisfactory evidence ofthe wisdomofadopting the sysrem. Its fairnessto the assured recommenda thesystem to the public, The adoption ofschedule'rating afforded an opportu­nity to introduce the practice ofrequiring the assured co mainlain acertain portion of insurance to thevalue of the risk, 75 percent, beingthe percentage required, for which areduction of 15 percent, from theschedule rate was allowed; thisallowance is also now granted to

other special hazards not scheduled.J.J. Kenny ~stern) became thesecond president of the associa­tion, and he held that office until1890,

The year 1888 witnessed a seri­ous attack on the CFUA. It camenot in the form of renewed com­petition from companies outsidethe association, but rather fromthe federal government through acommittee established to investi­gate combines in Canada. TheCombines Committee also scruti­nized other industries includingthe sugar and grocery business,watch and case manufacrurers,and producers ofcoal, bindertwine, barbed wire, oatmeal,stoves and coffin makers.

The committee adopted a nega­tive attitude toward the CFUA as

is evident in the following obser­vation:The evidence discloses the existenceofa powerful association for thepurpose ofraising and maintainingrares of insurance. The combinationwas formed in 1883, and includesnearly all the stock companies,English, American and Canadian,doing business in Canada. Sumsvarying from six hundred to a thou­sand dollars are paid annually by theindividual companies in the associa­tion. 'The individual companies arepledged to maintain rates, and ifanycuning is discovered the offendingcompany is compelled to cancel thepolicy. No schedule of rates is fixedfor farm or isolated risks. Owing tothe competition ofthe mutual com·panies it was found impossible tocontrol this line ofbusiness. Agentswere required to sign an agreementnot to do business for companiesoutside the association, but for some

'-

.,.

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•L .~..

An early advertisement for theAetna COmpany, a CFUAparticipant,

reason this plan was repealed by thegeneral association, but was againadopted by the Thromo Board, whichis still in force. No fe-insurance willbe accepted from any non-tariffcompany, nor placed with suchcompany, unless it is found impos­sible to place it within the associa­tion. The effects upon the insuringpublic have been decidedly injurious.It extends its operations to everyportion of the Dominion, and higherrates have been the rule in nearlyevel)' instance. Owing to the arbitral)'character of the tariff and the rulesadopted, little account can be takenofthe moral hazard, ie., the circum­stances. necessities or reputation ofthe applicants. In consequence ofthese conditions a large number offirst class risks in canada and involv­ing large amounts are placed withcompanies in the United States nothaving offices in canada nor amena-

ble to canadian laws. Another tangi­ble effect of a combination for theregulation ofrates is that the ratesbeing equal in all companies, thetendency is for the insurers to placetheir risks either abroad or withforeign companies doing business incanada, and possessed ofa largecapiral and of longer standing thanthe native companies. This is rapidlytending towards the freezing-out ofthe purely Canadian insurance com­panies, and opens up no vel)' brightprospect for the shareholders, whosemoney is invested in Canadian jointstock insurance.(Insurance and Financial Chronicle,June, 1888.)The canadian Fire Underwriters'Association qUickly responded tothe charges, claiming that manyof the statements issued by theCombines Committee were mis-

leading or simply unttue.

The association first answeredthe charge that the organizationwas formed solely for the purposeof "raising and maintaining ratesof insurance". The CFUA arguedthat its major aim was theimprovement of the fire insurancebusiness generally, and, far fromraising rates, they were actuallylower than before on the bestclass of risks,

The committee had reponed"that sums varying from $600 to$1,000 are paid annually by eachof the 32 companies". A spokes­man for the assodation ques­rioned the source of this evidenceand suggested the estimates weregrossly exaggerated, The commit­tee aiso stated there was no

'", $

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INSilil/TIONS ..

~ ~,\TION, SUPPORT ITS

'qj!'"

Q Q '" I...Q Q ..QQ e=!$ .. ~

Q Q CO C!k'!.'lI!!I • CO...ilIl

Elegant early advertisement for theCitizens' company, a CFUAparticipant.

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- - --~

schedule of rates for fann orisolated property, when in factthere was a tariff for all classesthroughout the province and inQuebec, with the exception of thewestern portion ofOntario.The Combines Committee chargedthat "the association extends itsoperations to every portion of theDominion". This was obviouslyerroneous as CFUA's jurisdicrioncovered only the provinces ofQuebec and Ontario. Anotherpoint ofgrievance was that theassociation took no note of the'moral' hazard, that is the reputa­tion of the applicants for insur­ance, Thls suggested that theassociation, after fixing ratesaccording to the physical hazardof the risk, should have made adeduction to 'A' because he, inthe opinion of the associationwas more moral and honest aman than 'B'. This would haveundoubtedly brought the associa­tion within the true meaning of'conspiracy' , had it not beenlibelous. The character of theinsured was properly left to thejudgement of the individual office.

The final charge levelled by theCombines Committee of"fteezing-out purely Canadiancompanies" was also untrue.While prior to the formation ofthe CFUA, several Canadiancompanies (including the Stada­cona, Canadian Fire and Marine,Dominion, National Fire. Provin­cial. Ottawa Agriculrural, canadaAgriculrural. Sovereign) wereforced to close their doorsbecause of the unprofitable narureof the business, since 1883 noCanadian nor other membercompany had failed.The Combines Committee wroteits report with inaccurate infonna­tion and from a biased position,It chose to ignore the advancesmade by the association in therating of risks and the resultingbenefits for the public:...while the average rate of premiumsprevious to 1883, in which year theAssociation was formed. was about$1.07 per $1,000 with losses show-

ing a ratio from 1869, of over 79percent, while the average rate in1884 was only $1.15 percent, and in1887, $1.10 percent, being .05¢ lessthan in 1884, but only .03¢ overthat of 1883, the average loss havingfallen to between 74 and 75 percent.Far ftom fixing extortionate rates,the association had acrually putbusiness on a sounder basiswhile providing some rerum tothose whose money is risked for"the security of the insured" .The association survived thelargely unfounded attack by theCombines Committee, and by1890 boasted 36 member com­panies. of the original 30, allremained except the Queen City,Sovereign and Standard. Thenewcomers were AgriculruralAdas, Connecticut, Eastern,Glasgow and London, Manches­ter, North America, Quebec andwaterloo.

The 1890 annual meeting washeld in London, Ontario, to allowmembers of the host companiesfreedom from interruption bytheir offices. J.J. Kenny's two yearterm was up and S.C. Duncan­Clark (Lancashlre) took the presi­dent's chair. Agendas of theassociation's annual meetingsbecame somewhat lighter dUringthis period, indicating that estab­lished resolutions were governingefficiently enough to require onlyoccasional amendments.

There was little doubt about theprogress made by the association.The average loss ratio of 63.12percent in 1869 had been loweredby 1889 to 51.4 percent. Thestandards and inspection serviceof the association were directlyresponsible for significantimprovements in firefightingappliances in the two provinces.The Thronto Fire Appliance Com­mittee provided a list of 13 townswhere classifications had beenraised (with reduced premiums)and only one, 1l'enton, whereincreased premiums had beennecessary.

In Ontario, electric light inspectors

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worked out ofThronto andOttawa. These inspectors pos­sessed no real authority, but asone stated: "I have never openlyconceded this point and have, ina number of places, been able toinsist on a number of impontantchanges." He said that he alsofound it necessary to prohibit thesale and use of two differentmakes of insulated wire that didnot meet the required standard.In view of thls, it seems sttangethat Montreal did not favourhiring an inspector unless hecould be given some specificauthority by the city.

The association did, however.face some problems, one beingthe contentious issue ofcommis­sions. Large commissions pre­sented an increasing expense andencouraged the practice of rebat­ing to the insured, which dis­rurbed both companies andagents. This problem, whichwould plague the association formany years to come. generatedsuch antagonism that the cohe­sion of the organization wasperiodically threatened.Another difficulty was the inva­sion of American companies intocanadian territory. The reductionof fire hazards made centralcanada an attractive prospect forunlicensed American insurers.and they gradually gained afoothold here. American compan­ies not having an office in Canadawere exempt from paying thegovernment deposit and fromacquiring an operating license.Because these firms paid nocanadian taXes. they were ableto offer cut-rate premiums. Whilethis practice of placing policieswith American companies.known as 'underground insur­ance'. found favour with thepublic because of low rates. theyoffered few guarantees to theinsured.

Duting the final decade of the19th cenrury. the increase inserious fires corresponded wid!urban growth. In 1895, threelarge fires in Thronto destroyed

the Globe, the Osgoodby and theSimpson Buildings. Montteal alsohad its share of fires, and thedetails of these are worth recount­ing because they illustrate thekind of incompetence whichoften frustrated the association.Although the story reads likefiction, the events are docu­mented in the CFUA minutes andin newspaper reports.In February of 1893, a seriousMontreal fire destroyed the build­ings where it originated and,meeting little resistance, spreadto adjacent buildings. Steamershad arrived at the scene withouttheir fires lit and more than halfan hour elapsed before one wasable to throw water. When all thesteamers finally went into action,the result was pathetic. Pressurewas so weak and the fear ofbursting hoses so great thatfeeble streams ofwater barelyreached the second storeys. Afireman who had climbed to theroof of a burning building foundhimself stranded and, in order toescape the flames, was obliged todrop to the ground. And wherewas the chiefall this time? Hisfiremen and the owners ofburn­ing propenies weren't sure heshowed up at all.

The city fire committeeannounced an immediate investi­gation into the fire. But as thiscommittee was itself responsiblefor the total inefficiency of the firedepanment, the president andmembers of the associationthought that sending representa­tives to the meeting simply wouldlend countenance to a travesty.They obtained a transcript of theproceedings and appointed acommittee to assess and reponon the city's investigation:A more futile attempt at an investiga·

tion can scarcely be imagined TheCommittee held four sessions atwhich were examined some fourteenwitnesses. Nearly rour hundredquestions were asked. but not one ofthem was directed as (0 water supply,pressure, arrival of reels. engines,steams thrown, effons to combatfires, prevention of extension of firesor absence or Chier. ...

Thward the end of April, thepresident, A.T. Paterson, (Phoe­nix ofLondon) and a delegationappeared at the request of thecity council and pointed out veryplainly that rates were based onexperience and that the Montrealfirefighters were indubitablynegligent. Paterson citedinstances of supposedly­extinguished fires rekindling andcausing further damage becauseinept firemen had left the sceneprematurely and without properprecautions. Later in the year, itwas disclosed that the loss ratioin Montreal for the five years andfour months ending April 30th,1893 was 74.98 percent.The distance between the cityand the underwriters in theirassessment of the adequacy ofthe fire department may begauged by an incident a fewyears later. Acity alderman andthe fire chiefapproached theassociation with a suggestionthat they and 10 men be sent toEngland to parricipate in a fire-

A. T. Paterson, CFUA president,1892-93.

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men's congress. The boardviewed this proposed depletion ofan already undermanned forcewith alarm exceeded only bytheir indignation on learning thatthey were expected to pay for thejunker.In addition to fires caused bycarelessness and incompetence,thete were many cases ofarson.In 1893, the association offered a$500 reward for the conviction ofthe men who set fire to MI. Ben­ny's farm house on the UpperLachine Road. The incidence ofdeliberately-set fires was particu­larly high in 1895, and severalrewatds for conviction wereoffered, one being paid in Ontario"to Constable Shouldice ofOwenSound for his pluckY capture of anotorious incendiary namedSpencer" . Spencer was caught inthe act and sentenced to 14 yearsin the Kingston Penitentiary. Atabout the same time, the EasternCommittee on Incendiarismreponed they had tracked downan organized gang, therebyaid­ing in the conviction of nine men.In 1896, the idea of creating anUnderwriters' InvestigationBureau was debated, althoughthe concept was not realized formany years.

The Iemple Building, Richmond atBay Streets, Thronto. This famouslandmark was the first majorstructural construction in 1bronto,and was home to many insuranceand professional offlces.

F. w: Evans, CFUA President,1896-97.

At CFUA:s thirteenth annualmeeting, held in Niagara Falls inOctober, 1896, Mr. F.w. Evans(Aetna and London & Lanca­shire) stated that:The general attitude of the Publlc haschanged for the better. The antago­nistic feeling that we are a combine,charging exorbitant rates, has gradu·ally given way to the conviction thatwhat we really aim at is the diminu­tion ofthe fire hazard.Steps taken toward expandingthe public role of the associationincluded the appointment in1892 ofa Montreal mercantileinspector. Qualifications for theposition stated that he did nothave to be an expert but "anintelligent artisan" who coulduse his common sense to see thatashes were properly disposed of,basements kept ITee ITom rubbish,

fires and lights properly controlledand so forth. In less than a year,he had inspected every mercantilerisk in Montreal. On the whole hewas fairly well received, thoughin 1894 he reported:In making re·inspections. instead ofgening assistance in getting thedefects remedied from those Iwouldexpect, I have found that a numberof insurance canvassers and othershave told the insured not to mind theinspector.The siruation improved, as thenext year he reported that, "Withtwo exceptions your inspectorhas not had an unkind word."This was the origin of whatbecame colloquially known in theMontreal board office as the"Ash-can Department". Thethree or four elderly men wholast staffed this department left it

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in 1935-36, when they wonabout $8,000 each on a jointly­purchased Irish Sweepstakesticket.

Another decision to help reducefire hazards was the hiring ofRobert Howe as inspector ofmunicipal appliances in 1893.1tained as a civil engineer, Howestarted at a salary of$75 amonth, quite a respectable sumconsidering a stenographerearned a mere $25 a month. ByOctober of the follOwing year, hehad inspected 44 wateIWorksand fire appliances in Ontario and28 in the province ofQuebec. Hewas generally well receivedexcept in Quebec City, where cityrepresentatives would not pennithim to test water pressure orhoses.Robert Howe proved to be a man

Montreal and 1bronto. Louis H.Boult, the Montreal inspector andone time general agent for theAtlas and National of Ireland,entered association service inJanuary 1893. He reported to theannual meeting held only ninemonths later that he hadinspected 977 risks at 80 places- no mean achievement, espe­cially considering the travellingconditions in those days. Inspec­tors were usually well received bythe insureds who were gratefulfor advice on how to qualify forlower rates by making certainimprovements.Asprinkler risk inspector was thenext appointment made byCFUA. Between 1896 and Marchof the following year, he hadvisited 60 risks, all that membercompanies were interested in.The New England Mutualsaccepted many of these risks andin 1898 one member stated that"very little success had attendedour efforts to retain and controlthese risks." Concern over theissue led to agitation that thecompanies be given a freer hand.During this period, electric light­ing in dwellings and in all com­mercial risks became much morecommon. The inspection servicekept pace with developments,and so dependent was the publicon this service, that most powercompanies in Ontario would notactivate the current until theinstallation had been approvedby the underwriters.Throughourthe 1890s, membercompanies, particularly in Mon­treal and Quebec, voiced dissatis­faction with the commissionrules. The rules were criticized as"unworkable" and some mem­bers threatened to leave theassociation rather than complywith them. In 1894, a notice ofmotion was given containing anagreement to be signed by allmembers. It contained the follow­ing clause:It being understood that this is simplyan honorable compact betweencompanies, and no penalty attachesfor violation: but it is admitted that

with apathy until the associationreduced the classification from"B" to "F". This promptedaction. Public opinion wasaroused, extra watchmen werehired and detectives conductedinvestigations with the result thatthe arson cases ceased and inless than three months a Class"B" rating was restored.An ultimatum issued to Ottawa in1897 threatened a re­classification unless improve­ments were made. It was reportedat the annual meeting that allrecommendations made by Mr.Howe to the city had been fol­lowed and an increase in rateswas thereby avoided. Acommit­tee of the association. accompa­nied by Mr. Howe, met in Junethe same year with the council ofthe Hamilton Board ofnade, andby the following February,reported that the suggestedchanges had been implemented.These examples demonSl'atehow the association was able topromote fire safety and educationand to provide technical informa­tion that reduced fire hazards,while cutting rates.Schedule rating inspectors ofindividual risks worked out of

of exceptional abllity and energy.His reports, as printed in thentinutes, are models for thosewho came after him, and hecould more than hold his ownwith the various municipal engi­neers and politicians who werehoping to replace deeds withspecious words. By the fall of1895, he had inspected evetyplace in Ontario and had mademuch progress in the city ofWinnipeg. Later, copies of theminutes contained long anddetailed reports of inspections asfar west as Calgary, and Halifaxand St. Pierre and Miquelon inthe east.In 1894, a new "Schedule forClassification of1bwns and Stand­ard of Fire Preventive Appliances"was adopted. 1bwns not meetingthe amended standard did notnecessarily forfeit their presentclassification but the fire appli­ances committee would endeav­our, within a reasonable time,"to have them conform thereto".CFUA:s priority was to stimulateimprovements to be made. andincrease rates only as a lastresort. For example, Samia'sepidemic of incendiary fires wasviewed by the civic aurhorities

~';~~ ..,. --- ~""'"" -",,"-

Adams Brothers factory, makers of harness and leather goods. 136-140King Street East, Ibronto, a typical lnner-city industriaJ risk.

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the slightest deviation from the tenusof this agreement should be consid­ered a dishonorable action, andworthy OF the contempt of all honor­able men.The matter was not laid to restthere. At a committee meeting in1899, the discussion became soheated that the assembly brokeup in disorder. A compromisewas finally agreed on and thepresident, P.H. Sims (BritishAmerica) stated at the sixteenthannual meeting (1899) that "themost important work of the yearwas the rearrangement of theserules, rendered necessary by theabuses which had crept in underthe old rules."

Other internal dissension chal­lenged the unity of the associa­tion. Arecalcitrant companyrefused to submit business forstamping or to permit the secre­tary to examine its books, andfailed to follow through on com­mitments. An official of thiscompany wrote a less than gra­cious letter to the associationwhich elicited a strong responseincorporated in the minutes:... this Association desires to expressits surprise and regret that one of itsmembers should address its associ­ates in such offensive tenus... theAssociation declines to take anyaction whatever at present upon acommunication ofsuch an insultingnature.Another maverick member pro­posed to sign an agreement withthe reservation that he wouldhold himself free to meet infrac­tions by taking the law into hisown hands. The associationwisely refused to be party to anysuch scheme. The general agentin question was soon involved inan infraction and tried airily todismiss the charge, maintaininghe was only doing what otherswere doing with the same risk. Athorough investigation convinced

the committee that he was thesole violator, and the followingstatement appeared in the min­utes: "Your Committee is there­fore compelled to state that Mr.K.... .'s statement is without anyfoundation."

Occasionally a member ofunquestioned integrity would fmdhimself involved in an infractionthrough the action of one of hisagents or general agents. John B.Laidlaw of the Norwich Unionmet with such misfortune in thefall of 1899. The Western chargedthat the Grain Rules were notbeing observed and that grainfirms were being appointed asagents. In reply to a telephonecall from the secretary, the man­ager of the Western stated he hadalready wired his agents to disre­gard all rules and he refused tocancel his order. Mr. Laidlaw

. realized that his was the chiefcompany against which thecomplaint was directed and hevolunteered to immediately cancelanything that was wrong or evenquestionable. This he did,although there was reasonabledoubt about his guilt, owing todifferent interpretations of therules. The Western responded bywithdrawing its instructions andcancelling any risk taken in theinterim that was contrary to thetariff. Responsible behaviour bya member obviated the need forinvestigations and upheld thecredibility of the association.As the century drew to a close,two changes were made thatunderscored the fact that CFUAhad substantiated its position asa force to be reckoned with in theinsurance world. By 1893, theMontreal board office had sooutgrown its quarters that itmoved to the Board ofTradeBuilding which, observed AlfredHadrill, "with its commodious

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Board Room and comfortableoffices for the staff, is fit toimpress the public with the impor­tance of the Institution."

The Thronto board - previouslyindependent - was sufficientlyimpressed with CFUA that itfinally placed itself under theauthority of the association. In1897, the jurisdiction of theassociation was further widenedwhen the Manitoba board electedto join.On October 13th, 1896, theCanadian Fire Underwriters'Association lost one of its mostimportant members with thedeath ofRobert McLean.McLean, the pioneer of the asso­ciative movement in central Can­ada, had suffered through alengthy illness, never havingquite recovered from the death ofhis wife the previous year.McLean was umelenting in hisrole of secretary of the CFUA andhad exhibited great aplomb anddiplomacy in his handling ofassociation's business. In a fittingtribute to his achievements, theInsurance and Financial Chroni­cle wrote ofRobert McLean:1b his untiring energy, pluck andendurance, to his perseverance andindustry are due the fact that thefoundations ofthis Association wereso 'well and truly laid' , and anexcellent superstructure rearedthereon, ofpenuanent use andbenefit to the Insurance Companies,its members, and the public of thisDominion. Interwoven with theincipient years of the Associationwere the later years of his life; to thelast, his business faculties wereemployed on its behalf; his desirewas ever for its perpetuation; and inits service he died. Let it be his fitmemorial- his endUring monument.(Insurance and Financial Chronicle,November 1,1896.)