A. J. Shaw, of McPherson, is the acknowledged expert authority in the West on the subject of hail insurance. Since its organization in 1899 he had been continuously secretary of the McPherson Hail Insurance Company.
The McPherson Hail Insurance Company is a business organization of which the State of Kansas may be proud. It was the first Kansas company to offer an adequate service in this department of insurance. Prior to twenty-five years ago insurance against Hail was almost unknown as a practice in Kansas. The only company that offered such insurance was the St. Paul Fire & Marine. About 1891 the Farmers Alliance Insurance Company of McPherson created a hail department, but continued it only four or five years. The experiment was unsatisfactory, largely because the rate was three and one-eighth per cent, which subsequent experience had proved too low.
In December, 1898, H. F. Harbaugh, now president of the McPherson Hail Insurance Company, introduced in the Legislature, of which he was a member, a bill, providing for the organization of mutual hail insurance companies. In response to this bill a meeting was called at McPherson January 31, 1899. A number of those participating in the assion were members and officials of the Farmers Alliance organization. This meeting resulted in the organization of the Kansas State Mutual Hail Association, which in January, 1914, became the McPherson Hail Insurance Company. The first officers of the association were: J. W. Yowell, of McPherson County, president; O. A. Smith, of Barton County, vice president; H. Parker, of McPherson County, treasurer; H. F. Harbaugh, of Sumner County, adjuster; and A. J. Shaw, secretary. Of these officers Mr. A. J. Shaw had remained continuously as secretary, and of the original board the only other active member at present is H. F. Harbaugh, president of the company.
At the beginning a flat rate of four per cent all over the state was adopted, the minimum insurance per acre being two dollars and the maximum eight dollars. The premiums the first year amounted to $7,678, and the losses were $1,882. As a mutual company a practice was made of rebating to the members all the surplus that remained in the treasury after the year’s losses and expenses were paid. For a number of years there was no reserve set aside, and for several years in the early history of the company the losses were so great that they could not be paid in full. In one year the deficit was nearly a hundred thousand dollars. Another defect in the original plan was the failure to elassify the counties of the state according to the liability of hail damage. Most of the business came from the central counties, but the greatest proportionate losses were in the western district, and experience had shown that hail is a much more frequent phenomenon in the western connties than anywhere else in the state. After several years the rates were adjusted so as to provide the higher premiums for western counties and lower in the central area. To provide against years of extraordinary loss the company had now provided a cash reserve of $35,000 for each $1,000,000 of insurance. The company in less than twenty years had reached an impregnable place in the confldence of its patrons and members, and its record entitles it to a place among the oldest and most substantial insurance organizations of the kind in the country.
Mr. A. J. Shaw, secretary of the McPherson Hail Insurance Company, had been a resident of Kansas nearly forty years. He was born in Ottawa County, Michigan, in 1867, but was brought to McPherson County in 1878. He had a country school education, but in 1891 entered McPherson College, and was graduated from the business and penmanship department in March, 1892.
A. J. Shaw is considered a genius in the field of accounting, is author of several systems of bookkeeping, and for a year while connected with insurance work he taught penmanship, bookkeeping and rapid calculation in the Walden Business College of McPherson.
In the spring of 1892 he became head bookkeeper of the Farmers Alliance Insurance Company of McPherson. He continued with that organization until he resigned in January, 1899, to become secretary of the Kansas State Mutual Hail Association. In 1900 he was elected secretary-treasurer of the state association of Mutual Insurance Companies, and that office he had held ever since.
The McPherson Hail Insurance Company had profited in many ways from Mr. Shaw’s services. Competent authorities say that the company had the best set of cost records on hail insurance in Kansas, if not in the United States. He had also originated a system of rating, which had special application to the field of hail insurance. It consists of a mathematical formula by which the insured may exercise a choice of rates with a corresponding assumption of responsibility for the smaller losses incurred by hail. The adoption of such a plan would eliminate to a large extent the speculative element from the insurance business and it would also eliminate what is perhaps the most vexations and expensive part of hail insurance, the secounting for small losses, which under his plan would probably be assumed to a large extent by the insured.
Mr. Shaw’s success with the McPherson company and his authoritative position in the United States in this department of insurance had naturally brought him, attractive offers to go to other fields, but he had preferred to remain a loyal citizen of Kansas.
He had for some time, had a very strong desire to expand his business by entering other states but as the laws of Kansas will not permit a Mutual Hail Company to go outside of the state for business and as the laws of other states are reciprocal, Mr. Shaw found that if he was to expand his business by either entering other states or securing a larger Yolume of business within the state than one company could take, he must make connections with other companies.
This he did in 1916 by securing the Central Agency of several stock companies for several states and soon found that this part of his business was so large and had such wonderful possibilities of expansion that it was advisable for him to sever his connections with the institution he had been with practically all of his business life and devote all of his energies to his General Agency business for stock companies, which he calls The A. J. Shaw General Agency.
It was also found that his insurance influence was not only to be felt in hail insurance, for he is now president of a mutual–old line, legal reserve life insurance company, “The American Mutual,” home office at McPherson, Kansas, which promises soon to rank high in the insurance field.
The American Mutual Life Insurance Company writes policies only on “tee-totalers,” and had the distinction as well as the great mortality advantage, of being the only company in the United States which writes only “non-alcoholics.”