MARYLAND MANUAL. 63
less than the number reported in the proceeding year. Out of this
number there were 14,339 claims filed for compensation of which 191
were claims in fatal accidents, as against 14,763 claims filed during
the year ending October 31, 1929, 117 of which were claims in fatal
cases. As a result of last year's work, there was paid out to injured
employes and their dependants the sum of $1,451,316.26, which included
the payment of compensation, funeral and medical expenses, etc. in
addition to the amount herein mentioned, there was $459,264.41 paid for
medical expenses in cases where there was no claim for compensation.
When the General Assembly of Maryland in 1914 passed the Work-
men's Compensation Act, they recognized the fact that employers might
be put in the position where they would not he able to comply with
the Act due to the fact that the private insurance companies would
refuse to carry their risk. Furthermore, they felt that inasmuch as
this form of insurance was compulsory under the State Law, that they
should provide a place where the insurance could be secured at prac-
tically the cost of writing this form of insurance. They, therefore,
created the State Accident Fund to be administered by the State Indus-
trial Accident Commission.
This Fund started business on November 1, 1914, the day the Law
went into effect. Its beginning was small and the money available at
that time consisted of premiums paid into the Fund by those insured
with it, which premiums were based on an advance estimate of the
payrolls of the insuring employers for a period of four months. The
State Industrial Accident Commission transferred from the funds
alloted to it by the State of Maryland the amount of $15,000.00 for
the purpose of maintaining the solvency of the Fund. A few years later
this amount wag returned to the State of Maryland.
During the first few years of the Fund's operations the principal
business carried on its books was coal mining operations, and the Fund
during these first few years was a comparatively small writer of com-
pensation insurance, the large bulk of the business having been secured
by the private insurance companies operating in the State. This condi-
tion gradually changed from year to year, and, while the Fund still
carries the risks of most of the coal operators in the State, there has
been a gradual transferring of the risks of other industries to the Fund
of a very desirable character, and for several years the State Accident
Fund has been the largest writer of compensation insurance, from a
point of premiums written, in Maryland.
In carrying out the idea of the General Assembly when it created
the State Accident Fund..that the Fund should endeavor to write busi-
ness at cost and also to keep this coat as low as possible..it would
appear that this purpose hag been accomplished. The average expense
ratio of the private companies carrying this form of insurance is from
35 per cent to 40 per cent of the premiums written while the expense
ratio covering all operations of the Fund has always been materially
lower than this, and for the last fiscal year was 8 per cent of the
premiums written. During that year the interest earned on the invest-
ments of the Fund practically paid the entire operating cost of the Fund.
Effective March 1, 1926, the Commission inaugurated a new merit-
rating system, the purpose of which is to reward and stimulate the
policyholders of the Fund in their work of accident prevention and to
measure the rate more closely to the individual hazard of the policy-
holder, preserving to the policyholder, of course, the basic principles
of insurance protection, so that any severe losses will still be distributed.
This merit-rating system is working out very satisfactorily, and is
offering an incentive to the policyholder to take a greater interest in
accident prevention in his plant.
There is no doubt that the State Accident Fund has saved to the
employers insuring with the Fund many thousands of dollars, and at
the same time giving them full protection under the Workmen's Com-
pensation Law of Maryland.