Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1868-12-25
The Profits and Losses
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INSURANCE Bus|NEssI

In the days when insurance was
unknown, every man had to bear the
whole of his own losses BY Ere or
shipwreck, If he was poor, and his
case appealed especially to the sym
pathies of his friends, a contribution
might be made on his behalf to re-
place some portion of what had been
taken from him; but this was moth
ing which he could certainly count
upon. Like Shakespcare's Merchant
of Venice, all Of his fortune might
be swept awsy, and he rendered PEN
fniless in single night. This hap
pens even now, often, to those who
are improvident enough not to insure
their property. The hard earnings
of years vanish before the flames or
the waves, and leave their former
possessors to begin life anew. \ e.
Insurance is device whereby tho
effects of such calamities, instead Of
being concentrated npon single indi-
yiduals, are divided up among many,
and the burden thus borne BY each
is comparatively light. In its print
tive form, it is an agreement between
say hundred men, that they will
all equally contribute to make good
the losscs.of any one Of the number.
II merchandise, ships or buildings
belonging to one are destroyed, each
lof the other ninety-ninc pays his ono
hundredth part of their value, and
thus the particular owner receives
from his associates ninoty-ninc one
huudredths Of his whole loss. The
hundredth part of the amount, which
he and all tho rest pay, is called
PREMIUM. 1t is the price of a right
to demand from others q contribu-
ton, to replace the property destroy
cd, instead Of heing dependent upon
their Charity. y 4ANAsG NIX
\ In practice, indeed, no such formal
agreement is made. Fer the sake Of
ECONOMY and convenience, the bust.
ness of insurance is carried on by u
special class Of men, or companies of
men, who collect from each QUO Of
the insured his premium in advance,
and cut of the total thus collected
pay to the losers the sums to which
they are respectively entitled. Usu.
ally tho men or companies fix the
amount of the premiums at such
rates as they think will meet all the
losses likely to accrue, and leave them
a surplus as o reward for their own
trouble. If they calculate Alright in
this respect, and no unusual losses
occur, they make money II they
miscalculatc, and unexpected losses
have to be borne, they lose. For tho
safety of the insured in this latter
contingency, fund is usually provi.
ded, called capital, out of which
losses eau be paid If necessary. But
as general thing, the amount of the
premiums must equal or exceed the
amount Of the losses and expenses
or the business must stop.
, There is an impression prevalen,
among some who have not beeoins
acquainted with the facts connected
: with the subject, that insurance ia al
i extremely profitable business, and thu
( the companies engaged in it roceiv.
= vast deal more money, in the shape
J, of premiums, than they pay out fol
!, losses. Statistics, however, domon
strate that tins idea is an incorrec
!. one. In the three years, 1866, ls6t
and 1867 the fire and marine com
; panies of this State received in pre-
y miums S1lU,720,000, while they paid
9 out, for losses and expenses, Sill.
!, $50, 600. Thatisthe aggregate isnnr
is Iance business, for three years, of al
S those engaged in it in this State, re
suited in loss Of $500, goo. Som,
!. of the companies, to be sure, mad.
money, but others had to draw upor
their capitals, ant the public actual,
, gained $500, 600 at their expcnse. II
81 These considerations show that ,
. great deal Of skill and knowledge i,
2 requisite to so manage the insuranc,
re business AS to make the premium,
% cover the losses and expenses. Care
d f,l estimates Of the risk to whicl
fe each particle Of property insured Il
A. exposed, and Of The likelihood of il
q being destroyed, must BIO made. AL
y the circumstances under which acct
9, dents occur must be observed an,
III studied, aud differences drawn frou
e them. The average Of losses in par
at ticular kinds Of business must be no
Il ted, and premiums regulated accord
d, ingly. Even the personal cbaracte
: of those who apply for insurance
must be taken into account, and allow
ance made for il. All this, and muel
more besides, is essential to the prop
= err conduct of an insurance Office
and without it, the business is sur
TO come TO an unfortunate end
Furthermore, it is apparent tina
not only must the men who attemp
to carry on the business Of INSURANCE
be competent 70 the task, but the,
must also have some other resources
TO meet their Losses than merely tn
premiums they collect. With ever,
prccsution the losses will, as we hav
/ seen, sometimes exceed the promi
ums aud then, If there be no cspi
tai to fall back upon, those who hol'
II policies arc really not insured at all
" and in case Of loss, fail OF the relic