Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-05-01
The Profits and Losses
INSURANCE BUSINESS !

In the days when insurance was
unknown, every man had to bear the
whole Of his own losses by fire or
shipwreck. IF he was poor, and his
case appealed especially to the SYM
pathies of his friends, 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 Shakespeare's Merchant
Of Venice, all of his fortune might
be swept away, and he rendered pen
niless 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.
Insurance is device whereby the
effects of such calamities, instead Of
being concentrated upon single indi-
viduals, 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 losses of any one of the number
If merchandise, ships or buildings
belonging to one are destroyed, each
of the other ninety mine pays his one.
hundredth part of their value. and
thus the particular owner receives
from his associates ninety-nine one.
hundredths of his whole loss. The
hundredth part of the amount, which
he and all the rest pay, is called 9
PREMIUM. 1t is the price Of right
to demand from others a contribu
ton to replace the property destroy
ed, instead of being dependent upor
their charity.
In practice, indeed, no such forma
agreement is made. For the sake O.
Economy and convenience, the bust
ness of insurance is carried on by ,
special class of men, or companies O
men, who collect from each one O.
the insured his premium in advance
and out of the total thus collected
pay to the losers the sums to which
they are respectively entitled. Usu
} ally the men or companies fix thu
amount of the premiums at sucl
rates as they think will meet all tn,
losses likely to accrue, and leave then
a surplus as reward for their owl
trouble. If they calculate Alright il
this respect, and no unusual losse
occur, they make money. IF the,
miscalculate, and unexpected losse
have to be borne, they lose. For tn
safety of the insured in this latte
contingency, fund is usually provi
ded, called a capital, out of whicl
losses can be paid if necessary. Blu
as a general thing, the amount of tn
premiums must equal or exceed tn
. amount of the losses and expenses
or the business must stop.
There is an impression prevalen
among some who have not becom
acquainted with the facts connecte,
with the subject, that insurance is al
extremely profitable business, and tina
the companies engaged in it receiv
IL vast deal more money, in the shap
! of premiums, than they pay out 70
; losses. Statistics, however, demon
i strate that this idea is an incorrec
one. In the three years, 1865, 1856
| and 1867, the fire and marine com
panies of this State received in pre-
miums Sl10,72O.000, while they pal
out, for losses and expenses, Sill,
100000. That is the aggregate isnul
ance business, for three years, of a
those engaged in it in this State, re
suited in loss of 100000. Som
of the companies, to be sure, mad
money, but others had to draw upo
their capitals, and the public actual
gained $500, 900 at their expense.
These considerations show that
great deal of skill and knowledge
requisite to so manage the insuranc
business as to make the spremium
cover the losses and expenses. Care
full estimates Of the risk to whic
each particle of property insured
exposed, and of the likelihood of il
being destroyed, must be made. A
+. the circumstances under which ace
dents occur must be observed an
studied, and differences drawn frol
!. them. The average of losses in PAL
!; ticular kinds of business must be nc
|; ted, and premiums regulated accord
ingly. Even the personal characte
of those who apply for insuranc
must be taken into account, and allow
ance made for it. All this, and muc
f more besides, is essential to the proI
err conduct of an insurance Office
and without it, the business is sur
to come to an unfortunate end.
Furthermore, it is apparent ths
Il not only must the men who attemI
4 to carry on the business of insuranC
y be competent to the task, but the
7 must also have some other resource
a to meet their losses than merely tn
y premiums they collect. With ever
Al