Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-06-12
u -T-7F- IT ~ u ~ -. sWTT7TT- :
y The Profits and Losses
Or THE
INSURANCE BUSINESS +!

~ - w. ID
In the days when insurance was
unknown, every man had to bear the
whole of his own losses by fire or
Ishipwreck. IF he was poor, apd 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 improyident 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 hinety-nine pays his one
hundredth part Of their value, and
thus the particular owner receives
from his associates ninety-n nine one
lhundredths of his whole loss. The
hundredth part Of the amount, which
he and all the rest pay, is called a
PREMIUM. 1t is the price Of right
to demand from others a contribu-
ton to replace the property destroy
ed, instead of being dependent upon
their charity.
In practice, indeed, no such formal
agreement is made. For the sake Of
u economy and convenience, the bust
. ness of insurance is carried on by a
. special class Of men, or companies Of
men, who collect from each one Of
the insured his premium in advance
:, and out of the total thus collected
is pay to the losers the sums to which
they are respectively entitled. Usu.
10 ally the men or companies fix the
&c amount Of the premiums at such
ID rates as they think will meet all the
iie losses likely to accrue, and leave then
a surplus as reward for their owl
trouble. If they calculate Alright il
this respect, and 10 unusual losses
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, a fund is usually provi
ded, called capital, out of whicl
losses can be paid if necessary. Blu
as general thing, the amount Of tn
premiums must equal or exceed tn
7. amount of the losses and expenses
a or the business must stop.
to There is an impression prevalen
,ss among some who have not becom
nd acquainted with the facts connecte,
with the subject, that insurance is al
extremely profitable business, and tina
the companies engaged in it receiv
vast deal more money, in the shap
NO i of premiums, than they pay out 70
ne losses. Statistics, however, demon
nd strate that this idea is an incorree
, me one. In the three years, 1865, 1856
lid and 1867, the fire and marine CON
M, panies of this State received in pre-
miums $l10,720.000, while they pal
= out, for losses and expenses, Sill
$40, 900. That is the aggregate isnu
ance business, for three years, of a
those engaged in it in this State, r,
o, suited in a loss of 100000. Son
of the companies, to be sure, mad
money, but others had to draw upo
their capitals, anc the public actual
gained $500, 900 at their expense.
These considerations show that
great deal of skill and knowledge
requisite to 80 manage the insuran,
business as to make the premium
cover the losses and expenses. Car,
full estimates of the risk to whiC
each particle of property insured
exposed, and of the likelihood of i
being destroyed, must be made. A
10. the circumstances under which acc
dents occur must be observed al
studied, and differences drawn fro
! 'se a them. The average of losses in pa
RIM; ticular kinds of business must be u
se @,i ted, and premiums regulated accor
,,,. ingly. Even the personal charact
i'0' of those who apply for insuran
must be taken into account, and allo'
ance made for it. All this, and mu,
THE more besides, is essential to the pro
err conduct of an insurance Office
and without it, the business is su
to come to an unfortunate end.
49, Furthermore, it is apparent tn
u ne m not only must the men who attem
and to carry on the business of insuran
any be competent to the task, but tn
,,itih must also have some other resourc
,uld to meet their losses than merely t
amy my premiums they collect. With eve
ri, precaution the losses will, as we ha
emu seen sometimes sexceed the nreu