Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-05-22
The Profits and Losses
VS. Z
INSURANCE BUSINESS |

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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-nine 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 o
PREMIUM. It is the price Of a right
to demand from others 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
r 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
s pay to the losers the sums to which
they are respectively entitled. Usu-
O ally the men. or companies fix the
= amount of the premiums at such
d rates as they think will meet all the
e losses likely to accrue, and leave them
a surplus as reward for their own
trouble. If they calculate Alright in
this respect, and no unusual losses
occur, they make money If they
miscalculate, and unexpected losses
have to be borne, they lose. For the
safety of the insured in this latter
contingency, fund is usually provi
ded, called capital, out of which
losses can be paid if necessary. But
as general thing, the amount of tn,
premiums must equal or exceed the
:. amount of the losses and expenses
or the business must stop.
to There is an impression prevalent
St among some who have not become
ID acquainted with the facts connected
with the subject, that insurance is ar
extremely profitable business, and tina
the companies engaged in it receiv,
vast deal more money, in the shape
II, ~ of premiums, than they pay out fol-
e, losses. Statistics, however, demon
ID strate that this idea is an incorrec
aaee one. In the three years, 1865, 1866
Id and 1867, the fire and marine com
1u panies of this State received in pre-
miums $110,720.000, while they pait
out, for losses and expenses, Sill,
$4,000. That is the aggregate isnur
ance business, for three years, of al
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 upol
their capitals, anc the public actuall
gained 100000 at their expense.
These considerations show that
great deal Of skill and knowledge
requisite to SO manage the insuranc
business as to make the premium
cover the losses and expenses. Care
full estimates of the risk TO whicl
each particle of property insured
exposed, and of the likelihood of it
being destroyed, must be made. Al
D, the circumstances under which acci
dents occur must be observed an
studied, and differences drawn fror
"a them. The average of losses in pal
m, ticular kinds of business must be no
~ ted, and premiums regulated accord
ingly. Even the personal characte
90 of those who apply for insuranc
must be taken into account, and allow
ance made for it. All this, and muc
HE more besides, is essential to the pror
er conduct of an insurance Office
and without it, the business is sur
to come TO an unfortunate end. e.
l. Furthermore, il is apparent tina
en- not only must the men who attemp
nd to carry on the business of insuranc
ny be competent to the task, but the
N must also have some other resource
I'D to meet their losses than merely tn
ny premiums they collect. With ever
1! prccaution the losses will, as we hav
"' seen, sometimes exceed the premi
!, ums; aud then, if there be no cap
tai to fall back upon, those who hol
policies are really not insured at al
aud in case of loss, fail of the relic
they counted upon. Hence the nc
cessity of some supervision of insul
ance companies to assure the publ
of their pccuniary ability, and t
protect them from such bogus cor
Germs as those which lately fourishe
!. in Jersey City--mere traps to cate
,. premiums, without any expectatio
on the part of their managers of pay
ing losses,-[New York Sun,