Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-01-15
The Profits and Losses
or THE
INSURANCE BUSINESS |

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, 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 Shakespeare's' Merchant
of \ enico, 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 linen, 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
hundrcdths 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 q 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
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
pay to the losers the sums to which
they are respectively entitled. Usu-
ally the 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 a 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 a 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 prevalent
among some who have not become
acquainted with the facts connected
with the subject, that insurance is an
extremely profitable business, and that
the companies engaged in it receive
a vast deal more money, in the shape
of premiums, than they pay out fol-
losses. Statistics, however, demon.
strate that this idea is an incorrect
one. In the three years, 1865, 1866
and 1867, the fire and marine com.
panies of this State received in pre-
miums S110, 100000, while they PAID
out, for losses and expenses, SILL
500, 900. That is the aggregate isnur
ance business, for three years, Of al
those engaged in it in this State, re
suited in loss Of $500, 900. Some
of the companies, to be sure, made
money, but others had to draw upor
their capitals, anG the public actual,
gained $500, 900 at their expense.
= These considerations show that
: great deal Of skill and knowledge il
, requisite to so manage the insuranc,
business as to make the premiums
cover the losses aud expenses. Care
: full estimates OF the risk to whicl
9 each particle of property insured il
r exposed, and of the likelihood Of it
r being destroyed, must be made. Al
0 the circumstances under which acct
Y dents occur must be observed an,
!, studied, and differences drawn iron
them. The average of losses in par
0 ticulaT kinds Of business must be no
: ted, and premiums regulated accord
] ingly. Even the personal characte
4 of those who apply for INSURANCE
: must be taken into account, and allow
I ance made for it. All this, and niue
moro besides, is essential to the prop
er conduct of an insurance Office
= and without it, the business is sur
c to come to an unfortunate end.
: Furthermore, it is apparent tina
!. not only must the men who attemI
c to carry on the business of insuranc
a be competent to the task, but the
/. must also have some other resource
c to meet their losses than merely til
4 premiums they collect. With ever
If prccaution the losses will, as we hay
Q seen, sometimes exceed the prem
!. ums aud then, n there be no cap
e tai to fall back upon, those who hol
t, policies are really not insured at al
# and in case of a loss, fail of tho rcli,
o they coanted upon. Hence the N,
1t ccssity of some supervision Of insu
% ancc companies to assure the publ
N of their pecuniary ability, aud
ID protect them from such bogus COZ
Germs NJ those which lately hourishc