Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-06-19
The Profits and Losses.
Or THE
INSURANCE BUSINESS (!

whole of his own losses by fire or
shipw-eck. 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-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 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
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
5 pay to the losers the sums to which
they are respectively entitled. Usu-
D ally the men or companies fix the
. amount of the premiums at such
4 rates as they think will meet all the
e losses likely to accrue, and leave them
surplus as reward for their owr
trouble. If they calculate Alright in
this respect, and no unusual losses
occur, they make money If they
miscalculate, and unexpected losse,
have to be borne, they lose. For the
safety of the insured in this lattel
contingency, fund is usually provi
ded, called a capital, out of which
losses can be paid if necessary. Blu
as general thing, the amount of tn,
premiums must equal or exceed thu
-. amount of the losses and expenses
;, or the business must stop.
o There is an impression prevalen
= among some who have not becom,
d acquainted with the facts connected
with the subject, that insurance is al
extremely profitable business, and tina
the companies engaged in it receiv,
a vast deal more money, in the shap,
2 of premiums, than they pay out 70
losses. Statistics, however, demon
d strate that this idea is an incorrec
e one. In the three years, 1865, 1866
d and 1867, the fire and marine com
!, panies of this State received in pre-
miums S110,720.00O, while they pal,
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 a loss of 100000. Som
of the companies, to be sure, mad
money, but others had to draw upo
their capitals, ant 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 premium
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 acc
dents occur must be observed an
studied, and differences drawn frol
"a a them. The average of losses in pa
a; ticular kinds of business must be nc
s. ted, and premiums regulated accort
=. ingly. Even the personal characte
60 of those who apply for insuranc
must be taken into account, and ALLOW
ance made for it, All this, and niue
lie more besides, is essential to the PROF
err conduct of an insurance office
and without it, the business is SUI
to come to an unfortunate end.
, Furthermore, it is apparent tn;
en- not only must the men who attemy
nd to carry on the business of insuranC
ny be competent to the task, but the
"A must also have some other resourc,
Id to meet their losses than merely ii
nnSs premiums they collect. With ever
1. precaution the losses will, as we ha,
u" seen, sometimes exceed the prem
. ums and then, if there be no cap
tai to fall back upon, those who hol
policies are really not insured at al
and in case of loss, fail of the reli
. they counted upon. Hence the n
cessity of some supervision of insu
ance companies to assure the publ
of their pecuniary ability, and
protect them from such bogus co
Germs as those which lately flourish,