Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-03-20
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, u contribution
might be made on his behalf to, re-
place some portion Of what had been
taken from him i; but this was moth
ing which he could certainly count
upon. Like Shakcspeare's Merchant
Of Venice, all Of his fortune might
he swept away, and he rendered pen
nilcss 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. aud leave their former
possessors to begin life anew. tJ
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 aud 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 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
dcd, called capitol, out of whicl
losses can be paid If necessary. Blu
as general thing, the amount of thu
premiums must equal or exceed tn,
amount of the losses and expenses
or the business must stop. .r...
There is an impression prevalon
among some who have not become
acquainted with the facts connected
with the subject, that insurance is al
extremely profitable business, and tina
the companies engaged in it recciv
vast deal more money, in the shap
of premiums, than they pay out 70
losses. Statistics, however, demon
stratc that this idea is an incorrec
one. In the three years, 1868, 1856
and 1867. the fire and marine com
panies of this State received in pre-
miums sl10,720.0o0, while they pal
out, for losses and expenses, Sill,
$4,000. 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 10 draw upo
their capitals, anc the public actual
gained $500, 900 at their expense.
These considerations show that
great deal of skill aud knowledge
requisite TO 80 manage the insuranS
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, aud of the likelihood Of i
bssng destroyed, must be made. A
the circumstances under which acc
dents occur mus, bc observed an
studied, and differences drawn fro