Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-06-05
The Profits and Losses
or THE
INSURANCE BUSINESS |

L w
shipwreck. 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 a 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
II economy and convenience, the bust
a ness Of insurance is carried on by 4,
% special class of men, or companies O.
men, who collect from each one O.
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 tn,
&C. amount of the premiums at sucl
d rates as they think will meet all tn
lie losses likely to accrue, and leave then
surplus as reward for their owl
trouble. If they calculate Alright il
this respect, and no unusual losse
occur, they make money. IF the,
miscalculate, and unexpected losse
have to be borne, they lose. For til
safety of the insured in this latte
contingency, fund is usually prov
ded, called capital, out of whic
losses can be paid if necessary. Br
as general thing, the amount of I'll
premiums must equal or exceed til
7. amount of the losses and expense
-, or the business must stop.
to There is an impression prevaler
~, MS among some who have not becom
nd acquainted with the facts connecte
with the subject, that insurance is a
extremely profitable business, and thu
the companies engaged in it receiy
a vast deal more money, in the shap
n ~ of premiums, than they pay out fC
ne, losses. Statistics, however, demol
nd stratc that this idea is an incorre,
me me one. In the three years, 1865, lSG
nd and 1867, the fire and marine con
mi panies of this State received in pr
miums S110,720.000, while they pal
= out, for losses and expenses, Sill
$4,000. That is the aggregate isnu
ance business, for three years, of a
those engaged in it in this State, r
o, suited in loss Of 100000. Son
Of the companies, to be sure, mac
money, but others had to draw upC
their capitals, and the public actual
gained $500, 900 at their expense.
These considerations show that
great deal Of skill and knowledge
requisite to so manage the insuran
business as to make the premium
cover the losses and expenses. Car
full estimates of the risk to Whit
each particle of property insured
exposed, and Of the likelihood of
being destroyed, must be made. A
10. the circumstances under which acc
dents occur must be observed al
studied, and differences drawn fro
! 'ca a them. The average of losses in pa
rm; ticular kinds of business must be II
se a,: ted, and premiums regulated accor
A., ingly. Even the personal charact
'''' of those who apply for insuran
must be taken into account, and allo
ance made for it. All this, and mu
rue more besides, is essential to the pro
er conduct Of an insurance office
and without it, the business is su
to come to an unfortunate end.
is, Furthermore, it is apparent III
!. nS d1 not only must the men who attem
and to carry on the business of insuran
any be competent to the task, but tn
Ii!h must also have some other resourc
,uld to meet their losses than merely /
amy ms premiums they collect With eve
n II procaution the losses will as we ha
'"' seen, sometimes exceed the prem
H. ums and then, if there be no ca
tai to fall back upon, those who he
policies are really not insured at a
and in case of loss, fail of the rel
. they counted upon. Hence the l
cessity Of some supervision of insv
anco companies to assure the pub
of their pecuniary ability, and
protect them from such bogus &C
Germs as those which lately flourish