Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-02-26
The Profits and Losses
INSURANCE BUSINEssI

In the days when insurance was
unknown, every man had to bear the
whole of his own losses by fire or
shipwreck. II 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 tile flames or
the waves, and leave their former
p0ssessors to begin life anew. f,
Insurance is a 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 primi-
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
huudredths of his whole loss. The
hundredth part Of the amount, which
he and all the rest pay, is called a
PREMIUM. It's the price of right
to demand from others contribu-
ton to replace the property destroy
ed, instead Of being dependent upon
their charity. ..-,. ...' 81. H..
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
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-
ded, called a capital, out of which
losses can be paid If necessary. But
az 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
vast deal more money, in the shape
of premiums, than they pay out for
losses. Statistics, however, demon
strate that this idea is an incorrect
one. Iu the three years, 1865, 1866
and 1867, the fire and marine com,
panies of this State received in pre-
miums Sll0,720.000, while they paid
out, for losses and expenses, SILL
$4,000. That is'the aggregate isnur.
ance business, for three years, Of all
those engaged in il in this State, re-
suited in a loss of $500, 900. Some
Of the companies, to be sure, made
money, but others had to draw upon
their capitals, ant the public actually
gained $500, 900 at their expense,
These considerations show that .
great deal of skill and knowledge il
requisite to so manage the insurance
business as to make the premium,
cover the losses and expenses. Care,
full estimates of the risk to which
each particle of property insured il
exposed, and Of the likelihood Of III
being destroyed, must be made. Al
the circumstances under which acct
dents occur must be observed ant
studied, and differences drawn from