Clarksville chronicle. (Clarksville, Tenn.) 186?-1872, 1869-01-29
The Profits and Losses
or TILE
BUSINESS /!

Tn the days when insurance was
unknown, every man had to bear the
whole of his own losses by fire or
If he was poor, and his
case appealed especially to the sym
pathics 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 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 a right
to demand from others contribu-
ton to replace the property destroy
cd, instead of being dependent upon
their charity.
In practice, indeed, no such formal
6 agreement is made. For the sake of
economy and convenience, the bust
4 ness of insurance is carried on by a
t 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
y pay to the losers the sums to which
they are respectively entitled. Usu
n ally the men or companies fix the
amount of the premiums at sucl
= rates as they think will meet all the
y losses likely to accrue, and leave then
II surplus as a reward for their ow,
y trouble. If they calculate Alright il
1t this respect, and no unusual losse
n occur, they make money IF the.
/; miscalculate, and unexpected losse
/ have to be borne, they lose. For tn
safety of the insured in this latte
contingency, a fund is usually prov
to ded, called a capital, out of whic
r. losses can be paid if necessary. Blu
~ as a general thing, the amount of tn
y premiums must equal or exceed tn
H. amount of the losses and expense
a. or the business must stop.
in There is an impression prevaler
ov among some who have not becon
:: acquainted with the facts connecte
~ with the subject, that insurance is q
ny extremely profitable business, and tn
til the companies engaged in it recei'
~ vast deal moro money, in the shal
NV of premiums, than they pay out fl
=, losses. Statistics, however, demo
no strate that this idea is an incorre
one. In the three years, 1865, 1S'
and 1867, the fire and marine col
TX. panies of this State received in pr
oof miums Sl1O, 720.000, while they pa
out, for losses aud expenses, Sll
'o' $4,000, That is the aggregate ISM
her ance business, for three years, of
ave those engaged in it in this State,
|or suited in a loss Of $S00,0G0. Sol
r,y Of the companies, to be sure, ma
-; money, but others had to draw up
l'h their capitals, and the public actua
gained 100000 at their expense.
These considerations show that
tho great deal of skill and knowledge
b.. requisite to SO manage the insurar
III" business as to make the premiu
ght cover the losses and expenses. Ca
rel, full estimates Of the risk to VIII
t of each particle of property insured
,ol exposed, and of the likelihood of
being destroyed, must be made.
Vi the circumstances under which a.
dents occur must be observed ;
studied, and differences drawn Fl
but them. The average Of losses in ]
- ticular kinds of business must be
~ ted, and premiums regulated accC
'rior ingly. Even the personal chara
med of those who apply for insura
They must be taken into account, and all
oaks ance made for it. All this, and IN
-, more besides, is essential to the p
wv" or conduct of an insurance ofhC
SIS and without it, the business is
oVeo to come to an unfortunate end.
the Furthermore, it is apparent
liity, not only must the men who attic
iiav, to carry ON the business of insur
as be competent to the task, but
H. must also have some other resou
to meet their losses than merely
cor premiums they collect. With c
mile precaution the losses will, as we
,wing seen, sometimes exceed the pr
ntbo ums aud then, If there be no
- O. tai to fall back upon, those who
io' policies are really not insured a
and i'm case of "A loss. fail of the