The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1900-07-12
ON MUTUAL INSURAN5:
COMMISSIONER DISH AUGHNESaV
PRESENTS A REPORT ON FARM
ERs' COMPANIES
SAFEST MUTUAL PROTECTION,
He Says, Is Afforded by These Com.
panfes as Long as Their Field
Is Closely Circuzn-
Ber1bed.

Insurance Commissioner O'Shaughnessy
has completed Part Of his annual re-
port. covering farmers town mutual COM
panies. and mutual hail companies, in
Guiding statements of the condition of
every cooperative insurance company of
that character in Minnesota.
Mr.. O'Shaughnessy, discussing these
companies, makes the following state
ment in the report: THE remarkable
growth Of town mutual fire business in
this state during very recent years ne
cessitates a separate report In justice to
an interest of such magnitude as to in
volve now over 1900 farmers, and over
SOS, 100000 Of Insurance property.
Township mutuals, as now constituted
under our laws, are properly speaking, the
only class Of companies that can be con-
sidered purely mutual. They are strictly
cooperative, eliminating completely the
element of pecuniary profit. and are con-
Quoted solely for the mutual protection
of members against loss Such can be
said Of no other class Of companies.
In fire underwriting the adequacy Of the
rate to be charged is determined by three
elements, viz: The physical hazard, the
moral hazard, and the expense hazard.
The success of town mutuals has been at
tanned by minimizing each Of these ele-
ments as no other class Of companies Is
capable Of doing. Each member Of the
company is practically an agent, as all
In consequence of the adjoining town.
ship" provision of the law, are neighborS;
therefore a careful selection and almost
continuous inspection and watch care Of
,.iclIc &c tharphU reducing DOfl
physical and moral hazard. The officers
discharge their respective duties in many
cases without pay, or else for merely
nominal sums, which likewise removes
the burden of a heavy expense hazard.
Underwriters estimate that companies
transacting a general fire business en-
counter moral hazard ranging from
twenty to forty per cent, and an expense
hazard averaging about forty per cent of
their total premium receipts, leaving an
average of about thirty per cent for the
consequence of a physical hazard that Is
much more considerable than is met with
by town mutuals.
The companies doing q general business
have been chargin during recent
years a rate of rs cents per annum for
each 500 insurance in force upon farm
property. The town mutuals have done
this business during the past ten years
for an average rate of II cents per 500,
or a saving Of IS cents per 500 per year.
The average amount of insurance per year
carried by the town mutuals Of the state
during the past ten years Is $751; 9S, 416, so
that the town mutuals Of Minnesota have
saved to the farmers Of the state during
these ten years the aggregate of $,572,-
zoe. With $108, SS1. TBS. % insurance now in
force, the annual saving to the farmers
is, at the present status of business. $631,-
224 There are now 127 of these compan-
les distributed throughout the farming
districts. They have a total Of 77,751 pol
icies in force, averaging about 1880 to
each policy. The business of these COM
panies Is growing steadily, having in
creased every year during the last twenty
years. A reference to the tables viii show
that the loss elements for the year 1893
were less than one and one-half mills, and
the expense element less than one-half
mill. or less than 10 cents per 500 for
losses, and less than five cents per 500
for expenses.
Such thing as failure is unknown