Omaha daily bee., 1902-02-16
FOR INSURINC GOOD FAITH
Eight Companies Find Mach Profit in BuIi
ness in United statsL
GUARANTEE FIDELITY OF tMPloYE,
Growth Of idea Has Been Remarkable
During Few Years and Has Proven
Vastly Lucrative to Cap
itaI Enlisted.

During the last half dozen years the bus
mess OF issuing fidelity and guarantee in
surance in the United States has grown to
Immense and extremely lucrative proper
lions.
The first company organized in America
for the purpose Of furnishing guarantee or
fidelity bonds was chartered in Canada in
1857, and until 1876 had the entire field to
itself, only having competition with private
individuals, a few Of whom locally went
into the business Of supply bonds for a con-
sideration. This company operated not
only in Canada, but in the United States,
without organized competition, until 1876,
when the second company Of its kind was
organized These companies met with un-
Rlloyed success and In 1884 the third COM
pany entered the field. For six years these
three companies divided the business, the
fourth company being organized in 1890.
In 1895 this form Of investment attracted
the attention Of capitalists and four COM
panies were organized, eight now being in
operation in this country.
The particular business Of the first COM
pany was that Of issuing bonds to indemnify
employers for the dishonest acts of en-
ployes, and the older companies still adhere
strictly to this line. The newer companies,
finding this field fairly we'll filled, intro
duced innovations, until now one can secure
a bond for almost any purpose. In an
earlier day in this country the professional
bondsman in a court Of justice was looked
upon with disapproval by the legal profess
sion and officers Of the law, but today the
agent Of a bonding company has come to be
q recognized factor in the courts, especially
in the matter Of appeal bonds in civil ac-
lions. States have come to realize the ad-
vantages offered by bonding companies and
today many state treasurers and other
hduclary officers would have d~ifhculty in
securing the approval Of personal" bonds.
Extremely Profitable Business.
While the bond company offers great adj
vantages to the users of this form OF Sc
curity, it also offers an excellent oppor-
tunity for the investment of capital. There
is a chart published by an insurance publ
cation giving the cost and profits Of the
several companies taken from the annual
reports which they are required to make
In some states. According to these reports
the average percentage Of loss to the
amount received from policies written is
about q per cent, while 81 per cent is con-
sumed by the expenses Of management,
leaving a net profit Of 6 per cent upon the
premiums received.
The great volume OF business Of the bond
ing companies is still in the line of fidelity
bonds for employees. Three methods Of
paying for these bonds exist. In about so
per cent of the cases the expense is borne
by the employers; in about 30 per cent the
employe pays for the policy. while in about
10 per cent the cost 10 divided between the
parties.
Many of the large corporations of the
country dOinO m fpfarafata huatnoaa houa
made arrangements with certain bond com
panies by which their employees are to be
bonded In one company at a stated rate.
This is especially true Of the express, rail-
road and large publishing houses. Other
companies employing large numbers OF
people In positions of trust insist upon
their employees coming to them in a con-
dition Il. give a bond instantly. 1t is said
that some OF the packing house companies
at South Omaha will consider no applica-
ton for a position unless accompanied by
evidence that a reliable company will bond
the applicant In the amount required.
These bonds are paid for by the individual
who is bonded.
How to Get n Bond.
When q person makes application for a
fidelity bond he is given a preliminary
blank to I'LL out, setting out the name Of
the applicant, the position he is to hold
and the amount OF the bond. He is re-
CURED to give his age. exactly, place Of
birth, residence. whether married or single.
the amount and nature OF his property.
One OF the questions to be answered is a
poser to the average man, and that is:
"How have you been previously employed
or engaged since leaving school?" The
applicant is required to enter into the most
minute particulars. giving a full account
of his occupied and unoccupied time. Then
follows a list Of questions tending to bring
out every fact and incident In the life Of
the applicant. A blank space on the back
of the application is to be used by the
employer In recommending the employe for
a bond. In the application the employe
binds himself to protect the guarantee
company against any amount they may
have to pay on the bond. and in case Of his
false arrest on charge OF any alleged
malfeasance he limits the amount OF his
damages to $50.
This is the form we use in ordinary
cases." said an agent OF one OF the COM