The river press. [volume] (Fort Benton, Mont.) 1880-current, 1905-09-13
WEDNESDAY, SEPT. IL, 1905.
Mutual FIRE INSURANCE.

1t is reported from the Milk river
country that efforts are being made to
organize a mutual fire insurance com.
pany, under the law enacted by the
last legislative assembly. The ad-
vantages of such an organization
have been recognized in other parts
of the ~state-the citizens of Gallatin
and Yellowstone counties having al.
ready formed mutual fire insurance
and similar benefits may be sect red
by residents of Chouteau county or any
other part of Montana.
Some interesting facts as to the
amount paid for fire insurance by the
people of Montana are given in a re-
port issued from the state auditors
Office. During the year 1903 the vari.
Gus fire insurance companies doing
business in Montana collected pre-.
miums to the amount of 1902, 692,
and paid fire losses to the amount of
only $466. 1863. In the year 1904 the
premiums collected amounted to ST..
1872, 934, and the losses paid were only
S57l.26l. That is to say, in the past
two years the insurance companies
have received from the people Of Mon
tana over a million dollars more than
the losses they paid. Under the mutual
system of fire insurance, the policy
holders pay only such amount as Is
required to meet the losses sustained.
The commencement of fire insurance
In the United States was in 1862, when
Benjamin Franklin, and some other
enterprising citizens OF Phil adelphia.
called a meeting and the result was
the organization of the ''Philadel.
phia Contributionship for the Insur-
ance of Houses from Losses by Fire"
Each policyiholder was to make a de.
posit and receive a policy, or deed of
settlement, as it was called, for a
seven.year term. If this deposit was
not consumed for losses, it was paid
back to him at the end Of the term.
1t was soon found that the interest
earnings were sufficient to care for
losses and expenses. and the policies
We're renewed without additional pay.
ment. The company then began to is
sue perpetual policies and is still do.
ing business on that plan.
There are several other very old
Mutual Companies in the United
States that are still doing business on
the plan Of the old Philadelphia Con.
relationship: among these companies
are the Mutual Insurance Co., OF Phil.
adelphia, founded in 1856; the Balti-
more Equitable, organized in 1895,
and which paid losses as a result OF
the Baltimore fire amounting to ST..
900, 900, or 500, 600 more than sus.
tanned by any other company; and the
Cincinnati Equitable, established In
1926. While there have been many
supposed advances made in the meth.
DDS OF insurance companies, it is
doubtful If many of the changes have
been real improvements on this origi.
nal system.
AS long as the business was con.
fined to such q mutual system there
was certainly no contention between
the premium payers and the company.
All insurance Is necessarily mutual in
that the premiums must pay the losses
and expenses. The organization sim
~ acts As a distributor. Not only is
1t necessary for the assured to con.
tribute sufficient to cover losses and
expenses, but It is considered wise
that he should contribute sufficient to
build up a surplus.
About the commencement of the
Nineteenth Century the capitalist saw
his opportunity In this growing sur.
plus of the mutual companies then do.
ing business, and by organizing a
stock company and using it as the
distributor, the stockhOlder would then
" the accumulated surplus instead
OF the policy holder. From that time
to the present there has been iucreas,
ing contention between the polio,
holder and the stock company. III.
capital stock of insurance cOmpauie.
never helped to pay losses. 1t wa,
not subscribed for that purpose; bu
only for the purpose Of absorbing tn,
surplus contributed by the polio,
holder.