The Daily Missoulian. [volume] (Missoula, Mont.) 1904-1961, 1917-11-05
A BRIEF
REVIEW OF
INSURANCE

In the space that has been allotted
To us II Is necessary that this review
be very brief and therefore we can
only touch upon n few of the most
essential parts of insurance
tirc insurance is merely "A SNs-
tenn of taxation. The insurance
agents are the tax collectors, the
inSuranc" companies tax distrihn-
tcrs. The premium nail for in
dcmnitN against loss by fire or the
tax Is composed of two elements.
FIRST. we have that portion that is
used solely for the paNmcn, OF
losses. which fluctuatcs from wear 10
Year, according 10 the burning ratio.
The residue is the expense. reserve
and surplus element this LAYS the
agent Ior his work and al the help
crs needed to care for supervise and
carry on the machinery OF collecting.
Investing and discussing the pre-
mi'nS Il Is also used IN adding
to the legal reserve and to surplus.
There are three general classes OF
fire insurance companies. Tho first
comprises companies with capital
stock paid in by those who are re-
sponslblc for the company and haz-
ard their Investment in getting il
started and maintaining it, When
a premium Is paid to a stock COM
pany there Is no further liability on
part of policy holder
The second class includes the mu.
tual companies. \ mutual Is in
corrorated. but has no capital stock.
The profits, If any, are distributed
among the policy holders to de-
crease the cost Of their insurance,
but, on the other hand, If there are
abnormal losses tho policy holders
are called on for additional pre-
MUM. The liability OF Il policy
holder of mutual may not end
with the payment of his cash pre-
MUM. There Is what IL known as
contingent liability. \ policy holder
Is held for his FRO rata share of the
losses during the term of his policy
ana Is liable To assessment in case
of excessive losses. The liability of
the policy holder is frequently lin
tied TO three Ut five times the cash
premium he pays.
The third class of insurance in
situations are LIosds and interim
suranc" associations. Tho Lloyds
Is the Oldest form of insurance. 1t
* not an incorporated body. \
number of II III form u partner
ship, 1t may be so termed. and issue
insurance policies In which each
personally assumes a part OF the
liability.
The best known l.loyds Is London
toyds, blanket name that covers
numerous groups of persons called
Underwriters or subscribers that is
sue policies. Each underwater
signs his namo to each policy and
the amount of liability he will as
sumo. In the United States the
scheme Is somewhat changed. The
Underwriters do not sign the policy,
but. delegates power of attorney to
some one who signs the policy. 1t
IS the usual rule for each UNDER
writer to assume his pro rata share
Of all liability. For instance, in
case of $4,000 policy, an under
writer at Lloyds would assume $500
as his share in case there were 90
underwriters.
reinsurance concerns differ
somewhat from I.loyds. They are
not Incorporated, The plan is for
a member of business concerns 10
insure each other. Suppose, for
example, that 800 department stores.
wholesale groceries and like enter
priscS. agree to contribute Il certain
sum in case any one of the num-
Der meets with loss by fire. That
Is reinsurance. Such a concern
issues no policy to any one not u
member of the syndicate. An at
torney or manager is delegated to
sign the policy and carry on the de-
tail work. In case of a favorable
loss ratio the subscribers are not
required to pay so high a rate, but
they must bear the extra burden in
n