The Daily Missoulian. [volume] (Missoula, Mont.) 1904-1961, 1917-11-12
A BRIEF
REVIEW OF
INSURANCE

In tho space that has been allotted
to ms Ii is necessary that this review
be very brief and therefore we can
only tOnch upon n few of the most
essential parts OF Insurance
Fire insurance is merely sys.
tenn OF taxation. The insurance
agents are the tax collectors, the
insurance companies tax distribu-
ters. The premium paid for in
dcmnity against loss by fire or the
tax Is composed of two elements.
used solely for the payment OF
losses, which fluctuatcs from year to
year. according to the burning ratio.
The residue is the expense, reserve
and surplus element this pays the
agent for his work and all the help
crs needed to care for. supervise and
carry on the machinery Of collecting.
investing and disbursing the pre-
miums. 1t is also used in adding
to the legal reserve and to surplus.
There are three general classes OF
fire insurance companies. The first
comprises companies with capital
stock paid in by those who are re-
SpOnSible for the company and haZ-
ard their investment in getting 1t
started and maintaining it. When
premium is paid TO a stock COM
Dany there is no further liability on
part of policy holder.
The second class includes the mu-
tual companies. \ mutual is in
corporated. but has no capital stock.
The profits, if any, arc distributed
among the policy holders to de-
crease the cost of their insurance,
but. on the other hand. if there are
ABNORMAL losses the policy holders
arc called on for additional pre-
MUM. Tho liability of a policy
holder of a mutual may not end
with the payment of his cash pre-
MUM. There is what is known as
contingent liability. A policy holder
is held for his pro rata share of the
losses during the term OF his policy
and is liable to assessment in case
OF excessive losses The liability OF
the policy holder is frequently lin
tied to three or five times the cash
premium he pays.
The third class of insurance in
situations are LloNds and interim
snrance associations. The Lloyds
is the oldest form of insurance. 1t
Is not an incorporated body. A
number of nj an form n partner
ship. IT may be so termed. and issue
insurance policies in which each
personally assumes n part of the
liability.
The best known Lloyds is London
LloEds, blanket name that covers
numerous groups of persons called
underwriters or subscribers that is
sue policies. Each underwater
signs his name to each policy and
the amount of liability he will as
sumo. In the United States tho
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 n $4,000 policy, an under
writer at Lloyds would assume $500
as his share in case there were 90
underwriters.
nter-insurance concerns differ
somewhat from Lloyis. They are
not incorporated. The plan is for
a member of business concerns to
insure each other. Suppose. for
example. that 500 department stores,
wholesale groceries and like enter
priscs. agree to contribute certain
sum in case any one of the num-
Der meets with loss by fire. That
is inter-insuranCe. Such a concern
issues no policy to any one not
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 n rate, but