The Columbus dispatch. (Columbus, Miss.) 19??-1922, 1921-02-27


since the class known as "Lloyd's" is
not authorized to operate in this state,
and in only two or three states in the
United States, | shall omit this class
and call attention to the three classes
authorized to do business of fire in
suranee in most of the states of the
union.
STOCK" Companies.
The first class of insurers to which
| call attention is that class which is
capitalized corporations, organized
and existing under corporation laws.
They have a capital stock, and under
write risks for the public at profit
to themselves. They underwrite risks
at fixed or definite premium charges,
assuming all liability, leaving the
other than that of paying the required
assured with no liability whatever
premium. If there is a profit, the
stock holders take the profit; if there
be loss, the stock holders also stand
the loss. This class of insurance is
known as "stock" companies.
Another class of insurance carriers
are Incorporated companies or associa-
tons, insuring only their own mem
bers. The purpose with this class is
to provide indemnity at cost or as
nearly at cost as possible. These COM
panies have several ways, and differ
ent ways, in which to provide funds
to pay losses. Some charge the same
cash premium as that determined and
charged by stock companies, and
where there is saving, such saving
accrues as a surplus; and if, after
paying losses, setting aside the re-
serves and creating the required sur
plus, there be residue, such residue
is returned pro rata to the policy
holders.
Still other companies of this class
operate purely upon. an assessment
basis, making assessments after losses
occur. In all cases, however, the
funds of these companies, in whatso-
ever way they may be collected or
created, become the property Of the
incorporated company and are jointly
owned by the members of the COM
pany, which members, as policy
holders, receive the profits, or bear
the loss pro rata, as the case may be.
These companies are managed by Off
GERS elected by the policy holders, or
at least supposed to be elected by the
policy holders, and this class of car
riers is known as mutual insurance
companies.
I There is still another class of car
riers doing business in this and most
OF the other states of the union. This
class of carriers is not a company, is
not a corporation, is not in fact a
legal entity. This class of insurers is
an association of persons, usually per-
sons or corporations engaged in the
same line of business-as, for in
stance, merchants, mill men, etc.
who, not desiring to pay definite in
surance premium in order that they
may be Unidentified against loss by
fire--the insurer assuming all of the
liability, and preferring not to become
members of company operated joint
ly, taking the profits or assuming
the risk, as the case may be, but pre-
ferring to associate themselves to-
gether for the purpose of taking care
Of their losses themselves at cost, and
for that purpose employing an attor-
ney to manage their insurance bust
ness for them under power of attor-
ney, which each member or subscriber
executes. In this way each subscriber
becomes the insurer Of every other
subscriber, while every other subscrib-
er is also his insurer. This class of
carriers is known as reciprocal
associations or exchanges
The subscribers in such reciprocal
exchanges advance as premium from
time to time such amounts as their
attorney-in-fact estimates to be suf-
ficient to meet the losses, pay the at
torney-in-fact his commissions, and
defray all other expenses of the ex-
change. If the amount estimated
proves by experience to be more than
is required for the period, the attor-
ney-in-fact returns to such subscriber
his pro rata of the excess or gives
subscriber credit for same on his next
advance deposit. And if the estimated
amount proves to be too low, and the
amount paid thereon insufficient, the
attorney-in-fact must levy an assess
ment or advance the deficit himself
The competition between these diff
ferent classes of carriers is sharp, al
most to the point of belligerancy at
times, and the purchaser of fire pro-
lection has his choice and cannot be
forced to take what is offered at any
stipulated price. Nowhere in the
business world is there more relent-
less and determined competition thar
that which exists between stock com.
panies and mutual companies, between
mutual companies and reciprocal ex-
changes, and between reciprocals and
stock companies in effecting fire in
surance. Should there be any doubt
as to the correctness of this PROPOSE
ton, an examination of the files II
this, or any other insurance depart
ment, will be amply sufficient to con
vince the most skeptical.
Competition Between Carriers of thu
Same Cass.
Contrary to the views of greaI
many people there Is sharp competi