FARMERS MUTUAL INSURANCE COMPANIES' UNION. 353 



One of the first principles of mutual insurance is fairness and justice 

 to all concerned. I can see no way whereby a rodded building could be 

 insured at a less rate and do justice to all policy holders. 



Let us assume that a company insures rodded buildings at a rate of 

 two-thirds. I have here an assessment that was made October 10, 1903. 

 The losses were by lightning $2,945, by fire $1,535, total $4,480, rate of 

 assessment 15 cents on each $100. Here is also one of our policies: 



Dwelling $ 700 



Contents 7 150 



Barn No. 1 800 



Contents 250 



Barn No. 2 ■ 150 



Stock 250 



Total $2,300 



The dwelling and barn No. 1 we will say are properly rodded. That 

 makes $1,850 worth of property that is protected by rods, and $450 worth 

 that is not protected. Now the problem presents itself as to how this par- 

 ticular policy is to be assessed for these losses. We have $2,945 lost by 

 lightning and $1,535 by tire. This man had his $1,850 protected by rods 

 and $450 not protected. It would not be just to charge him only a two- 

 third rate on all his risk because part of his property was not protected 

 by rods. Neither would it be right to charge him only a two-third rate 

 for the amount lost by fire because Lis fire risk was just as great as the 

 man's whose buildings were not rodded. So we see in seeking for justice 

 to the man who has rods we get into complications that would tax the 

 patience and mathematical skill of the ordinary secretary to the utmost. 



If all our losses were caused by lightning the making of assessments 

 would be a comparatively easy matter. In keeping the assessment reg- 

 ister it would be necessary to open two accounts with each policy; one 

 for the part protected-, by rods and one for the part not protected. 



In making an assessment on $3,000,000 worth of policies a full rate 

 of 15 cents would bring in $4,500. Now suppose instead of the full rate 

 we charge only a two-third rate on one million and the full rate on two 

 millions. The result is we raise only $4,000. Now this deficit must be 

 raised and there is only one way to do it, and that is to charge the two 

 millions more than a full rate and the one million a proportionate increase 

 on their two-third rate. 



In looking this matter over from various points of view, and taking 

 into consideration the fact that rods do not decrease the chances of loss 

 by fire, and that our companies do not insure buildings for more than two- 

 thirds of their value, it seems that we must come to the conclusion that 

 it would be exercising good business judgment to put up rods to add more 



23-Agri. 



