A CRAP TUB /i\r FIBU INSURANCE. 767 



business as it could, and reinsuring a large percentage of its risks in 

 the offices of other cities. By a uniform method of classification, and 

 a uniform responsibility, each of the nineteen New England Mutual 

 Companies reinsures in the other associated concerns. The accept- 

 ance of risks is local, their distribution is general. Were pioneer 

 stock companies to adopt this plan, their success would oblige other 

 companies to imitate them. Expert underwriters would be required 

 to plan the details of a scheme applying to miscellaneous risks some 

 principles of mutual insurance. These would comprise : 



1. The identification of the interests of owners and insurers by 

 basing rates of premium upon the actual hazard, allowance being 

 made for all precautions against fire, and approved methods of quench- 

 ing it. By issuing policies to cover somewhat less than the total of 

 a loss, at a lower rate than when full indemnity is assured. 



2. By combination of the advantages of a local underwriting with 

 the benefits of well-distributed risks. Companies doing a local busi- 

 ness are not subject to the expenses and inefficiency of great compa- 

 nies with agents widely scattered and difficult of control. Reinsur- 

 ance on a well-considered method will give local companies stability 

 in cases of large fires — this, while the interests of local insurers will 

 always be large enough to make them anxious to have as few and as 

 small fires as possible. 



In a large city, where several local companies might occupy the 

 field, each could select its risks from among all quarters of the city. 

 By whatever means attained, one thing is clear, that the business pub- 

 lic, pressed by the narrowing margin of profit, will avail itself of the 

 cheapest safe insurance to be had. The reduction of cost must spring 

 from making the prevention of fire the cardinal rule of insurance. At 

 present the main rule is simply to accept risks as they are, and assess 

 immense losses — largely preventable — on the public. In Great Britain, 

 premiums average one quarter those charged in America, and the busi- 

 ness is profitable. Why can not America reach this economy, by 

 adopting British care in construction ? 



Apart from the Manufacturers' Companies, mutual underwriting 

 has not obtained much foothold in the Union. In New York State, 

 in 1883, the assets of the mutual companies were but one per cent in 

 amount of those of the stock concerns. These latter, with large re- 

 serves ready at the call of disaster, enjoy a public confidence withheld 

 from the comparatively weak mutual associations, scattered here and 

 there throughout the country. When capitalists, however, become 

 local underwriters on a large scale, we may expect insurance to have a 

 preventive efficiency, such as we find among the New England mills. 

 Just here a quotation from the New York State Insurance Commis- 

 sioner's last report may be in order : 



" During 1883, stock companies doing business in the State lost 

 percentages of premiums received as follows : Those organized in the 



