THE ORGyXNIZATIOX OF FARMERS* MUTUAL FIRp: IXSURANCE COMPANIHS 21 



one of whicli will, in rotation, retire at the end of each year. Thus conti- 

 nuity is given to the board. 



There are good reasons why the regular officers should generally be 

 elected by the board from their own number. Especially is this true of the 

 secretary and the piesident. The duties of the treasurer however, as 

 ordinarily prescnbed, bring him little into touch with the actual insurance 

 business, and therefore this office may well be held by a responsible person 

 otherwise unconnected with the compan}' . An official or responsible em- 

 ])loyee of a local bank ofter makes a good treasurer. In exceptional cases 

 it may be found expedient to elect a secretary who at the time has no farm 

 ])roperty to insure and therefore cannot be a meniDer of the company in 

 a technical sense. He may, for exam])le, be a retired farmer who has for 

 years been an active member of the company. 



The best plan probably is to provide for an executive committee res- 

 ponsiole for all important business of a more or less routine nature. The 

 president, secretary and \-ice-president properly constitute such a com- 

 mittee. All companies should also provide for an auditing committee, which 

 ordinarily, and especially in the case of companies of moderate size, should 

 consist of members of the company. An auditing committee of three should 

 ha\e its chairman and at least one other member chosen at the annual meet- 

 ing from outside the board of directors. It may be well that the third 

 member should be chosen bv the board from their own number. 



§ 2. IXST.RANCE Tr.VN.SACTIQNS. 



The most important single problem confronting a nevvly organized 

 farmer.=^' mutual fire insurance company is that of securirg a sufficient 

 number of acceptable applications for insurance within a reasonable distance 

 of the head office. The standard applied to risks must var\- with the 

 economic development of a community. In a new or undeveloped com- 

 munity risks have to be accepted wliich could and should be rejected in 

 one more advanced materialh'. The cost of insurance will therefore be 

 higher in an undeveloped than in a developed community, but commercial 

 rates for insurance — if commercial insurance be available on any terms — 

 will be equalh' higher, and therefore the savnng effected by co-operation 

 will not be less. The requirements as to the personal character of applicants 

 need not and should net vary. 



As to who should solicit or accept ajjplicaticns there is a variety of 

 opinions. In about 55 per cent, of the farmers' mutual companies one or 

 more special agents receive all applications, and in other 10 per cent, they 

 are received at least in part by such agents. The remaining 55 per cent, 

 of the companies restrict the right to receive applications to the officers or 

 to the directors and officers. The extent to which the co-operative spirit 

 has developed in a community' should be considered in deciding on a plan 

 for securing business. It is believed however that the plan of charging 

 the directors with this duty whenever possible will strengthen the co- 



