22 UNITED STATES - INSURANCE AND THRIFT 



operative spirit, The plan of employing agents risks a sacrifice of tlie 

 interests of the company to an effort to secure large applications and com- 

 missions. The compensation for securing business should be a fixed 

 amount rather than a percentage of the advance charges collected ; the per- 

 son receivang the application will thus be left umbiassed as to valuations and 

 the consequent amounts of insurance to be written. 



The application should contain an accurate and fairly detailed descrip- 

 tion of the property to be insured, the proposed member's formal acceptance 

 of the articles of incorporation and the by-laws of the company, and his 

 agreement to meet hi.s' share of all losses and legitimate expenses. The po- 

 licy or membership fee and the initial premium should be forwarded with 

 the application to the secretary, unless there is an arrangement for a pe- 

 riodic settlement of accounts between the company and the person re- 

 ceiving the application. The application should, when fully and regularly 

 approved by the company's representative who receives it, impose full lia- 

 bility' on the company imtil it has been formally rejected or a policy has been 

 issued. The applicant may otherwise, especially where the secretary does 

 not give his full time to his office, be unprotected for some time after he 

 has taken all steps incumbent on him to procure insurance. 



When a conditional approval by the company's representative who 

 receives the application is provided for in the b^^-laws, an application so 

 approved should notjbindthe company until it has been finally accepted at 

 headquarters. The reason for rejection should be clearly stated whenever 

 this is practicable. 



It is possible for a farmers' mutual are insurance company to bring 

 the average annual percentage of loss considerably below that experienced 

 by larger commercial companies. The aimual loss by fire in the United 

 States, whether covered by farmers' mutual companies or not, is however 

 very much higher than the average in other countries. The first and per- 

 haps most important step towards lessening risks and eliminating prevent- 

 ible losses is to provide an efficient system of inspection. 



In our pre\aous article on farmers' mutual insurance against fire we 

 noticed the desire of the members of the mutual companies of Illinois to 

 render policies more uniform. The United States l^epartm'int of .Agricul- 

 ture considers however that the advisability of requiring farmers' mutual 

 insurance companies to use a standard policy for all classes of insurance may 

 be questioned. In many instances in which the use of a standard policy 

 has been required by State law the companies have still considered the b}'- 

 laws printed on the back of the policy as constituting their true agreement 

 with the insured. It is unquestionaoly essential that the agreement be-' 

 tween a company and its members should be understood. The standard in-, 

 surance policies of the various States must be admitted to be difficult read- 

 ing for one not accustomed to legal phraseology. Moreover their provisions 

 regarding factories are of no interest to farmers. These considerations 

 have induced the legislatures in a majority of the States having legal pro- 

 visions for formers' mutual companies to exempt these companies from 

 using the State's standard fire insurance policy. 



