PRUSSIAN FEDERATION OF SOCIETIES FOR THE INSURANCE OF CATTEE 4I 



Financial Position. Number of Casualties beyond the Normal Limit, 

 Compensation for Risks {the "fifth") : 



The total expenditure of the societies under the head of casualties, 

 costs of veterinar}- attendance and costs of administration — premiums paid 

 to the federation being included —, amounted — when the receipts from 

 premiums paid to the societies, the slaughtering of animals and the minis- 

 terial subsidies left over for 1915 had been deducted — to a sum of 2,319.17 

 marks (3,185.18 marks in 1914); and in this outlay the federation participated 

 to the extent of four fifths or 1,855.37 marks (2,548.10 in 1914), and the 

 societies to that of one fifth or 463.80 marks (637.09 in 1914). The federa- 

 tion has not yet had to exercise its right, conferred on it by the by-laws, 

 to make societies, which have had to pay extraordinarily high indemnities 

 owing to bad farming, participate in payment for the excessive casualties 

 to the extent of two fifths. 



The total stun advanced by the federation to the societies during the 

 five 3-ears for which the period of insurance lasts is covered by the soci- 

 eties' reserves. If they have no reserves — that is if a'^ry year their number 

 of casufilties be above the normal — , or if their reserves be insufiicient — 

 that is if their bad years have been more frequent than their good — , they 

 are not bound to make special payments to cover the federation's advances. 

 They have recourse to an expedient less felt by their members, namelj'' 

 they increase the premiums for the next period of insurance. The amount 

 which a society pays to the federation is thus augmented, and little by little 

 the debt contracted with the federation is redeemed by payments spread 

 over five years and not by a single payment. 



The proportion in which the premium is increased varies naturally 

 with the size of the debt. In view of the ministerial aid given to the less 

 wealthy societies, which have had to sufier particularly bad years through 

 no fault of their own, this debt should never reach an exorbitant level, 

 and there should be question only of a fraction added to the percentage 

 payable as premium and of the payment of pfennigs (i) by the insurers. There 

 are federations of which some societies have been able to reduce to 0.85 per 

 cent, the rate of their premiums which was at first 2 percent. The respon- 

 sibility of societies for casualties surpassing the normal limit shows that they 

 are no longer interested in the economical management of common funds. 

 Precaution is justified ; for if the federation placed itself in a position to pay 

 for all casualties surpassing the normal Hmit the societies might easily 

 adopt such methods of administration that prudence and thrift would be 

 the least of their cares. The largest reserve fund would be unable to hold 

 out for long. To compensate for risks with the premiums of the various 

 societies and within the federation is to give to the technique of insurance 

 its one and only firm basis. It may be noted in this connection that the ex- 

 cess of casualties over the normal limit is influenced, in the societies and con- 



(i) I pfeimig := ,01 mark. 

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