^.2 UXITKl) STATICS - INSURANCE AND THRIFT 



iu 1914 varied from 70 cents (Georgia) to 12 cents (Utah). The fact that, 

 especially in the Southern States, some of these average costs are for insurance 

 against windstorms as well as against fire and lightning should be remembered. 

 About 15 per cent, of all the farmers' mutual companies in the country write 

 policies giving the combined protection. This fact makes the average of 

 26 cents per $100 for the country as a whole aU the more remarkable when 

 compared with the rates which farmers without mutual organizations are 

 obliged to pay. 



c) The Advantages and the Scope of Farmers Mutital Fire Insurance. 



The total annual saving to farmers by reason of the relatively low insu- 

 rance cost in their mutual companies amounts to a very considerable sum. 

 No close estimate of this saving has been attempted, since no special effort 

 has been made to collect lists of commercial rates f orf arm risks in the diffe- 

 rent States and in the various sections of these States. 



It ma}' be safely said however that in a number of the States where 

 farmers' mutual insurance is most highly developed, the average cost of 

 insurance for aU these companies in the State has fallen well below one half 

 of the rates quoted by commercial businesses or the so-called bureau rates. 



The saving of the farmers' mutual companies in insurance cost may be 

 credited mainly to two sources. First the necessary working expenses of 

 large commercial companies for commissions, salaries, dividends, taxes, 

 rents, rating charges, legal assistance, etc. have been either greatly reduced 

 or entirely eliminated. Secondly the losses experienced have been fewer 

 because the moral hazard has been practically removed bj' precautions 

 against over-insurance on the part of the farmers' companies, and the diffe- 

 rent attitude of the insured towards a company consisting of friends and 

 neighbours than towards a large business company having, perhaps, its 

 premises in a distant town. 



The full possibilities of direct and conscious co-operation in farmers' 

 mutual fire insurance have not yet been realized. At least one group of 

 mutual companies in the United States has far outstripped the farmers in 

 effectively co-operating for the prevention of losses. This group is known 

 as the factory mutuals and consists of nineteen companies, mainly in New 

 England. They insure only large factories and have so far limited themselves 

 to the district east of the Mississipi River. Not only have they secured 

 severally the effective co-operation of their members for the prevention 

 of losses but they have freely and generously co-operated with each other. 

 They have for years maintained a joint bureau in Boston for the advance- 

 ment of the science of safe construction and the frequent and thorough 

 inspection of their risks. The oldest of these companies was organized in 

 1835. During the first ten years of its existence its average cost for 

 §100 of insurance was 84 cents. This average for the last ten years has 

 fallen below 6 cents, which means that the cost of insurance in this company' 

 has been reduced to approximate!}' 7 per cent, of what it was three quarters of 

 a century ago. 



It is believed that what has been done by the factory mutuals can be 



