532 



INSURANCE. 



Total loss incurred in 1862, as reported $4,746,046 47 



Actual indebtedness, or present liability 783,978 07 



Amount of reinsurance fund, or unearned 



premium 2,530,947 12 



Total expenditure in 1862 8,626,042 46 



Expenses of working the business, exclusive 



oftaxespaid 2,162,055 89 



Total liabilities, including estimate for rein- 

 surance as returned, but excluding profit 



scrip 4,117,699 66 



Net surplus (above capital) over liabilities and 



reinsurance 8,590,836 70 



Amount of fire risks written in 1S62 1,191,983,193 09 



Amount of fire risks in force at end of 1862 ... 891,620,365 58 

 Amount of inland navigation risks written in 



1862 :. 6,432,347 00 



Amount in force at end of 1862 2,037,38320 



Average percentage of expenses on total in- 

 come 22 23 



Average percentage of expenses on net cash 



premium 27 96 



The amount of risks taken by the companies 

 in 1862 exceeded those of 1861 by $362,644,325. 

 The foreign companies doing business in New 

 York, had risks in New York of $121,726,767 

 fire and $9,861,867 inland navigation. The 

 amount of risks of the Massachusetts, New 

 York, and of other States, exclusive of Massa- 

 chusetts, doing business in New York, are as 

 follows : 



Such is the enormous amount of property at 

 risk against fire in the companies in and about 

 New York. 



The insurance in New York companies is be- 

 coming more on the participation plan to the 

 extent of three fourths of their profits. 



They issue scrip to the policyholder for his 

 share of said profits, and make no provision 

 whatever for the redemption of this scrip ex- 

 cept the excess of the fund of profits over a 

 fixed sum, which may be $500,000. "When it 

 comes to redemption, the oldest scrip takes 

 precedence, and the fund is always subject to 

 losses as much as the capital, and lefore the 

 capital. 



This principle works well. In Massachusetts 

 the law requires the companies to divide the 

 whole surplus cash premiums. 



The directors divide money which should be 

 kept. The premiums of new comers are taken 

 to pay losses or dividends to the old ones; 

 money is borrowed to do the same thing, thus 

 still further anticipating the future business; 

 and at last, when no more can be borrowed 

 and 'debts can no longer be put off, resort is 

 had to the notes, which can be collected with 

 great difficulty. Among the Massachusetts 

 companies there are ten that insure to the ex- 

 tent of $15,185,994; to reinsure this amount 

 would require $91,205, and the whole available 

 cash assets of the companies amount to $16,480. 



The mutual marine companies, though they 

 issue scrip for profits, are allowed by law to 

 retain the actual funds absolutely subject to be 

 absorbed by future losses, and do not begin to 

 redeem the scrip till the reserve fund exceeds a 

 certain fixed amount ; viz., it is at the option 

 of the company to begin to redeem scrip after 

 the fund reaches $250,000, and it is imperative 

 after it reaches $500,000. 



The past year has been one of unwonted ac- 

 tivity in life insurance. The unusual number 

 of men engaged in hazardous military and naval 

 employments has apparently been accompanied 

 by a desire to provide for families, and this de- 

 sire has been met by the companies on appro- 

 priate terms. The demand so occasioned has 

 induced the establishment of many new com- 

 panies in different parts of the country; of 

 them two have been started in New York. 

 The following return (see Table on p. 533) 

 shows the leading features of the companies 

 doing business in New York during the year 

 1862. 



The amount insured in 1862 was an average 

 of $2,492 on each policy, and equalled one 

 third of the whole amount outstanding at the 

 beginning of the year. The tendency has been 

 to a great number of policies at a lower average 

 sum, from the fact that, on military and naval 

 risks, the amount insured by each policy has 

 been more strictly limited than on other risks, 

 whereby the companies have been able to ex- 

 tend the benefit of insurance to a greater num- 

 ber and still keep the aggregate within a pru- 

 dent limit. 



The reasons for receiving such applications 

 were apparent. The members of the company 

 and their families, wherever resident, have the 

 same interest in the defence and perpetuation 

 of our institutions as other citizens, and if the 

 number of a family is taken to be five, on an 

 average, this consideration would extend to 

 about three hundred and twenty-five thousand 

 individuals, and therefore, if the assumption of 

 such risks would have a favorable influence, it 

 was expedient to assume them on just terms 

 and not to an excessive amount. The principal 

 difficulty in the case was the want of satisfac- 

 tory data on which to estimate the risk, since 

 precedents applicable were wanting. But esti- 

 mates were carefully made and such rates of 

 premium adopted, subject to modifications for 

 the varieties of risks, as would seem to put 



