INSURANCE. 



543 



profit, it is necessary, as previously remarked, that 

 the experience of the risks should be pretty ex- 

 tensive. It is not, however, at all necessary, that 

 either party should inquire into the circumstances 

 that lead to those events that are most commonly 

 made the subject of insurance. Such a research 

 would, indeed, be entirely fruitless : we are, and 

 must necessarily continue to be, wholly ignorant of 

 the causes of their occurrence." 



Marine Insurance The advantages resulting 

 to commerce and navigation from marine insur- 

 ance are immense. " Without the aid that it 

 affords, (says Macculloch) comparatively few indi- 

 viduals would be found disposed to expose their 

 property to the risk of long and hazardous voyages; 

 but by its means insecurity is changed for security, 

 and the capital of the merchant whose ships are 

 dispersed over every sea, and exposed to all the 

 perils of the ocean, is as secure as that of the ag- 

 riculturist. He can combine his measures and 

 arrange his plans as if they could no longer be af- 

 fected by accident. The chances of shipwreck, or of 

 loss by unforeseen occurrences, enter not into his 

 calculations. He has purchased an exemption from 

 the effects of such casualties ; and applies himself 

 to the prosecution of his business with that confi- 

 dence and energy which nothing but a feeling of 

 security can inspire. Besides insuring against the 

 perils of the sea, and losses arising from accidents 

 caused by the operation of natural causes, it is 

 common to insure against enemies, pirates, thieves, 

 and even the fraud, or, as it is technically termed, 

 barratry, of the master. The risk arising from 

 these sources of casualty being extremely fluctuat- 

 ing and various, it is not easy to estimate it with 

 any considerable degree of accuracy ; and nothing 

 more than a rough average can, in most cases, be 

 looked for. In time of war, the fluctuations in 

 the rates of insurance are particularly great: and 

 the intelligence that an enemy's squadron, or even 

 a single privateer, is cruising in the course which 

 the ships bound to or returning from any given port 

 usually follow, causes an instantaneous rise in the 

 premium. The appointment of convoys for the 

 protection of trade during war, necessarily tends, 

 by lessening the chances of capture, to lessen the 

 premium on insurance. Still, however, the risk in 

 such periods is, in most cases, very considerable ; 

 and as it is liable to change very suddenly, great 

 caution is required on the part of the under, 

 writers." 



The first remarkable peculiarity in Marine in- 

 surance is, that while Fire and Life Insurances are 

 usually effected by companies, Marine risks are 

 commonly guaranteed by individuals. London and 

 Liverpool are the only towns in England in which 

 public companies exist for protecting property ex- 

 posed to the perils of the seas. It has been as- 

 serted, that the comparatively small amount of 

 business done by the Marine companies offers a fair 

 argument that individuals are better adapted to in- 

 sure sea risks than societies. A little consider- 

 ation, however, will prove this inference to be in- 

 correct ; since a well-constituted company must 

 certainly possess larger means than any single indi- 

 vidual, for offering a sufficient guarantee to the 

 insured, and must likewise afford greater facilities 

 in making the contracts, and in promptly liqui- 

 dating the contingent claims. The mode of con. 

 ducting the business of Marine Insurance, both by 

 individuals, and companies, in London, is as fol- 

 lows: 



The individual underwriters meet in a subscrip- 

 tion room at Lloyd's. The joint affairs of the 

 subscribers to these rooms are managed by a com- 

 mittee chosen by the subscribers. Agents are ap- 

 pointed in all the principal ports of the world, who 

 forward, regularly to Lloyd's, accounts of the de- 

 partures from and arrivals at their ports, as well as 

 of losses and other casualties ; and, in general, all 

 such information as may be supposed of importance 

 towards guiding the judgments of the underwriters. 

 These accounts are regularly filed, and are acces- 

 sible to all the subscribers. The principal arrivals 

 and losses are, besides, posted in two books, placed 

 in two conspicuous parts of the room ; and also in 

 another book, which is placed in an adjoining room, 

 for the use of the public at large. Many of the 

 merchants of the city of London are subscribers 

 to these rooms ; and the two old companies contri- 

 bute each 100 per annum, in return for which 

 they are furnished with copies of the daily intelli- 

 gence. The rooms are open from 10 o'clock in the 

 morning till 5 o'clock in the afternoon, but the 

 most considerable part of the business is transacted 

 between 1 and 4. Those merchants and ship 

 owners who manage their own insurance business, 

 procure blank policies at the government office, or 

 of their stationers, which they fill up so as to meet 

 the particular object in view, and submit them to 

 those underwriters with whom they are connected ; 

 by whom they are subscribed or rejected. Each 

 policy is handed about in this way until the amount 

 required is complete. The premium is not paid to 

 the underwriter in ready money, but is passed to 

 account. Nor does the underwriter debit the ac- 

 count of the person to whom he subscribes a policy, 

 with the whole amount of the premium, but with 

 the premium less five per cent. Whenever losses 

 occur which more than absorb the premiums on any 

 one account, the underwriter is called upon to pay 

 the balance. But should the underwriter's ac- 

 count be what is called good, that is, should the pre- 

 miums exceed the claims, he sends round during 

 the spring and summer, to collect from his various 

 debtors either the balance of his last year's ac- 

 count, or money on account, according to his judg- 

 ment ; but, upon what he receives, he makes an 

 allowance of twelve per cent. Many merchants and 

 ship owners do not transact their own insurance 

 business. They give their orders for insurance to 

 others, who undertake it for them, and are re- 

 sponsible for its proper management. These lat- 

 ter persons are called insurance brokers ; and some 

 of them manage the business of a number of prin- 

 cipals. To them, likewise, are transmitted the 

 orders for insurance from the outports and manu- 

 facturing towns. They charge the whole premium 

 to their principals, and their profit consists in 5 per 

 cent, upon the premium, 12 per cent, upon the 

 money that they pay to the underwriters, and per 

 cent, that they deduct from all the claims which 

 they recover from the underwriters. It will at 

 once be seen, that the trouble of effecting insur- 

 ances at Lloyd's is considerable ; that a good deal 

 of time must be consumed; and that merchants 

 and ship owners, therefore, have great inducement 

 to consign their insurance business to brokers. 

 But where the business is transacted with a com- 

 pany, this inducement, if not destroyed altogether, 

 is, at all events, very much diminished. Any 

 party having property to insure, has merely to go 

 to the manager of the company, and state the par- 

 ticulars of the risk to be insured: the premium 



