Mutual Insurance 309 



companies are saving three-quarters of a million dollars 

 annually in premiums. The Minnesota Act authorizing 

 the formation of township mutual insurance companies 

 was passed in 1875, and of the one hundred and fifty or 

 more associations formed since that time, none has failed. 1 

 The formation and management of the mutual com- 

 panies must conform to the insurance laws of the state, 

 the mutual companies being subject to the same super- 

 vision as that exercised over the stock corporation insur- 

 ance companies. In forming a mutual company, a group 

 of farmers or other property-owners residing in the same 

 town or county or in a number of adjoining towns who own 

 collectively from $50,000 to $250,000 worth of property, 

 or whatever amount is prescribed by the state law, form 

 themselves into a company or corporation for mutual 

 insurance against fire, hail, cyclone, or against such other 

 catastrophes as the state laws provide. When agreements 

 have been entered into for insurance by the number of 

 people prescribed by the law, usually twenty-five or more, 

 and a certain proportion of the premiums are actually 

 paid in, and the remainder secured by notes or bonds in 

 the possession of the association, the company takes out a 

 certificate of incorporation, and, after approval by the 

 state officials, is ready to transact a mutual insurance 

 business. 



A PLAN FOB A MUTUAL INSURANCE COMPANY 



There are two methods of organizing mutual insurance 

 companies. In one of these a fixed premium is charged 



1 " Farmers' Mutual Fire Insurance in Minnesota," Victor Nelson Val- 

 gren, Quarterly Journal of Economics, Harvard University, Feb., 1911. 



