310 Cooperation in Agriculture 



to all those who insure, somewhat after the plan of the 

 old-line companies. From these premiums a surplus is 

 accumulated from which the losses are paid, and when 

 the surplus is not large enough to cover losses, the members 

 are assessed pro rata to cover the losses. In the second 

 method, no premium is paid upon the insurance, but a fee 

 is collected at the time a policy is issued to cover the cost 

 of examining the property and other expenses in connec- 

 tion with issuing the policy. The members are under a 

 written agreement to pay a pro rata share of the loss sus- 

 tained by the company whenever a loss occurs. 



In some states each company has to provide and main- 

 tain as a reinsurance reserve a fund equal to a certain pro- 

 portion of the amount received annually from premiums. 

 This provision applies especially to the state mutuals. 

 Under the first method of organization, in addition to the 

 annual premium a member pays, he may be legally liable 

 to the association for a still greater amount when unusual 

 losses occur, in Iowa, for example, the maximum liability 

 of a member equaling not "less than a sum equal to the 

 basis rate charged by the association for insurance nor 

 greater than a sum equal three times such basis rate." 

 In other states each member by agreement may be liable 

 for his pro rata share of all the liabilities carried by the 

 company, the maximum amount of the liability usually 

 being plainly stated on the face of each policy. When a 

 loss occurs, the extent of the loss is determined by the 

 company, and the amount is paid from the assessment 

 or from the reserve fund. 



One may gain an idea of the extent of the mutual in- 

 surance business from the annual reports of the state in- 



