MANAGEMENT OF AN INSURANCE OFFICE. 273 



from their own accumulations, and each member is a 

 guarantee to the rest for the fulfilment of all engagements. 

 If the office possess a charter, this guarantee operates no 

 further than to pledge the premiums already paid by any 

 member for the discharge of all claims which arise be- 

 fore his own, since a corporation is considered in law 

 as an individual. If, on the other hand, there be no 

 charter, the whole fortune of every member is pledged for 

 the discharge of all claims. The risk, however, at the com- 

 mencement is not great in character, and small in amount; 

 and the quantity of risk diminishes so much faster than 

 the amount increases, that it may safely be said there is 

 nothing in the commercial world which approaches, even 

 remotely, to the security of a well established and pru- 

 dently managed insurance office. 



A proprietary insurance office has a capital, the 

 proprietors of which may or may not be insured in 

 the office, and for which such a bonus is paid, in ad- 

 dition to the market rate of interest, as is mentioned 

 in p. 263. It would perhaps be difficult, at the pre- 

 sent time, to establish a new proprietary office with a 

 very large capital. The public now begins to see 

 that much capital is not necessary, and that nearly 

 all the bonus which is paid for its use is so much taken 

 away from the savings of the insured, without any ade- 

 quate benefit received in return. One by one, the pro- 

 prietary offices must (as some have done) admit the 

 insured to a share in the profits : the necessity for which 

 will be taught by the decline of business, if not previ- 

 ously learnt. 



The question as to how profits should be divided^ is 

 of the same nature in both species of offices; the differ- 

 ence being, that the offices which are partly proprietary 

 have less to distribute among the insured than those 

 which are mutual. The first inquiry must be, What is 

 the profit of an insurance office; and how is the amount 

 to be ascertained ? Firstly, as to the profit which an 

 insurance office may be expected to realise, judging by 

 the premiums they receive, and the mortality they have 

 T 



