WATT, INSURANCE ON FARM CROPS. 29 



mercial crop predominates is further heightened by the fact that this 

 commercial crop is very generally insured by the farmer without 

 including his other field acreage, thus causing hail risks of the in- 

 surance companies to be concentrated in a single crop to a degree 

 even greater than are the farmer's crop prospects taken as a whole. 



In States in which considerable diversification of crops occurs there 

 will exist at no given time this high degree of susceptibility to damage 

 from hail. In such States farmers more generally insure more than 

 one crop. The critical period of one or more of these crops is likely to 

 be past before that of other crops is reached. The total hail loss in 

 such States, as well as the part of such losses covered by insurance 

 will, therefore, tend to vary less from year to year than is the case in 

 States where there is little diversification. However, since the 

 amount of hail that falls and the angle at which it falls, depending 

 upon the intensity of the wind during the hail storm, are uncertain 

 and variable, as well as the time at which hail occurs, it follows that 

 considerable variations in hail damage from year to year will be 

 found even in States having a wide diversification of crops. 



It should be apparent, therefore, that no insurance company can 

 with safety assume a large volume of hail risks in a limited territory 

 unless it has available assets in considerable amount. While this is 

 especially true with reference to the tier of States composed of Texas, 

 Oklahoma, Kansas, Nebraska, and the two Dakotas, as well as for 

 the States immediately to the west of the tier, it is essentially true for 

 all localities where hail constitutes a hazard severe enough to merit 

 special attention. A new company, obliged to rely for the meeting 

 of its obligations largely or entirely upon the premiums collected 

 during the year, should see that the risks assumed are scattered over 

 as wide a territory as circumstances permit. A limit must be placed 

 on the acreage that may be accepted for insurance in any one square 

 mile of area, in any one township, and, finally, in any one county. 

 Even with restrictions of this kind carefully provided for and ap- 

 plied, the small, joint-stock company without accumulated reserves 

 takes greater or less chances of direct failure, while the mutual hail 

 insurance company, similarly situated, takes chances of having to 

 collect unduly large premiums if operating on the unlimited liability 

 plan, and of having to prorate its losses if operating on the fixed 

 premium plan. 



The mutual as well as the newly organized or small joint-stock 

 company doing a hail insurance business must use every reasonable 

 opportunity to build up a surplus or reserve fund. In the case, of 

 mutual companies, the mutualism must, in the case of hail insur- 

 ance at least, be interpreted to embrace not only the members of the 

 company during a given year, but must be held to embrace, to a con- 

 siderable extent, the membership included for a series of years. 

 Those who join the company in a year when the hail hazard happens 

 to be unusually light, for example, must be willing to be assessed 



