A FARMERS MUTUAL FIRE INSURANCE COMPANY. 3 



BUSINESS TERRITORY. 



There has been a growing tendency in recent years on the part of 

 legislatures to permit farmers' mutuals a wide business territory. 

 Several States now permit companies of this kind to operate in the 

 entire State. The tendency on the part of the companies to nvail 

 themselves of this privilege has been somewhat less marked. While 

 it seems a natural ambition on the part of a farmers' mutual to desire 

 to grow by extension of its territory as well as by adding to its risks 

 within the territory already partly covered, there is danger that such 

 ambition eventually will lead to less desirable results. One of the 

 most important advantages that farmers' mutuals in general enjoy 

 over larger companies is that of a community interest and a com- 

 munity pride in the success of the undertaking. Each member dis- 

 tinctly feels himself a part of the company. The individual member 

 actively promotes the interests of the organization, is anxious to see 

 all losers receive equal justice, and is usually satisfied with a reason- 

 able settlement in case he himself suffers a loss. These conditions, 

 together with the knowledge of one another's character and business 

 affairs, tend to reduce the moral hazard to a minimum. 



Even if a case of overinsurance in a farmers' mutual should occur 

 in connection with property owned by an unscrupulous member who 

 would be quite ready to occasion a loss to a large insurance company, 

 located perhaps in a distant city, such a member is likely to hesitate 

 to throw the loss upon his own neighbors. Thus the moral hazard is 

 greatly reduced in the local farmers' mutual. Many of the local 

 mutuals have done business for half a century or more without a 

 single lawsuit. Such a record would rarely be possible except in a 

 company founded on true cooperation and embodying the principle 

 of community interest in some direct form. When risks are con- 

 fined to a limited territor}^ the saving in traveling expenses of di- 

 rectors, inspectors, and adjusters is also a large item. 



MEMBERSHIP AND VOTING PRIVILEGE. 



All persons whose applications for insurance have been accepted 

 should be members of the company in every sense of the word. The 

 character of the owner as well as the physical condition of the prop- 

 erty should be considered before the application is approved. Once 

 his application is accepted and a policy is issued to him, however, the 

 new member should be treated in exactly the same way as the charter 

 members. 



Active cooperation of all the members should be the aim. The 

 annual meeting should be well advertised and, if possible, made an 

 interesting and significant community event. Occasionally a set of 

 directors and officers are well satisfied to have the members neglect 

 the annual meeting, thus leaving to those already in office all responsi- 



