A FARMERS MUTUAL FIRE INSURANCE COMPANY. 9 



be put into practice, will increase the cooperative spirit. It will 

 help to give the organization a broad and firm basis and make it 

 more truly a community affair. Under the agency plan, on the 

 other hand, there is greater danger that the interests of the com- 

 pany will be sacrificed in an effort to secure large applications and 

 commissions. 



The compensation for securing business should be a fixed amount 

 rather than a percentage of the advance charges collected. The fixed 

 amount leaves the one who takes the application unbiased as to the 

 valuation and the consequent amount of insurance written. While 

 a thoroughly conscientious and unselfish person may refuse to let 

 the matter of his own compensation influence his judgment, there 

 is no doubt as to the wisdom of eliminating temptation wherever 

 possible. 



The application should contain an accurate and fairly detailed 

 description of the property to be insured and should also contain 

 the proposed member's formal acceptance of the articles of incorpo- 

 ration and the by-laws of the company, together with his agreement 

 to meet his share of all losses and legitimate expenses. The latter 

 obligation frequently is embodied in a separate assessable note, 

 though in most cases where this is done it merely adds another paper 

 to be cared for, without corresponding advantage. 



The policy or membership fee and the initial premium should be 

 forwarded with the application to the secretar} 7 , unless a plan for 

 periodic settlement of accounts between the company and the person 

 receiving the application has been provided. Such application, when 

 full} 7 and regularly approved by the company's representative taking 

 it, should impose full liability upon the company until a policy is 

 issued or the application has been formally rejected. In the absence 

 of such a provision, especially where the secretary does not give 

 his full time to the duties of his office, the, delay in issuing a policy 

 may mean that the applicant goes without protection for some time 

 after he has taken all necessary steps on his part to have his prop- 

 erty insured. 



• When a conditional or tentative approval by the company's repre- 

 sentative taking the application is provided for in the by-laws, an 

 application so approved should not bind the company until finally 

 passed upon and accepted at the company's home office. In any case, 

 after due consideration of the application, either a policy should be 

 issued and forwarded to the applicant or the application, together 

 with the advance charges collected, should be returned promptly 

 with formal notice that it has been rejected. The reason for rejec- 

 tion should be clearly stated whenever practicable. 

 78934°— Bull. 530—17 2 



