A farmers' mutual fire insurance company. 15 



FEES AND ASSESSMENTS. 



A reasonable policy fee, or membership fee, should be provided 

 for in the by-laws. This fee is usually large enough at least to com- 

 pensate the representative of the company who takes the applica- 

 tion and makes a survey of the risk. 



Apparently many of the farmers' mutuals, in their early history, 

 followed the plan of levying assessments after each material loss, 

 and a few companies still adhere to this plan. It has been found, 

 however, that after a company has reached a fair size this plan proves 

 needlessly burdensome to the officers and also involves unnecessary 

 expense in notifying members of their assessments and in receipting 

 for these assessments when paid. The members themselves fre- 

 quently find it annoying to be called upon for small assessments several 

 times during the year. Other companies have adopted the plan of 

 borrowing money with which to pay losses as they occur, and levy 

 an assessment sufficient to repay the loans at the close of the busi- 

 ness year. 



An increasing number of farmers' mutuals, however, are adopting 

 the plan of requiring the prepayment of an initial premium at least 

 equal to one year's average cost and then collecting at the beginning 

 of each succeeding year of the policy term an annual assessment in 

 advance. This plan not only obviates frequent assessments but also 

 eliminates much of the trouble occasionally experienced in enforcing 

 pa3 7 ment by delinquent members. The fact that a reasonable amount 

 of money is always on hand in the treasury of the compan}^ further 

 tends to inspire confidence in the organization both on the part of the 

 members and on the part of business men with whom the company 

 or its policy holders may wish to deal. 



Where the annual prepayment plan has been adopted the initial 

 premium as well as the successive annual assessments should be based 

 on a liberal estimate of the needs of the company for the coming 12 

 months, taking into consideration any funds already on hand. 

 Should it be found, however, that the funds have become exhausted 

 some time before the next regular assessment, the management should 

 not hesitate to make good the deficiency by levying a special assess- 

 ment upon all risks insured at the time of the occurrence of the 

 unusual losses that exhausted the company's funds. 



In the case of special assessments, as well as in the case of all 

 regular assessments when levied in arrears, it is important that the 

 payment of all dues be enforced in a businesslike manner. Several 

 companies have suffered loss of reputation, and subsequently of mem- 

 bership, because of their failure to take prompt and effective meas- 

 ures to enforce their assessments. Once it is understood that the 

 management of the company means what it says in its assessment 



