32 DEPARTMENT BULLETIN 912. 
with whom he has settled, or in any case their neighbors, will expect 
and demand the same liberal settlement from the other concerns. 
Unless equally liberal settlements are made it will be difficult for 
these other companies to secure business in this locality in the near 
future. By this form of unscrupulous competition, losses in the past 
were often grossly overpaid, resulting in immediate injury to the 
companies affected and in needless increase in hail rates for the terri- 
tory in succeeding years. The evil just outlined has been remedied 
to a considerable extent by an arrangement on the part of a large 
percentage of the joint-stock companies for a jointly maintained ad- 
justment bureau. 
Fair and reasonable adjustments, as well as economy in the oper- 
ation of the business, are, in the long run, as much in the interest 
of the buyers of hail insurance as they are in the interest of the 
organizations engaged in this form of underwriting. This is true, 
no matter whether the farmers in a given State or locality patron- 
ize joint-stock companies, mutual companies, or State hail insur- 
ance departments. Extravagance, either in the adjustment of losses 
or in the expenses of operation, is quite sure to be reflected in in- 
creased premium rates or assessments. In the case of mutual com- 
panies, and more particularly those operated on the assessment or 
contingent liability plan, this relationship between expenditures and 
cost is very direct, and therefore apparent to every intelligent pur- 
chaser of insurance. The same may be said to, he true with refer- 
ence to State hail insurance departments. In the case of joint-stock 
companies the connection between expenditures and rates is some- 
what less direct and is frequently overlooked entirely by the pur- 
chasers of insurance. The incc~~ * ^ excessive rates may con- 
tinue for a time to go to increased dividends to the stockholders 
or into the general surplus of the company, while a deficit, due 
either to some form of extravagance in expenditures or to rates 
which are actually inadequate, may be temporarily cared for by the 
surplus accumulated from the business of preceding years or from 
that of other lines of business during the same year. In the long 
run, however, no company is going to continue a line of insurance 
at an ^remunerative rate, nor, in the face of legal regulation and 
of competition, actual or potential, is it probable that a company 
will long collect a rate greatly out of proportion to the necessary 
cost of the business. In hail insurance, as well as in other lines of 
underwriting, adequate rates of premiums or assessments are a first 
essential to true success. Excessive rates, on the other hand, whether 
caused by extravagance or cupidity, tend to discourage the buying 
of insurance on the part of many of those who need it, to reduce the 
volume of business and lessen the usefulness of the insurance insti- 
tutions, and to place an unfair and unjustifiable burden upon those 
who do provide themselves with needed protection. 
o 
