(Eh ea a aa aca ee ee ee 
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 1s 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 secretary, unless a plan for 
periodic settlement of accounts between the company and the person 
receiving the application has been provided. Such applcation, when 
fully and regularly approved by the company’s representative taking 
it, should impose full habilty 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, 580—17-——2 
