INSURANCE. 685 INSURANCE. Of the three life insurance companies in the L'nitfd States having over $1,000,000,000 of in- surance in force, the Mutual and the New York are mutual companies, while the Etjuitable is a joint-stock company. The capital stuck of the Equitable, however, is only .t;100,000, and the annual dividend of 7 per cent, accounts for only $7000 out of a total annual disbursement of nearly $40,000,000. The share of the $7000 assessed against each of the 400,000 policies in force is a negligible element in the cost of in- surance. The capital stock of a stock company is of importance only so long as it constitutes a considerable part of the fund which guaran- tees security to the policy-holders. This is the case only while a company is small. All the older companies have surpluses over and above the amount legally necessary for the protection of the policy-holders which far exceed the amount of the capital stock. For example, the Equitable has a surplus of nearly $75,000,000. Even in the ease of companies with a large capital stock like the Prudential and the Metropolitan, each of which is capitalized at .$2,000,000, the surplus is several times as large as the capital stock. ^lutual companies are most numerous in fire insurance. These are small companies, usually confining their operations to a limited area and to simie one or two classes of risks. The reason for their existence is usually to be found in the belief, whether justifiable or not, that the stock companies are not managed as economically as they ought to be, thus enabling the mutual com- panies to make a saving in the cost of manage- ment; and that the particular kind of property in question is improperly classified, and the premium rate in consequence unjustifiably high. Individual JJndericrilinr;. — Insurance for gain is most commonly issued by joint-stock com- panies, but sometimes by individuals. There is no reason why insurance issued by a single person might not be as secure as that issued by a joint-stock company, provided the insurer sets aside a sufficient guarantee fund. As a matter of fact, however, comparatively little insurance is written by individuals. Some of our States have gone so far as to prohibit the practice en- tirely, influenced largely by the constitutional and other difficulties in the way of exercising adequate supervision. In marine insurance, how- ever, individual underwriting is still common. In the English Lloyds it is the prevalent form of insurance. Within recent years attempts have been made to establish an ostensibly similar form of underwriting in the fire insurance busi- ness in the fnitcd States. The promoters of the American Lloyds have claimed exemption from the jurisdiction of the Insurance Departments on the ground that they were not insurance com- panies within the meaning of the law. They still enjoy this exemption in a few States, but there is a general tendency to bring them under the same regulations as apply to joint-stock companies. Few of the Lloyds survive after their freedom of action is thus restricted. It is to be noticed, however, that the failure of so many of them is due. not to the practice of individual underwrit- ing in itself, but to the fact that the ostensible reserve for the protection of the policy-holders has usually been of little real value. The most obvious classification of insurance companies is on the basis of the kinds of risks which they assume. Thus we have fire insurance companies insuring against loss by fire, marine in- surance companies against loss at sea, plate-glass insurance companies against the breaking of plate- glass windows, and so on. Some companie:; con- line their business to one kind of risk, while others assume two or more kinds. This division of the field of insurance among different com- panies is purely a matter of practical conven- ience of administration. There is no a priori reason why one company should not issue insur- ance against all kinds of insurable risks; in fact, the theoretical arguments are all on the side of such action. So long as each risk is cor- rectly estimated according to the principles al- ready pointed out, the more risks the company assumes the more cheaply it can afford to grant insurance, since the element of uncertainty in the amount of loss to be expected constantly di- minishes as the number of risks increases. The combination of fire and marine insurance on the one hand, and of life and accident insurance on the other, is by no means unusual, and outside of these forms the tendencv seems to be for .'"om- panies to extend the field of their activity. Thus the Fidelity and Casualty Company of Xew York has a charter authorizing insurance of '"any con- tingent event whatever, life, fire, and marine risks excepted, which may be the .subject of legitimate insurance." The company actually carries on the following kinds of insurance: Acci- dent, burglary, employers' liability, fidelity and surety, plate glass, and steam boiler. By far the largest part of the insurance in force is for protection against loss through the destruction of property by the action of natural forces. This is the ease, for example, in fire, marine, plate glass, tornado, steam boiler, and elevator insurance, and in most forms of so- called agricultural insurance, such as insurance of live stock and growing crops. The chief dif- ferences between these various forms are con- nected with the technique of the business rather than with its general principles. Thus the body of data from which to calculate average losses is much smaller in some kinds than in others; the difficulty of determining the amount of loss varies greatly from one kind to another: and the moral risk involved in the various kinds is very unequal. The class of insurance which ranks next in importance is made up of those forms which un- dertake to give indemnity for the loss of income through the sickness, injury, or death of the person insured or his inability to obtain em- ployment. Life insurance is treated in a sepa- rate article under that title. Other forms of insurance in this class deserve brief notice on account of their great social significance. Sickness and Accident Insurance. — Sickness insurance and accident insurance are carried on under various forms. There are a number of joint-stock insurance companies in the United States and in foreign countries which issue acci- dent insurance policies, and a considerable num- ber which guarantee weekly indemnity in case of sickness from certain specified diseases. Many fraternal associations and trade unions assure their members indemnity for loss of income through accident or sickness. Several large busi- ness corporations have established funds for the insurance of their own laborers against accident or sickness or both, in some of which membership is voluntary, in others compulsory. , Finally,
