SECTION CCXXXVII (a).
INSURANCE IN GENERAL.—MUTUAL AND SPECULATIVE INSTITUTIONS.
All insurance institutions fall into two classes:
A. Mutual insurance companies, in which the insured are also as a society the insurers, and share the aggregate damage, of a year, for instance, among themselves.
B. Speculative institutions, in which a party, generally a joint-stock company, in consideration of a certain definite compensation (premium agreed upon and paid in advance), assumes the risk.[237a-1]
So far as security is concerned, no absolute preference can be accorded to either of these classes. Mutual insurance companies require to extend their business very largely[237a-2]to be able to meet great damage. And even where the liability of the members is unlimited, care must be taken to distinguish between the legally and the actually possible.[237a-3]The joint capital of a wellorganized[237a-4]premium-association affords, in this respect sufficient security from the first, but the ratio between its security-fund and the amount of its assumed liabilities becomes less favorable as the business is extended, in case the fund itself is not enlarged.[237a-5]Mutual insurance may accomplish something analogous to that accomplished by a joint-stock fund by collecting a reserve of yearly dues in advance, thus modifying the burdensome vacillation of the amount payable each year.[237a-6]Experience, however, teaches, that the strongest form of mutual insurance, that supported either by municipalities or by the state, has been able to meet extraordinary damage from fire much better than premium-institutions, which are too quickly left in the lurch by the stockholders when the damage is greater than the amount of the stock subscribed. So also loss from fire caused by war or riots is for the most part and on principle, excluded by speculative insurance institutions.[237a-7]
In point of cheapness to the insured, mutual insurance seems to have the advantage, since it contemplates no profit.[237a-8]From a national-economical point of view, also, it is very much of a question, whether the active competition of premium institutions, in a sphere which affords little room for industry proper, is more of a spur to make them "puff up" their claims (Reclamen) or to the simplification of their administration.[237a-9]However, premium-institutions are more easily capable of extending the circle of their business;[237a-10]which of itself decreases the general expenses and strengthens their insuring power. Premium-insurance supposes a greater development of capitalistic speculation than does mutual insurance. But, even in the highest stages of civilization, the competition of some mutual insurance companies is desirable to protect the insured from a too high rate of profit to the insurers.[237a-11][237a-12]And since the principle ofmutual insurance has so little attraction for capitalists in a time like that in which we live that it can be maintained perhaps only by the support of the state or of municipalities, we may consider the desirableness of the state's continuing to participate in some way in the matter of insurance as established.
[237a-1]We might, however, improperly add another class, that of self-insurance, which lies in the proper distribution of a large capital over a great many points. When, for instance, a large state insures its buildings, this seems a superfluous outlay of public money for the benefit of private associations. Or does England insure its ships? On this account, in Prussia, the insurance of post-offices which Frederick William favored, has recently been done away with. (Stephan, Gesch. der Preuss. Post, 195, 803.)
[237a-2]According toBrüggemann(D. Allg. Ztg., 1849, No., 75 ff.), 100 million thalers of an insurance-sum. Actual American legislation prescribes in the case of mutual insurance a minimum number of members of from 200 to 400, a minimum amount of annual premiums of from $25,000 to $200,000, of cash payments on the annual premium of from 10 to 40 per cent. of cash-paid yearly premiums, $5,000 to $40,000; and a maximum amount of premium notes made by a member of $500. (Compare Mittheilungen, 26 ff.)
[237a-3]Hence several mutual companies limit themselves to a maximum liability. Thus, for instance, the Gotha Fire Insurance Company requires from each member a bond that in case of necessity, four times the amount of the presumptive contribution paid in advance shall be paid after; in Altona, six times the yearly premium is the maximum.
[237a-4]In France, every premium-insurance-company has to be approved by the government (Cod. de Comm., art 37), and the approval is not given until 1/5 of the joint-stock capital has been deposited. (Block, Dictionn. de l'administration, Fr. 153.) Many recent American laws require that the shares of insurance companies should be registered with the name of the owner.
[237a-5]The Aix-Munich Fire Insurance Association raised its joint-stock capital[TN 58]after the Hamburg fire from 1 to 3 million thalers.
[237a-6]Usually so that the regular yearly contribution is higher than the average damage and cost of administration; this excess is then returned in the form of a dividend, either immediately at the close of the yearly account, or which is still safer, after several years. In the Stuttgart private insurance company, the reserve must amount to one per cent. of the amount insured, before the premium-surplus is returned. The Gotha fire insurance company, between 1821 and 1842, paid back an average of 46 per cent.; and even in 1842, after the Hamburg conflagration, there was an after-payment of only 98 per cent. necessary. This collection in advance of a fund for extraordinary losses is more secure than borrowing in case of need, and paying back in good years. Thus, the Baden Landes-Brandkasse had a debt in 1837 of 800,000 florins. (Rau, in the Archiv., III, 320 ff.) In a mutual insurance company, where entrance and exit are free, this would be scarcely possible.
[237a-7]Nearly three-fourths of the public insurance institutions insure also against fire caused by war (Mitth., 1874, 85), a matter of importance even as war is waged in our own days, since in 1870-71, the damage from fire by the Franco-Prussian war in France was estimated at 141,000,000 francs. (Mitth., 1873, 33.)
[237a-8]In Prussia, the mutual fire insurance companies, in 1865 and 1866 had an administration outlay of 0.24 and 0.22 per 1,000 of the amount insured; the premium insurance companies of 0.80 and 0.96; the latter doubtless including large assessments for common purposes. (Preuss. Statist. Ztschr., 1868, 269.) In all Germany, the outlay for administration is, for public institutions, 4 per cent. of the contributions; for premium institutions, inclusive of their dividends, 37.1 per cent.; for the more important French private institutions, even 68.8 per cent. (Mitth., 1874, 89, 92.)
[237a-9]German public fire insurance institutions generally have a territory of their own, in which that institution is the only one of the kind. On the other hand, the premium institutions in the whole empire keep about 80,000 agents, i. e., a number 50 times as large as the number of officers of the former, (loc. cit. 90.)
[237a-10]Mutual insurance companies, as they have extended, have sometimes split up into several; for instance, the insurance companies against damage by hail at Lübeck, Güstrow, Schwedt and Griefswald, daughters of that at New Brandenburg.
[237a-11]The founder of the Mutual Fire Insurance Company of Gotha expressed the hope that in it, it would be possible to insure 60 per cent. cheaper than was customary in the joint stock companies of the time. In the system of agriculturalEinzelhöfein Germany, small mutual insurance companies are possible, and insurance then may be very cheap.
[237a-12]On the premium associations,BernoulliUeber die Vorzüge der gegenseitige Brandasscuranzen vor Prämiengesellschaften, 1827.Per contra,Masius, Lehre der Versicherung und Statische Nachweisung aller V. Anstalten in Deutschland, 1846. In Prussia, premium associations are growing more rapidly than mutual: the per capita amount on the whole population insured in the former against damage from fire in 1861 was 116.6 thalers; in 1866, 154.2; in 1869, 176.6; in the latter in 1861, 103.5; 1866, 124.3; 1869, 154.3 thalers. (Engel, Statist. Zeitschr., 1868, 268 ff.; 1871, 284 ff.) In France, in the former, in 1857, almost 36 milliards of francs; in the latter, in 1864, 13 milliards. (Mitth., 1871, 51.)
SECTION CCXXXVII (b).
INSURANCE IN GENERAL.—ECONOMIC ADVANTAGES OF INSURANCE.
The national-economic advantage of insurance consists in this, that the damage which is divided among many, and which, therefore, is felt but lightly by each one, is probably made up for, not by an inroad upon the body of still existing original resources, but by savings made from income. This, indeed, is unconditionally true only of such damage as does not depend at all on the will of man, such as, for instance, the damage caused by hail. On the other hand, there is especially in maritime[237b-1]and fire insurance,[237b-2]a great temptation to culpable and even criminal destruction; to the latter, when the object insured is estimated at too high a value. (Speculation-fires!) And it is difficult to say whether this drawback or that advantage is the greater. But, on the other hand, every kind of insurance is attended by good consequencesto the credit of a people. It is of advantage to personal credit, since it prevents sudden impoverishment; but it is by far more advantageous to real-credit (Realcredit=material credit) the pledges of which, while their forms may be destroyed, it preserves the value of; that is their economic essence. This last is most clearly manifest in the case of public insurance institutions, with compulsory participation; while in the case of entirely voluntary insurance, the creditor cannever be certain that his debtor has not neglected something necessary. The aggregate danger is less than the sum of individual dangers, for the reason that it is more certain, and that uncertainty of itself is an element of danger.[237b-3][237b-4]
[237b-1]Even in Demosthenes' oration against Zenothemis, we may see how easily the analogy of maritime insurance may lead to criminal destruction of property. Similar cases mentioned byPegolottibefore the middle of the 14th century. (Delia Decima dei Fiorentini, III, 132.)
[237b-2]French experience teaches that during a commercial crisis there are more fires in mercantile magazines than at other times; while in times when sugar is a drug in the market, etc., many sugar factories are burned. (Dictionnaire de l'Econ. polit, I, 88.) The style of our house-building and fire-extinguishing institutions is wont to improve with economic culture. Hence, for instance, in Mecklenburg, 1651 to 1799, cities burned down, in whole or in greatest part, 72 times; 1800 to 1850, only once. (Boll, Gesch., von Mecklenb., II, 618 ff.) However, in many countries the damage caused by fire has largely increased: in Baden, for instance, by 100,000 florins a year. Insurance capital, 1809 to 1818, 65 fl.; 1819 to 1828, 128 fl.; 1829 to 1836, 152 fl. (Rau, Archiv, III, 322.) Similarly in Switzerland. In Bavaria, of every 10,000 buildings insured, in 1856-60, there were 4.6 fires per annum; 1861-65, 5.04; 1866-69, 8.67. (Preuss. Statist. Ztschr., 1871, 315.)
In Saxony, in 1849-53, there was one fire in every 290 buildings; 1854-58, in every 201; 1859-63, in every 180. Of these fires, 68 per cent. of the whole number were from known causes, i. e., 36.4 per cent. from incendiarism; 28.5 per cent. from negligence. (Sächs, Statist. Ztschr., 1866, 106, 115.) Even in antiquity, similar evil consequences attended the generosity which gratuitously compensated damage by fire. CompareJuvenal, III, 215 ff.;Martial, III, 52. In England, of every 128 cases of damage by fire of "farming stock," 49 were caused by incendiaries, for the most part actuated by revenge. Hence, there, a notice is posted on insured buildings by the insurance companies which runs: "this farm is insured; the fire office will be the only sufferer in the event of a fire." In London, of every seven fires among the small trading class, one is estimated to have been the work of an incendiary, and of all fires at least one-third (Athenæum, 2, Nov., 1867), if not one-half (Mitth., 1879, 100). One of the largest English fire insurance companies estimates that the introduction of the lucifer match has caused it a damage of £10,000 per annum. Of 9,345 fires, 932 were ascribed to gas, 89 to certain, and 76 to doubtful, incendiarism, 127 to lucifer matches, 8 to storms, 100 to negligence, 80 to drunkenness, 2,511 to the catching fire of curtains, 1,178 to candles, 1,555 to chimneys,[TN 59]494 to stoves, 1,323 to unknown causes. (Quart. Rev., Dec, 1854, 14 ff.) Fires originate from criminal (dolose) causes most frequently when a new stage in the politico-economical development of a people is reached, which renders the buildings put up in a former and lower stage of development insufficient.
[237b-3]A Prussian fire insurance regulation, as far back as 1720, expressly says: "everybody scruples to make the least loan on pledged houses in towns." "Every care shall be taken to make the least possible amount of loans in cities." (Jacobi, inEngel'sZeitschr., 1862, 122.)Leib, Dritte Periode, etc., 1708, cites a proverb to the effect that, in Hamburg, "no house takes fire;" that is, at a time that its fire-fund-system (Brandkassenwesen) had as yet found few imitators,v. Justi'sproposition to combine the insurance of houses against fire with a loaning-bank for houses. (Polizeiwissenschaft, 1756, I, § 7, 8 ff.) In Russia, in 1815, the loaning bank was the only fire insurance company, which however assumed risks only on stone houses at three-fourths of their value in consideration of 15 per 1,000 annual premium. (Rau, Lehrbuch, I, 229.)
[237b-4]Spittler, Politik., 441, objects to insurance that it diminishes benevolence and approximates to communism, thus hitting the dark side of all very high civilization.
SECTION CCXXXVII (c).
FIRE INSURANCE.
The present system of fire insurance has been introduced in many places by the establishment of so-called domanial fire-guilds (Domanial-Brandgilden), by which the country population on crown-lands bound themselves to mutually assist one another by furnishing thatch, and horse and hand power in the rebuilding of burned houses. Whatever was wanting after this was made up by gratuitous supplies of wood from the public forests, by the granting of governmental fire-licenses to beg (begging letters), by permission to have collections made in the churches[237c-1]etc. The next step was generally the establishmentof public insurance (Landes-Assecuranz) only for houses,[237c-2]but with compulsory membership. This compulsion was justified by the continuing interest of the state in the payment of the house-tax, as well as by the interest of the eventual owner of the estate, and of hypothecation-creditors.[237c-3][237c-4]The insuranceof moveable property is much more recent, both by reason of the nature of the property itself, which becomes of importance only at a later date, and also on account of the much greater difficulty of carrying on such insurance.[237c-5]The thought of making this species of insurance compulsory, or of turning it over to the state, has seldom been suggested.
[237c-1]Thus in Austria, even after the middle of the 18th century:Schopf, L. W. des öst. Kaiserstaates, I, p. 175. In the mandate of the electorate of Saxony of Dec. 7, 1715; but the fire-fund (Feuerkasse) of 1729 depended on voluntary but regular collections, besides which it obtained certain contributions from the state and the church. Those who gave nothing, however, were threatened with getting nothing, or very little, in case of fire. Parties desiring to rebuild massively had especially much to expect. (Cod. August Forst., I, 538.) The charters of the oldest GermanLandesbrandkassencontain a provision that, in future, no further fire-collections shall be allowed.
[237c-2]The English Hand-in-Hand Fire Office for houses, founded in 1696; the Union Fire O., for houses and movable property, in 1714: both mutual institutions. The premium-institution, the Sun Fire Office, 1710 (Frankenberg, Europ. Herold, 1705, II, 181), mentions fire insurance as a special characteristic of England. But we may trace fire insurance on buildings and harvest supplies in the low countries about the Vistula in Prussia, even as far back as 1623. (Jacobi, loc. cit., 131.) Brandenburg fire-fund, 1705, with voluntary admittance of all houses, and fixed relation between the yearly contribution and the insurance capital. If a fire happened, the fund repaired the damage caused to the fullest extent its means allowed. (Mylius, Corp. Const. March. V., I, 174 seq.) Even in 1706, it became necessary to prohibit speaking ill of the institution. It was, therefore, abolished later. The first Würtemberg private fire insurance company, 1754, founded on similar principles, and which was still existing in 1760, had a like fate (Bergius, Polizei und Camerelmagazin, III, 40 ff.), but it was exchanged in 1773 for a mutual public company. In Berlin a mutual insurance company in 1718 (Bergius, Cameralistenbibliothek, 151); in Denmark, 1830 (Thaarup, Dän. Statist., II, 173 seq.); in Silesia,[TN 60]1742; Calenberg-Grubenhagen, 1750; in Baden, 1758; in Kurmark, 1765; in Hildesheim, 1765; in Hesse-Darmstadt, 1777. In France, the Parisian institution of 1745 is considered the oldest. (Beckmann, Beitr. z. Gesch. d. Erfindd., I, 218.)
[237c-3]In Galenberg-Grubenhagen only theBauerhöfesubject to the common burthens were obliged to enter, in Hildesheim, all houses subject to taxation; in Darmstadt all house-owners who were allowed only adominium utile. In Kurmark, the subjects of the estate might be compelled to enter by their lords, but could not be kept out. Of Prussian companies in 1846, entrance was compulsory only in those of East Prussia and Posen. In Würtemberg compulsion since 1773; confirmed in 1853. Also in Zurich, Jan. 24, 1832; in Schaffhausen Nov. 27, 1835. In Berne, only for state, municipal and mortgaged houses; for the latter only so far as it was not expressly left to the creditor. Introduced into Baden in 1807, after most of the parishes (Gemeinden) had voluntarily accepted it; confirmed in 1840. The provision that at least no judicial hypothecation should be made on an un-insured house is found in the Darmstadt law of 1777, § 13, and in that of Mainz of 1780, art. I, § 15.Rau, Lehrbuch, II, § 25 a., finds compulsion in the case of property in common and in that of property belonging to other persons very appropriate. It is a matter worthy of thought, that, in cities like Berlin, Breslau, Thorn and Stettin, compulsory fire insurance is still retained. In Upper Silesia, the abolition of compulsory provisions has had for effect to cause 52 per cent. of all buildings to be insured. (Press Zeitschr, 1867, 329).
[237c-4]Question of introducing state insurance into Hungary. As a cultured land, and one rich in capital, is better adapted to insurance, it would be folly to "emancipate" ones self from Trieste, etc. in this respect. But, on the other hand, only state-insurance can attract the Hungarians and make them feel universally the want of insurance. A reconciliation of these opposing views might be effected by compelling the peasantry to insure their farm houses, and allowing complete liberty in the cities and with reference to movable property.
[237c-5]EvenBergins, Polizei und Cameralmag., III, 80, 1768 ff., doubts the possibility of the insurance of movable property. Insurance of movable property of the Evangelical clergy in the electorate of Mark, in which, however, only movable property of the value of 400 thalers is considered. But by this provision the changeableness of the object, which so facilitates fraud, was done away with. Hamburg joint-stock company for the insurance of movable property, 1779. Electorate of Saxony fire-fund for movable property, 1784-1818, which, however, made good, as a rule, only 25 per cent. of the damage caused. In Prussia, in 1814, there were only 12 insurance companies in which movable property could be insured. In the aggregate even they were but of little extent, and had generally a partnership, guild, or communal basis. (Jacobi, loc. cit, 123.) On the other hand, in 1869, there were in all the mutual insurance companies, 530,600,000 thalers worth of movable property insured, besides 2,814,800,000 thalers worth of immovable property, and 366,100,000 thalers worth of property of a mixed nature, partly movable and partly immovable. (Preuss. Statist. Zeitschr., 1876, 298.)
SECTION CCXXXVII (d).
REQUISITES OF A GOOD SYSTEM OF FIRE INSURANCE.
Among the chief requisites of a good fire insurance system are the following:
A. The adoption in insuring of measures for the prevention of criminal abuse on the part of the insured. No one should be benefited by the burning of his insured goods.[237d-1]Hence, the rates of insurance should be rigidly fixed according to the real value in exchange.[237d-2]In the case of houses, the value of the incombustible elements of value should be deducted; also the value of the ground and the value it possesses from being advantageously situated, etc. The simultaneous insurance of the same object in several companies without proper notice being given should be unconditionally prohibited.[237d-3]The controlof all this may be greatly facilitated by requiring foreign insurance companies to obtain a special permit to carry on their business in the country, and to allow them to effect insurance only through responsible home agents.[237d-4]Most insurance companies exclude from insurance personal property which may be easily secreted, such, for instance, as jewels, cash money, valuable documents, etc.
B. There should be a just proportion between the insurance premium and the risk. This depends not only on the style of building of the houses themselves and of those in the neighborhood,[237d-5]on the situation, the too great intricacy (Complicirung)of which extends the ravages of fire, as its too great isolation makes assistance difficult;[237d-6]but also on the nature of the business carried on in them,[237d-7]and on the condition of the local development of fire police. Highly cultured places, especially large cities, are really much less exposed to damage from fire. To not take this into account would be not only to compulsorily dole out charity to the poorer classes of the people, and to the less cultivated portions of the country,[237d-8]but it would indirectlyput an obstacle in the way of a transition to the massive construction of houses, and of good, that is, as a rule, of costly fire-extinguishing institutions.[237d-9]On the other hand, administration must be rendered much more difficult by the taking of risks of many degrees of danger, especially as it is scarcely possible, for a long time, to even hope for a statistically unassailable basis of a tariff graded in exact accordance with the risk.[237d-10]If those objects especially exposed to danger should be excluded altogether, the common utility of the institution would be largely diminished; and the insured least exposed to danger would nevertheless have to complain of a relatively too high contribution.[237d-11]If every peculiar class of risks wereto be treated as one whole, the insuring principle itself would suffer.[237d-12]Where the nation or municipality engages in the business of compulsory insurance, its too rigid system of rate-fixing has something inequitable in it, inasmuch as it makes the most provident housekeeper suffer from the danger from fire of his neighbor's establishment, a gas factory, for instance.
C. The certainty of compensation for damage suffered. The government should see to it that the institution does not promise more than it can perform with its joint-stock capital and by means of its premiums.[237d-13]The good will of foreign institutions to keep their promises to the letter is best assured by requiring them as a condition precedent of carrying on their business in a country, to bind themselves to litigate only in the home courts. They protect themselves against therisk of very large insurances by the system of re-insurance, by transferring a portion of the premium as well as of the risk to one or more other insurance companies.[237d-14]
D. In all highly cultured quarters, the almost entirely voluntary fire-extinguishing system, in which the people turned out in a body to battle with the flames, made way for the fire-militia system; and if the latter should make place for what we may designate as a standing fire-army which is most easily attained in connection with the fire-insurance system, we should reach the ideal of such a system, especially if the business of insurance was in the hands of the state or of the municipality. Such a system would be in accordance with the principle of the division of labor, and, also, with the fact that usually the most vital interest is the greatest spur to action.[237d-15]
[237d-1]The former almost unrestricted liberty of the American system of insurance has recently been curtailed, in most of the states, by a rigid governmental superintendence, by special insurance boards with power to permit companies to engage in the business of insurance, and endowed with the right of imposing proper penalties, but of declaring the privilege forfeited at the end of any year. CompareBrämerin III, Ergänzungshefte der Preuss. Statist. Ztschr. und Mitth., 1871, No. 1.
[237d-2]The first fire insurance provisions or regulations paid little attention to the danger of over-valuation. Similarlyv. Justi, Abh. von der Macht, Glückseligkeit, etc., eines Staats. 1860, 81. AlsoKrünitz, Oekonom. Encyclopædie, 1788, XIII, considers it improbable that any one would have his home insured at a higher than its real value. On the other hand, there were formerly bitter complaints made in the United States that the agents, on whom the determination of the rate of premium and the control of the insurance-sum depended chiefly, were led to make over-valuations in furtherance of their own interests. (Mitth., 1871, 3; 1874, 95.)
[237d-3]If the valuation were made to depend on the purchase price or on the cost of replacing or restoring the damaged property, even this would be some temptation to not entirely upright men. Hence the Baden law of 1840 expressly provides that instead of this, the selling price shall be the basis; the law of 1852, § 17, the medium cost of the combustible parts, after deduction made of the diminution in value caused by age. The fixing of premiums in the case of houses should be repeated from time to time on account of wear. According to the Calenb. Grubenh. law of 1823, § 21, every 10 years. According to the Baden law of 1852, § 28, 33, and the Württemberg law of 1853, § 12, the city council should examine annually in what cases a new valuation was necessary. The more certainly over-insurance is avoided, the less need is there of the superintendence policy adapted to a rather barbarous state of insurance, that only a part of the value shall be made good. The Phœnix fire insurance company in Baden for the insurance of movable property has reserved the right to investigate at any time and to satisfy itself as to the value of the insured object, and to lower the amount insured in accordance with its own opinion. The provision that the valuation shall be made by the authorities of the place, or that it shall be approved by them is frequently found. In Saxony, for instance (law of Nov. 14, 1835), the Leipzig city council gives its approval when it finds the amount insured in keeping with the means of the insured, and entertains no suspicions as to his honesty. To what a bad state of things a less liberal course leads, see inMasius, loc. cit., 85. This indeed is only difficult in large cities. It is also to be considered that it is not so much the many small amounts, but the few large ones that are dangerous to insurance. The Prussian scheme wanted to give up the police superintendence of insurance, but to punish over-insurance of more than 5 per cent. of the common value, by imposing a fine equal to the amount of over-insurance on the insured, the agents, and on the conductors of the business. (Jacobi, in II. Ergänzhefte der Preuss. Statist. Ztschr., 1869.) The provision that the amount paid as damages for a burned house shall be immediately employed in rebuilding, is to be explained in part by requisite A; in part also by the same police-guardianship against presumed negligence which introduced compulsory insurance.
[237d-4]CompareBrügemann, Die Mobiliar V. in Preussen nach dem G. von 1837.
[237d-5]Oberländer, loc. cit. 108, calls insurance without classification of risks, a "mutual benevolent institution;" and one rigidly classified according to the probable period of burning, "an institution for the making of advances" (Vorschuss-Anstalt.) In Baden, even in 1737, there was no difference made between a massive building and a wooden hut with a straw roof in the Black forest. (Rau, Archiv., III, 324.) Here, there was in 1844 to 1849, an average damage by fire in houses with brick roofs of 1,302 florins, with thatch roofs of 1,786 florins, with shingle roofs of 2,292 florins, to say nothing of the greater frequency of such damage in each succeeding class. (Rau, Lehrbuch, II, 1, § 26, a.) In Württemberg, before 1843, the owners of insured personal property, in houses with thatch roofs, had, in the same time, received 22 per 1,000 compensation for damage; in houses with brick roofs, from 8 to 9 per 1,000. (Rau, loc. cit.) In 17 German insurance companies, between 1866 and 1869, massive buildings with hard roofs paid 1,003,000 thalers and received 612,000 thalers; the not massive with hard roofs paid 1,544,000 thalers and received 1,339,000; houses with soft roofs paid 2,420,000 and received 2,792,000. (Preuss, Statist. Zeitschr. 1861, 327.) Similar observations made in Berne during 23 years.
[237d-6]While in most English insurance companies, there are only three classes: common, hazardous, and doubly hazardous, in Rhenish[TN 61]Prussian insurance companies, there are seven, according to the style of building, and in each class two subdivisions, according to the location.
[237d-7]According to an English average of 15 years, there is some damage from fire yearly in the following classes of buildings and on the following percentages:
Of the whole number.Match factories,30.00Lodging houses,16.50Hat makers,07.70Cloth makers,02.60Candle makers,03.80Smiths,02.40Carpenters,02.20Oil and color dealers,01.50Book dealers,01.10Coffee houses,01.20Beer houses,01.30Bakeries,00.75Wine dealers,00.61Small dealers in spices,00.34Eating houses,00.86
(Quart. Rev., 1854, 23.) There is indeed a difference in the intensity of these fires. For instance, in inns, there have been a great many; but the damage has been for the most part insignificant.
[237d-8]In Paris the houses insured had a value of 2,370,000,000 francs, but the damage from fire amounted to only 0.016 per 1,000! (Dictionn. d'Econ. politique, I, 89.) On an average, the premiums in France amount to 0.85 per 1,000. In Prussia, 1867-69 on an average: in the province of Prussia, 9.46 per 1,000; Posen, 3.75; Brandenburg, Berlin not included, 2.82; Pomerania, 2.52; Westphalia, 2.15; Schleswig-Holstein, 2.09; Hanover, 1.99; Silesia, 1.68; Saxony, 1.47; Hesse-Nassau, 1.46; the Rhine country, 1.34; Sigmaringen, 0.56; city of Berlin, 0.28 per 1,000. (Preuss. Statist. Zeitschr., 1871, 289.) How largely a higher civilization tends to arrest the spread of fire by the reason of the great facilities of rendering assistance is shown by the fact that for 100 buildings totally consumed in Posen, in 1837-40, there were 13.4 only injured: in 1866-69, 32 were injured for 100 totally consumed. In Prussian Saxony, 1839-44, 34; 1867-69, 57. (loc. cit., 329.) In Baden, the district called theSeekreisgot from the fire-fund, in 1845-49, 80 per cent. more than it contributed to it; the middle Rhine district contributed 37 per cent. more than it received. The Bavarian Reza district, 1828-29, received only 11.4 per cent. for damages, and paid 19 per cent. of all premiums; the Lower Danube district, 10 and 8.8 per cent. (Rau, Lehrbuch, II, § 28, 26.) The city of Leipzig contributed from 1/19 to 1/17 of the insurance paid, 1864-68, to the insurance companies taking risks on real property in the kingdom of Saxony, and received back only from 1/662 to 1/114, although its fire extinguishing institutions cost, in 1870, 26,182 thalers. (Official.)
[237d-9]Even premium-institutions have frequently very different rates for the same risk, according as they fear greater or less competition, or desire to recommend themselves in a new place, etc. Hence the tricks of the trade with which most of them surround their tariff.
[237d-10]In Würtemberg, theaters, powder mills, places where brick and lime are burned, porcelain factories, iron-works, etc. cannot be insured at all. In Calenb-Grubenh. and Bremen-Verden, shingle-roofed houses can be insured only at 2/3 of their real value.
[237d-11]Thus, for instance, in the electorate of Mark, each of the four classes of houses bears its own loss alone. To the fourth class, for instance, belong smithies, brick factories, and buildings with steam engines, etc. The Baden law of 1852 puts the same burthen in the same place, upon houses exposed to danger in a greater or lesser degree; but provides for 4 classes (Gemeindeclassen) with different rates of contribution, and assigns eachGemeindeevery year, according to the relative magnitude of the losses of the previous year, to one of those classes. How risky it is for large cities to confine their insurance, because of the ordinarily small amount of damage to them from fire, only to insurance institutions of their own, is shown by the case of Hamburg in the year 1842, where three joint stock insurance companies could pay only from 75 to 80 per cent., and the Bieber Mutual Insurance Company, only 20 per cent.
[237d-12]In the case of buildings, the greater risk is generally calculated by correspondingly multiplying the insurance-value, but in case of damage by fire, it is simply made good.
[237d-13]In the insurance companies specified byMasius, loc. cit., 176, the aggregate amount of their insurance, stood to the amount necessary to cover it, by means of receipts from premiums, reserve, and joint-stock capital: