Page:Encyclopædia Britannica, Ninth Edition, v. 13.djvu/173

161 INSURANCE INSURANCE is the system or machinery by which it is sought to guard against the pecuniary consequences of certain accidents to which men are liable, such as the loss of property by fire or shipwreck, or the loss of future earnings through disablement or premature death. Insur ance does not attempt to prevent these accidents, nor even to protect men against all the consequences of them. It deals only with the main pecuniary loss which such acci dents are fitted to occasion, provides for it beforehand, practically distributes it among the persons who are more or less exposed to the same risk; and so, when the accident does light on any one of them, its pecuniary effects are neutralized or greatly mitigated. The three chief developments of this system Fire, Life, and Marine Insurance are separately treated in the follow ing articles. A very important application of the principle has been treated under the heading FKIENDLY SOCIETIES. Besides the above branches of insurance, which have attained immense proportions in almost all civilized, countries, there are many other applications of the principle which have been tried with greater or less success. The conditions which seem necessary to success (in addition to good administration) are chiefly these :- there must be a risk of real loss which it ought to be beyond the power of either the insurer or the insured to avert or to hasten ; a large number of persons must be liable to the like risk ; the accident contemplated must be likely to fall on a com paratively small number of the persons exposed to the risk of it ; the probabilities of its occurrence must be capable of being estimated beforehand with some approximation to certainty; the loss apprehended must be so considerable when it does occur as to be worth providing against; and the cost of that provision must be comparatively so small as not to be prohibitive. Accident Insurance. Ordinary life assurance protects against the pecuniary loss arising to a man s family or creditors or others by his death, whether that arise from accident or disease; but it has been found that a separate insurance against the consequences of accident meets the requirements of a large class of persons. A company was established in London in 1849 for insuring against the consequences of railway accidents, the Railway Passengers Assurance Company. In return for a payment of 3d., 2d., or Id. made by first, second, or third class passengers respectively, for insurance during a single journey, it under took to pay 1000, 500, or 200 in case of death by such an accident, or a certain weekly allowance in respect of personal injury not resulting in death. In 1856 the business was extended to embrace accidents of all kinds, and there came into use a system of yearly payments pro portioned to the degree of risk supposed to attach to various occupations or other conditions of life. Many other similar companies have since been established, and at the present time (1881) there appear to be about eleven such offices in the United Kingdom. The amount insured by them is estimated at nearly 100,000,000 sterling, and their yearly income is between 400,000 and 500,000. The claims absorb about 50 per cent, of the premiums, the remainder, after paying expenses necessarily large, being the profit. Various schemes are at present being organized, in conse quence of recent legislation, to enable employers to insure against risk from injuries suffered by their work-people. The business of insuring against accidents has been developed in Canada, Victoria, and New South Wales, as well as in France, Germany, Switzerland, and the United States. In the country last mentioned the premium in come of the principal office engaged iu this business was in 1879 close on a million of dollars. Fidelity Guarantee. The guarantee of employers against the fraud or insolvency of their servants has of late years become a considerable and useful department of insurance business. Private suretyship is attended by many evils, and a bond of indemnity by a joint-stock company, although it has to be purchased by a yearly payment, is now generally preferred. Such a bond is not granted without previous inquiry as to the character of the applicant and the checks which the employer 1 is to use. Seven institu tions in the United Kingdom undertake this description of business ; some of them insure only against loss arising from embezzlement, while others protect the employer against any failure to make good the sums entrusted- to an employe. The yearly premiums required range from 10s. to 60s. per cent, of the sum guaranteed. Various Minor Forms of Insurance. In those parts of the British Isles which are exposed to violent hail-storms offices have been established successfully for insurance against the loss which these often occasion. Efforts have been made also, not always with equal success, to protect farmers and other owners of horses and cattle against the loss arising from accident or disease among these animals. It has been attempted also to insure traders against loss from bad debts, and house-owners against loss of rent and against defective titles. No fewer than thirteen offices, mostly local in their operation, insure against loss from the break age of plate glass, and three against the loss from explosion of boilers. In former times, when men were liable to be drawn to serve in the militia but might purchase a substi tute, a system of insurance was established to provide them with the necessary funds. These developments of insur ance, however, are of an importance quite insignificant com pared with the three great departments now to be dealt with. I. FIKE INSURANCE. Fire insurance is a matter of practical interest to a far larger number of persons than either of the other two great departments of insurance life or marine. There are few persons to whom, in the absence of insurance, the destruction of their dwellings or of their household goods would not be a serious calamity, while to the merchant or manufacturer the burning of his premises or stock or machinery might be ruinous. No age or country has been exempt from such fatalities, and no watchfulness has been aide to prevent them. Some protection against the pecu niary consequences seems an essential condition of any extended system of manufactures or commerce. Fire insurance, however, as an organized system, has had an origin comparatively recent. There are traces, indeed, in earlier times of enforced or voluntary contributions towards the relief of sufferers by fire, but it is only about the beginning of the 17th century that we hear of proposals being made for a more systematic provision, and it was not till after the great fire of London iu 1666 that these proposals took practical shape. This seems at first to have been in the form of underwriting by individuals or by clubs, and some attempts were made to engage the corporation of London in a scheme of fire insurance; but in 1681 the first regular office for insuring against loss by fire was opened by a combination of persons " at the back-side of the Royal Exchange," and it was followed shortly after wards by another Of the insurance offices that still survive, only one. (he Haml-in-Hand, dates from the 17th XIII. 21