Page:The New International Encyclopædia 1st ed. v. 10.djvu/774

INSUKANCE. 686 INSU&ANCE. several European countries, folUnving the lead of Cierniauv, have inlroducud a system of govern- mental insurance of working men against certain contingencies, sickness aiitl accident included. Private accident insurance was first introduced into the I'nitcd States in ISUa, though one or two railways had previously attempted to sell tickets insuring travelers over their own lines. The de- velopment of the business was very rapid. It was taken up hy many insurance cnmpanics and for a time by several railroads. Short -time in- sunin(>> uf travelers still constitutes a very con- siderable part of the business of accident com- panies, though general policies, usually covering a year, arc now eonunon. In many companies these polieie.s are limited to accidents which re- sult in death or total disability. Sonic com- panies, howevi'r. issue |)olicies which cover also certain specified injuries of a permiuient nature, such as the loss of an eye. a hand, or a foot. The indemnity varies with the nature of the in- jury and the amount of the premium. Conniiereial sickness insiirance is as yet of- fered by only ten or a doz<'n regular insurance companies in the I'nited States. The policies generally ginirantee a wwkly indemnity during illness or for a limited |«?riod, in case of certain specified diseases. Sometimes the company un- dertakes to pay a stated lump simi for a per- manent disaiiility such as total blindness or paralysis. The moral risk constitutes a very large element in both accident and sickness insurance, espe- cially in the case of laborers with small incomes. Jklerely limiting the indemnity to an amount less than the wage of the laborer docs not remove all incentive to simulate or even bring about the disability which entitles the insured to indem- nity. He is comparing not merely daily inilem- nity with daily wage, but indemnity and idle- ness with wage and eight, ten, or twelve hours of work. Experience has shown that the moral risk can be much better controlled where the in- surance is granted by a body like a trade union or a lodge. Here the knowledge the memliers have of one another's affairs affords a more efficient check upon malingering than any which a regu- larly established insurance coiii|)any is able to »ise. Hi'nce it is not surprising to find that by far the largest part of the insurance of workers against sickness and accident, in those countries where the Oovernment has not taken up the business, is in the hands of these organizations of the laborers themselves. Kmployerx' hinhUHp Insurance. — Closely al- lied to accident insurance is the insurance of employers against claims for damages arising from accidents to their laborers, so-called em- ployers' liability insurance. This form of in- surance, like the preceding, originated in Eng- land. It was introduced into the United States in 188fi by a London insurance company. There are now twelve or fifteen companies engaged in the business in this country. They no longer con- fine their operations to the employers' liability for accident to his employees, but cover also lia- bilities for accidents to persons not in the em- ploy of the insured. Railroad corporations, con- struction companies, manufacturin-j concerns, protect themselves in this way. The risk varies greatly in difTerent occupations and there is a corresponding variety of premium rates. The schedule of classifications adopted by the com- panies embraces nearly a thousand different kinds of risks. The developmeul of the busi- ness in recent years has Ijeeii greatly accelerated through the general extension by statute of the liability uf the employer for indemnity for acci- dent which he was not obliged to indemnify un- der the common law. I'ncDipluymrnt Insurance. — Insurance of work- ers against loss of income on account of lack of employment presents greater dilliculties than those involved in accident insurance. The moral risk here becomes very great. Such insurance has never been carried on successfully by com- mercial insurance companies. Many of the trade union; pay out-of-work benefits to their members, but the business is not run on scientil)c insur- ance principles. In none of the benefits paid by the trade unions is there any attciiipl to corre- late the risk and the assessment, nor is there any separation of the insurance fund from the other funds of the union. I'nemplovment insurance has been tried by some of the Swiss communes, but with poor success. It is an unfortunate fact that insecurity of employment, which con.sti- tutes such a st'rious evil in the life of laborers, is a form of uncertainty with which it is ex- tremely diincult for insurance to deal. /■'iiUlil;/ and Siireh) Insurance. — Of the remain- ing forms of commercial insurance two are of special interest, fidelity anil surety insurance and credit insurance. fidelity and surety in- .surance is almost entirely the growth of the last fifteen vears. and vet the amount written in the Inited" States in 'l!H)l exceeded $1,700,000,000. Fidelity insurance, according to the distinction made by the Xew York State Insurance Depart- ment, consists in giving bonds for the honesty of employees and |)ublic officials, while surety insunince consists in going on the bonds of ail- ministialors and executors of estates. This kind of insurance is interesting as illustrating the regularity in human conduct to which Quetelet first called attention. It is only because of the comparative regularity in the annual number of defalcations and similar crimes that the insur- ance company is able to assume the risk of such occurrences for a premium small enough to make the business jiracticable. Credit Inniiranir. — Credit insurance under- takes to indemnify merchants and business men who give credit for losses through b;ul debts. This form of insurance was first introduced into the I'nited States about I8!»0. In 1893 there were four American companies in the business. Of these companies three have since failed. In I89o one foreign company was admitted to prac- tice in Xew York. Tlie risks written in 1901 by the two companies in operation amounted to nearly .$22,000,000. The successful prosecution of this form of underwriting is extremely dilB- eult, owing to the high degree of moral risk in- volved. To guard as far as possible against the abuse of the system by the insured, a very inge- nious uHthod was adopted. The insurance applied only to credits given to persons with a rating in the mercantile agencies, and the amount of credit to be given to them was usually limited to 20 per cent, of their lowest capital rating. Moreover, the insurance did not apply to any particular credit, but was based on the average loss for a year. The person applying for insuranc* was required to furnish a statement of the amount of his credits and the amount of his losses from bad