business as it could, and reinsuring a large percentage of its risks in the offices of other cities. By a uniform method of classification, and a uniform responsibility, each of the nineteen New England Mutual Companies reinsures in the other associated concerns. The acceptance of risks is local, their distribution is general. Were pioneer stock companies to adopt this plan, their success would oblige other companies to imitate them. Expert underwriters would be required to plan the details of a scheme applying to miscellaneous risks some principles of mutual insurance. These would comprise:
1. The identification of the interests of owners and insurers by
basing rates of premium upon the actual hazard, allowance being
made for all precautions against fire, and approved methods of quenching
it. By issuing policies to cover somewhat less than the total of
a loss, at a lower rate than when full indemnity is assured.
2. By combination of the advantages of a local underwriting with
the benefits of well-distributed risks. Companies doing a local business
are not subject to the expenses and inefficiency of great companies
with agents widely scattered and difficult of control. Reinsurance
on a well-considered method will give local companies stability
in cases of large fires—this, while the interests of local insurers will
always be large enough to make them anxious to have as few and as
small fires as possible.
In a large city, where several local companies might occupy the field, each could select its risks from among all quarters of the city. By whatever means attained, one thing is clear, that the business public, pressed by the narrowing margin of profit, will avail itself of the cheapest safe insurance to be had. The reduction of cost must spring from making the prevention of fire the cardinal rule of insurance. At present the main rule is simply to accept risks as they are, and assess immense losses—largely preventable—on the public. In Great Britain, premiums average one quarter those charged in America, and the business is profitable. Why can not America reach this economy, by adopting British care in construction?
Apart from the Manufacturers' Companies, mutual underwriting has not obtained much foothold in the Union. In New York State, in 1883, the assets of the mutual companies were but one per cent in amount of those of the stock concerns. These latter, with large reserves ready at the call of disaster, enjoy a public confidence withheld from the comparatively weak mutual associations, scattered here and there throughout the country. When capitalists, however, become local underwriters on a large scale, we may expect insurance to have a preventive efficiency, such as we find among the New England mills. Just here a quotation from the New York State Insurance Commissioner's last report may be in order:
"During 1883, stock companies doing business in the State lost percentages of premiums received as follows: Those organized in the
