A joint stock company, insuring with definite premium, is likely to bring the best business management, the quickest though not always the fairest adjustment of losses, and the confidence of the business community. Its prosperity, however, is hindered somewhat by the common judgment that the interests of the stockholders must be against the interests of the insured. The actual cheapness of insurance depends not so much upon the amounts paid from time to time as upon the actual quality of the insurance purchased. Assessment companies of all kinds, without a legal lien upon definite property, are decidedly lacking in quality, since their guaranty of payment involves the financial credit of every person insured. No one should be deceived by the promise of insurance at cost, until he knows exactly how genuine that insurance will remain during the period of years for which he desires it.
Governmental control of insurance.—The essential importance of insurance and the difficulties of providing [pg 229] against fraud and mismanagement have led naturally to government inspection, and in some countries to government control of insurance agencies. The laws of various states provide differently for inspection and reports, and restrict the action of companies in various directions. It is probable that time will develop the necessity of greater uniformity of insurance laws and more definite requirements in the way of published reports and expert inspection. At present, insurance commissioners often have the confidence of neither companies nor people, and no expert knowledge is demanded in the candidate for that office.
The desirability of insurance by government direct is questioned so long as governments themselves are unstable and popular will favors laxity in the business machinery. That insurance could in this way be made cheaper is a matter of doubt while great masses of people magnify their claims against government and minify their obligations to it. Frauds against government in both taxes and claims are proverbial. At any rate, governments will not wisely undertake the indefinite applications of insurance until larger experience and wider acquaintance with the methods in vogue are reached.
Applications of insurance.—The applications of insurance are indefinite in variety. There is no limit to the possibilities except in the lack of experience to settle the average of hardships. Insurance of property against fire and storm is well understood and almost everywhere practiced. Insurance of life is almost equally extended, in which the head of a family may in a measure [pg 230] provide against the suffering of his family in his unexpected removal by death. This is easily extended into insurance against accident. In this, as in life insurance, there is some lack of experience, as yet, as to the actual cost. It is possible even to insure against dishonesty of employés through so-called bond and security companies, which issue bonds for definite amounts payable in case of failure of the person whose character is insured to meet the expectations of his employer. Such companies, in their own interest, exercise an influence over the character of those for whom they have given bonds by attention to their habits of life and business methods. They make more prominent the maxim, “Honesty is the best policy,” whether they actually cultivate honesty in fact or not.
There is no conceivable limit to the possible applications of the principles of insurance. It seems possible that a body of business farmers, subject as they are to so many disasters from weather, insects and contagious diseases of stock and vegetation, might devise methods of equalizing and diminishing the disaster from such losses in a common system of insurance. As a basis for such systematic action, careful statistics for large regions of country are absolutely necessary. With such losses clearly presented and averages fairly estimated, insurance would be just as feasible as it is now against fire. It will be wisely undertaken first upon such matters as can be most definitely measured in dollars and cents. Losses from accidents to teams and other live stock have already been studied and insurance to a limited extent attempted. The difficulties of such insurance [pg 231] are greatly increased by the ease with which owners may contrive to market unsalable stock through a false representation of misfortune. The possibilities, however, of extending the advantages of insurance in a business of this nature are worthy of more careful study.