[237-4] In Berlin, in 1871, the movable property of 30.4 per cent. of all dwellings was insured; but with this great difference, that of the smallest (without any heatable rooms) only 5.3 per cent. were insured; while of dwellings having 5-7 heatable rooms, 84 per cent. had taken this precaution. (Schwabe, Volkszahlung von 1871, 169) But it should not be forgotten that private insurance, especially when speculative, is not in favor of having much to do with persons of small means, while public institutions are, for the most part, obliged to reject no proposition for insurance in their own line, except when coming from a few manufacturing quarters especially exposed to fire.
[237-5] Outside of Germany, public fire insurance is to be still found only in German Austria, in Denmark, Switzerland and Scandinavia. The Germans had, in 1871, an insurance-sum of 5,908,760,000 thalers, while the mutual private insurance companies had about 1,435,000,000 (of which, at most, 200,000,000 to 300,000,000 were on immovable property), and joint-stock insurance companies, after deducting re-insurance (Rückversicherung), about 7,000,000,000. (Mittheilungen der öff. F. V. Anstalten, 1874, 84 ff.) Between 1865 and 1870, it was estimated that the per capita insurance of the population was: in Saxony, 407 thalers; in Würtemberg, 410; in Baden, 365; in Prussia, 332; in Switzerland, 425. On the other hand, in the much wealthier British Empire, only 325 per capita; in North America, 215. (loc. cit., 92.) Even in the case of joint-stock insurance companies, the average receipts of premiums (1867-70) were, in Germany, 2 per 1,000 of the insurance-sums; in the United Kingdom, 4.06 per 1,000; in the United States, 10.77; and the damage respectively 1.25, 2.28, 5.92 per 1,000 of the insurance-sum. (loc. cit., 93.)
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 well organized[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 of mutual 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.)