Online Library of Liberty: Economics, vol. 2: Modern Economic Problems

from a better popular knowledge of insurance principles. The fraternal orders have more than ten million policies in force and incomes totaling more than $180,000,000. They combine insurance with other objects of a benevolent and social character. With good management, a favorable death rate, and very low expenses, some of them have provided protection at very low rates for many years. Many in the past have failed, with disappointment and disaster to the older members. Still others are struggling with difficulties that presage dissolution. Most of them now have some, though inadequate, reserve accumulations, and some have so improved their methods that they begin to resemble reserve companies. The assessment companies average $1.37 reserves per $100 of insurance in force, and get 10 per cent of their total incomes from their funded investments. Even with the favorable conditions under which fraternal orders conduct their insurance business, they eventually must fail unless they adopt rates and policies based upon adequate reserves. Many thousands of present members are paying for insurance at rates that will not suffice to meet the future losses. The assessment plan fails to eliminate the one great risk, that of leaving the survivors without insurance in advancing years.

References.

Gephart, W. F., Principles of insurance, vol. 2, Fire. N. Y. Macmillan. 1917. Same, Insurance and the state. N. Y. Macmillan. 1913.

Huebner, S. S., Property insurance. N. Y. Appleton. 1913.

Willet, A. H., Economic theory of risk and insurance. N. Y. Longmans. 1901. Winter, W. D., Marine insurance. Pp. 450. New York. McGraw-Hill. 1919. Zartman, L. W. (Ed.) Fire insurance. Yale Univ. Press. 1915.

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