Mutual insurance company

“ There are two kinds of Insurance Companies, one known as a "Mutual" office, in which all the profits which may be earned are periodically added to the amount insured, the other in the form of a Joint-Stock Company, in which a small proportion of the profits are distributed amongst the Shareholders and the remainder added to the Insurances. The Mutual Office dividing the whole of its profits amongst the insured would appear to be the more advantageous of the two, and undoubtedly it is, all other things being equal ”

“ One mutual employer's liability insurance company is already doing business and others are about to be organized. A committee of the State Bankers' Association is at work formulating a plan for the organization of a bankers' mutual insurance company for the protection of depositors. Provision has been made for the granting of life insurance and annuities by the state in the state life fund on an absolutely safe plan of collecting a sufficient advance premium and returning the savings. ”

“ The appellant Francis asserts he is denied equal protection because agents of mutual insurance companies may be licensed even though their compensation consists of a salary rather than commissions. The answer sets up that mutual insurance companies are organized on a different basis from stock companies, do business in a wholly different way and sustain an altogether different relation to their policy-holders than do stock companies. ”

“ It contains a stipulation that if the premium be not paid at the office of the company in Hartford, or to some agent of the company producing a receipt signed by the president or secretary, on or before the day of its maturity, then, in every such case, the company shall not be liable for any part of the sum insured, and the policy shall cease and determine, all previous payments being forfeited to the company. The policy is upon the half-note plan, and it is part of the contract that the dividends set apart to the insured be applied in the discharge, pro tanto, of annual premiums. ”

“ To hold otherwise would be to maintain that the contract of insurance requires good faith of the assured only, and not of the insurers, and to permit insurers, knowing all the facts, to continue to receive new benefits from the contract while they decline to bear its burdens. ”

“ We are inclined to the view that, where a holder of a life-policy borrows money of his insurer, it will be presumed, prima facie, that he does so on the faith of the insurance, and in expectation of possibly meeting his own obligation to the company by that of the company to him, and that the case is one of mutual credit, and entitled to the privilege of compensation or set-off whenever the mutual liquidation of the demands is judicially decreed on the insolvency of the company. ”

“ It is further insisted, that by the law merchant insurance can be effected only by a contract in writing. We do not doubt that the commercial law of all countries has treated of insurance as made in writing by an instrument, denominated by us a policy; and there may be provisions of positive law, in some countries, requiring an agreement to make a policy to be in writing. ”

“ It is argued that the provision requiring each new subscriber to have not assets of $10,000 violates the equal protection clause, but since each subscriber is also an insurer and other subscribers are dependent on his financial responsibility, there is no reason why the legislature might not think this provision necessary. It is also complained that different requirements have been put upon reciprocals than mutual companies; but we have previously held that a co-operative insurance company may be subject to separate classification for the purpose of determining how it shall be regulated. ”

“ It is enough to say that they do not, in fact, arise in the instant case, and they could not arise except as a result of the contract, whose words the insurance company itself selected and by which it is bound. ”

“ They admit it has been usual for the president to make such contracts; but they say that when he has done so, the policy was not issued until the next day, and no risk is understood to have commenced under such an undertaking until the policy issues. Whether a risk be commenced when the contract for insurance in made, or only when the policy issues, must depend on the terms of the contract. Where, as in the present case, there is an express contract to take the risk from a past day, there is no room for any understanding that it is not to commence until a future day. ”

“ Provided, that domestic industrial insurance companies shall in no case be required to deposit more than the legal reserve on their policies, but not less than $1,000, which said deposit may be made at the rate of $500 a year, on April 1st, of each year, until the whole be deposited; each domestic mutual life insurance company doing business on a recognized table of mortality with interest assumption not higher than 4 per centum per annum, not less than $3,000. ”

“ Its outstanding policies were not affected thereby, and it continued to collect the premiums upon them and to pay the losses arising thereunder, and it was doing so at the time of the service of process upon its agent.'
'It cannot be said with truth, as we think, that an insurance company does no business within a state unless it have agents therein who are continuously seeking new risks, and it is continuing to issue new policies upon such risks. ”

“ But, be the argument ever so strong in respect to the opportunities to deal unjustly with each other, it is quite clear, upon the fair if not necessary construction of the terms of the policy, both parties have agreed to submit to them, for the sake of the better means furnished to ascertain the true character of the risks, and thus reduce the rate of premium below that which was charged under the old system, where it was fixed in the absence of knowledge on the subject ”

“ Upon the part of the payees it is contended that the company waived strict compliance with the provision making the continuance of the policy dependent upon the payment of the annual premium on the day named therein; and that, in view of the settled course of business between the company and its agents on one side, and the insured on the other, it is estopped to rely upon the non-payment of the last premium, at the day, as working a forfeiture of the policy. ”

“ And it is further understood and agreed that, so soon as said building or buildings shall be in a situation to be insured, said party of the second part shall cause the same to be insured in some good and responsible insurance company, in the fair insurable value thereof, and assign and deliver the same to said party of the second part, and, as soon as said building shall become so insurable, all the provisions contained in said above-described mortgage shall apply to said insurance, and said conditions are hereby made a part of this agreement. ”

“ On the twenty-seventh of December, the complainants tendered their note for the agreed premium, and demanded the policy of reinsurance. The defendants declined to make the policy. Several grounds have been insisted on in support of this refusal:
The first is, that by force of a statute of the State of Massachusetts, (Rev. Stats., ch. 37, secs. 12, 13,) insurance corporations can make valid policies of insurance only by having them signed by the president and countersigned by the secretary. ”

“ In all these countries, indeed, corporate enterprise on a large scale, in every branch of business, is of comparatively late growth, and mutual fire insurance was a familiar practice long before joint-stock companies entered upon this field of activity. The tendency in the large cities and commercial centres is to throw new insurances into the business corporations, while the time-honoured mutual associations retain their standard character and customary clientage. ”

“ The proper selection of business and the safe investment of funds require prudence and sagacity, and devolve great responsibility upon executive officers. But mutual-insurance companies (and nearly all stock companies in the United States also embody the mutual principle) have a margin far above any probable exigency, in the excessive loading of premiums. ”

“ 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. ”

“ The premiums on an endowment policy are necessarily greater than those on a regular life, and the premiums increase with the shortness of the time.
MUTUAL INSURANCE SOCIETIES Seeing the vast sums accumulated by what are known as "the old line companies," despite their high salaries and great expenses, working men throughout the world, but more particularly in the United States, have banded together and formed mutual insurance companies. ”

“ And while the guarantee of cash value based on net premiums reduces substantially the investment risk of the contract holder, the assumption of an investment risk cannot by itself create an insurance provision under the federal definition. ”

“ In view of the statute, and of that understanding, upon the faith of which the assured made his application, paid the first premium, and accepted the policy, the company is estopped, by every principle of justice, from saying that its question embraced insurance in cooperative associations. The answer of 'No other,' having been written by its own agent, invested with authority to solicit and procure applications, to deliver policies, and, under certain limitations, to receive premiums, should be held as properly interpreting both the question and the answer as to other insurance. ”

“ They find their business profitable, and pay good dividends to their shareholders. Moreover, they incur a considerable expenditure on offices, on clerical staff, on agents, and the like. All these payments must be defrayed out of the premiums they receive; so that it is plain that the premiums greatly exceed the expectation of the risks insured. The odds are heavily in favor of the Insurance Company—of that the stupidest person can have no shadow of doubt. ”

“ No. 10,364, a clause in the reinsurance policy stated that 'loss, if any, payable at the same time and pro rata with the insured;' and it was held that such language simply gives to the company the benefit of any defense, deduction, or equity which the first insurer may have, making the liability of the reinsurer the same as the original insurer. It does not limit such liability to what the original insurer may have paid or be able to pay. ”

“ But with the combined capital of all the firms in the trade at our back, we can change all that. Either by a guaranty, or by assuming the obligations, we can bring the interest charges on every mill in the association down to four or five per cent. at most.
We have been paying enormous rates to fire insurance companies. They are not as familiar with our business as we are ourselves, and they don't know just how much risk there really is; so they charge us a rate which they make sure is high enough. We can combine together and insure ourselves on the mutual plan ”

“ Underwriters do not rely so much upon the principles as on the interest of the assured; and it would seem, therefore, to be always material, that they should know how far this interest is engaged in guarding the property from loss.'
We think this reasoning entirely satisfactory, and founded in the true exposition of the contract of insurance. Whenever the nature of this interest would have, or might have a real influence upon the underwriter, either not to underwrite at all, or not to underwrite except at a higher premium, it must be deemed material to the risk ”