Chapter XCV: Section CCXXXVII: Insurance in General

The idea of societies for mutual assistance intended to divide the loss caused by destructive accidents which one person would not be able to recover from among a great many is very ancient. The insurance of their members against causes of impoverishment was one of the principal elements[237-1] of the strength of the medieval communities (_Gemeinden und Körperschaften._) If we compare these insurance institutions of the middle ages with those of the present, we discover the well-known difference between a _corporation_ and an _association_. There the members stand to one another in the relation of _persons_ who, therefore, seek to guaranty their entire life in the one combination; here, they appear only as the representatives of limited portions of capital confronted with a definite risk, the average of which may be accurately determined. Hence, the former are of small extent, mostly local; the latter may extend over whole continents, and even over the whole earth. The former have uniformly equal members; the latter embrace men of the most different classes. While the former, therefore, simply govern themselves, often only on the occasion of their festive gatherings, the latter need a precise charter, an artificial tariff and a board of officers.

As the absolute monarchical police-state constitutes, generally, the bridge between the middle ages and modern times, so too the transition from the medieval to the modern system of insurance has been frequently introduced by state insurance.[237-2] [237-3] This was very natural at a time when the guilds of the middle ages had lost their importance, and private industry was not ripe enough to supply the void left by them. The government of a country, far in advance intellectually of the majority of its subjects, may, by force, induce them to participate in the beneficent effects of insurance, and immediately provide institutions extensive enough to guaranty real safety. While it may be called a rule that mature private industry satisfies wants more rapidly, in greater variety, and more cheaply than state industry; in the case of insurance against accidents, especially of insurance against fire, there are many peculiarities found which would make the entire cessation of the immediate action of the state in this sphere, or its limitation simply to a legislative and police supervision of insurance, seem a misfortune. A dwelling is one of the most universal and urgent of wants, and indeed a governing one in all the rest of the arrangements of life. If it be destroyed, it is especially difficult to find a substitute for it, or to restore it. And to the poorest class of those who need insurance, private insurance will, perhaps, be never properly accessible.[237-4] If German fire insurance and the German system of fire prevention be so superior to the English and North American, etc., one of the principal causes is that German governmental institutions so powerfully participate in it.[237-5]

[Footnote 237-1: The Icelandic _repps_ consisting as a rule
of 20 citizens subject to taxation, who mutually insured one
another against the death of cattle (to the extent of at
least one-fourth the value), and against damage from fire.
After every fire three chambers of each house were replaced;
so also the loss of clothing and of the means of
subsistence, but not other goods or articles of display.
(_Dahlmann_, Danisch Gesch., II, 281 ff.) Scandinavian
parish-duty, (_Gemeindepflicht),_ of assistance in case of
damage by fire: _Wilda_, Gesch. des deutschen Strafrechts,
I, 142. Similarly Capitul. a. 779 in _Pertz_, Leges, I, 37.
This matter plays an important part in the guilds out of
which a large portion of the ancient cities were evolved:
compare _Wilda_, Gildenwesen in M. Alter. 123.]

[Footnote 237-2: Proposed national fire insurance
(_Landesbrandversicherung_) in which for the time being
several villages should form a company, the surplus of which
was to go to the ærarian, and the deficit to be made up by
the same: _Georg Obrecht_, Fünf unterschiedliche Secreta,
Strasburg, 1617, No. 3. A similar proposition made on
financial grounds in 1609, and rejected in Oldenburg.
(_Beckmann_, Beitr. zur Gesch. der Erfind, I, 219 ff.) The
idea sometimes suggested in our day, of making the system of
insurance a government prerogative, arises as much from the
passion for centralization as from socialistic tendencies.
Compare the Belgian Bulletin de la Commission de Statist.
IV, 210, and _Oberländer_, Die Feuerversicherungsanstalten
vor der Ständeversammlung des k. Sachsen, 1857.]

[Footnote 237-3: Maritime insurance is much older than
insurance against risks on land; the Dutch institutions of
Charles V.'s time seem to have existed long before.
(Richesse de Hollande, I, 81 ff.) On Flemish, Portuguese and
Italian maritime insurance in the 14th century, see
_Sartorius_, Gesch. der Hanse, I, 215; _Schäfer_, Portug.
Gesch. II, 103 ff., and _F. Bald. Pegolotti_, Tratato della
Mercatura in Della decima, etc., della Moneta e della
Mercatura dei Fiorentini, 1765. The class engaged in
maritime commerce are indeed especially and early rich in
capital, speculative and calculating.]

[Footnote 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.]

[Footnote 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.)]