Section Ccxxxvii (_b_).

INSURANCE IN GENERAL.--ECONOMIC ADVANTAGES OF INSURANCE.

The national-economic advantage of insurance consists in this, that the damage which is divided among many, and which, therefore, is felt but lightly by each one, is probably made up for, not by an inroad upon the body of still existing original resources, but by savings made from income. This, indeed, is unconditionally true only of such damage as does not depend at all on the will of man, such as, for instance, the damage caused by hail. On the other hand, there is especially in maritime[237b-1] and fire insurance,[237b-2] a great temptation to culpable and even criminal destruction; to the latter, when the object insured is estimated at too high a value. (Speculation-fires!) And it is difficult to say whether this drawback or that advantage is the greater. But, on the other hand, every kind of insurance is attended by good consequences to the credit of a people. It is of advantage to personal credit, since it prevents sudden impoverishment; but it is by far more advantageous to real-credit (Realcredit = material credit) the pledges of which, while their forms may be destroyed, it preserves the value of; that is their economic essence. This last is most clearly manifest in the case of public insurance institutions, with compulsory participation; while in the case of entirely voluntary insurance, the creditor can never be certain that his debtor has not neglected something necessary. The aggregate danger is less than the sum of individual dangers, for the reason that it is more certain, and that uncertainty of itself is an element of danger.[237b-3] [237b-4]

In Saxony, in 1849-53, there was one fire in every 290 buildings; 1854-58, in every 201; 1859-63, in every 180. Of these fires, 68 per cent. of the whole number were from known causes, i. e., 36.4 per cent. from incendiarism; 28.5 per cent. from negligence. (Sächs, Statist. Ztschr., 1866, 106, 115.) Even in antiquity, similar evil consequences attended the generosity which gratuitously compensated damage by fire. Compare Juvenal, III, 215 ff.; Martial, III, 52. In England, of every 128 cases of damage by fire of "farming stock," 49 were caused by incendiaries, for the most part actuated by revenge. Hence, there, a notice is posted on insured buildings by the insurance companies which runs: "this farm is insured; the fire office will be the only sufferer in the event of a fire." In London, of every seven fires among the small trading class, one is estimated to have been the work of an incendiary, and of all fires at least one-third (Athenæum, 2, Nov., 1867), if not one-half (Mitth., 1879, 100). One of the largest English fire insurance companies estimates that the introduction of the lucifer match has caused it a damage of £10,000 per annum. Of 9,345 fires, 932 were ascribed to gas, 89 to certain, and 76 to doubtful, incendiarism, 127 to lucifer matches, 8 to storms, 100 to negligence, 80 to drunkenness, 2,511 to the catching fire of curtains, 1,178 to candles, 1,555 to chimneys, 494 to stoves, 1,323 to unknown causes. (Quart. Rev., Dec, 1854, 14 ff.) Fires originate from criminal (dolose) causes most frequently when a new stage in the politico-economical development of a people is reached, which renders the buildings put up in a former and lower stage of development insufficient.]