SELF- iNSURANCE. many pieces of prop e•ty so situated as to constitute separate risks are owned by a single individual or corporation. proprietor sometimes finds it cheaper to 'carry his own insurance' than to have recourse to an insurance company. When a corporation adopts this plan of self-insurance, it usually sets aside an insurance fund, out of which any prop erty destroyed by lire is to be replaced. The losses which are suffered fall wholly on the cor poration; the insurance fund merely enables it to meet them without embarrassment. The prev alence of this custom of self-insurance against lire among large corporations constitutes a seri ous indictment of the management of fire-insur anec companies. A part of the gain from a system of insurance conies from combining many separate risks in a single company, since the more risks the company carries (provided, of course, they are properly classified) the less fluctuation will there be in the amount of loss, and the smaller the reserve which will have to lie maintained to prepare for unexpected losses. Consequently, however many risks of its own a corporation may be carrying, it should be to its advantage to combine them with as many other similar risks as possible. That so many large corporations find it cheaper to carry their own insurance can be explained in only one way —that the insurance companies charge more for the protection they give than is justified by the risk they assume. A slight extension of the
principle of self-insurance is seen in the strictly mutual insurance companies often formed. com posed of a small number of persons all engaged in some one line of business. Perhaps the best known example of this kind of company is to be found in the so-called or 'factory' mutuals of New England. Such a company consists of a limited number of persons or corporations en gaged in some particular line of manufacture— as, for example, the cotton manufacture—each of whom insures the whole or a part of the value of his mill in the company. Nearly all of these companies are very stringent in their require ments as to the protective measures to be adopt ed by their members. The adoption of these measures greatly reduces the danger of loss by fire, and so lessens the degree of risk. These companies, however, like individuals, should be able to insure more cheaply in large insurance companies, if those companies charged no more for the business than the risk justified.