Note 237a-6 — Chapter III

Usually so that the regular yearly contribution is higher than the average damage and cost of administration; this excess is then returned in the form of a dividend, either immediately at the close of the yearly account, or which is still safer, after several years. In the Stuttgart private insurance company, the reserve must amount to one per cent. of the amount insured, before the premium-surplus is returned. The Gotha fire insurance company, between 1821 and 1842, paid back an average of 46 per cent.; and even in 1842, after the Hamburg conflagration, there was an after-payment of only 98 per cent. necessary. This collection in advance of a fund for extraordinary losses is more secure than borrowing in case of need, and paying back in good years. Thus, the Baden Landes-Brandkasse had a debt in 1837 of 800,000 florins. (Rau, in the Archiv., III, 320 ff.) In a mutual insurance company, where entrance and exit are free, this would be scarcely possible.