Online Library of Liberty: Economics, vol. 2: Modern Economic Problems

and more express itself not in accumulating large capital sums to provide for one’s old age or for survivors, but in providing insurance for dependent survivors, and invalidity and old-age pensions for the insured and others, payable as terminable annuities. In any case, the results to be expected in the changing forms and magnitude of private fortunes are certain to be great. The assets of life insurance companies in the United States have already attained the enormous sum of nearly $7,000,000,000, a sum equal to the reported savings bank deposits. In the last thirty years life insurance assets have more than doubled in each decade, and are now increasing by more than a quarter of a billion dollars annually. These great funds, which in equity nearly all belong to the policyholders, form already approximately one thirtieth of all the private capital of the country. They are invested in many ways, in real estate, in loans secured by mortgages on real estate, in bonds, municipal, railroad, and industrial. This is one of the ways in which the equitable ownership of the wealth of the nation is being practically and effectively socialized. The problem of wise legislation for these organizations, of their competent and honest management, and of their relation to the social, business, and political life of the nation, is certain to be of ever increasing importance. We are hardly more than emerging from the experimental stage of insurance, hardly more than at the beginning of its development.

§ 10. Future of insurance. It is striking evidence of the importance of the marginal principle that insurance should still be desired by men when the cost is so high and so large a part of the total premiums is absorbed in expenses.3 Insurance of all kinds grows apace, but its use would be wider and its benefits greater if the “tare and tret” of doing the business could be reduced. It seems a reasonable hope, now that the experimental stages are passed, that this may be done. It is true that some portion of the expenses of insurance companies give to the insured valuable services, such as inspection of houses for fire prevention, medical examination, and home nursing to reduce illness and conserve life and these services might be further extended. In the case of all kinds of insurance as yet a large expense for agents has been necessary to educate men to see the value of insurance and to purchase it, as well as for many other competitive expenses. It has been found that much of this expense can be saved by insurance in groups (for all employees in an establishment), by compulsory insurance (as of all workingmen), and by central state administration serving to regularize and unify the organizations. An important problem to be solved in the future is to find methods of insurance equal to or exceeding in their efficiency those now in use, but at much more moderate cost. It is not improbable that universal coöperative state insurance, both of life and property, will be worked out. This important question will be further considered in connection with “social insurance” as a measure to benefit the working classes.

References.

Dawson, M. M., The business of life insurance. New York. A. S. Barnes & Co. 1905.

Gephart, W. F., Principles of insurance, vol. I, Life. New York. Macmillan. 1917.

Huebner, S. S., Life insurance. N. Y. Appleton. 1915.

Zartman, L. W., (Ed.), Life insurance. Ed. Yale Univ. Press. 1915.