THE FUNCTIONS OF FIRE AND MARINE
INSURANCE1
Definition of Insurance.-Fire insurance has been defined as "that social device for making accumulations to meet uncertain losses of capital through fire, which is carried out through the transfer of the risks of many individuals to one person or a group of persons.' 2 The same definition is also applicable to marine insurance, except that the perils against which protection is granted comprise not only fire, but in addition, the perils of the sea, enemies, thieves, jettison, barratry, and other hazards of a like nature.
All industry involving the ownership of property is more or less subject to risk of loss through fire and the elements, and in all business enterprises it is the desire of the capitalist to eliminate this risk as far as possible. Three methods of elimination may be used: either the
1 The best treatment of this subject is found in Allan H. Willett's "The Economic Theory of Risk and Insurance.' Excellent brief discussions are also found in F. C. Moore's introductory chapter to his work on "Fire Insurance and How to Build," and in Richard M. Bissel's lecture on the "Place of Fire Insurance in the Financial World." These sources, especially the first two, have been drawn on to a considerable extent in this chapter.
Allan H. Willett, "The Economic Theory of Risk and Insurance,'' Macmillan Co., New York, 1901, p. 106.