The Place of Conservation in Insurance

Insurance is primarily distributive: it creates a fund made up of the contributions of those who are exposed to a risk and distributes it to those who have experienced the misfortune. It does not prevent the misfortune; it prevents only the bad effects of the misfortune. Conservation, the prevention of the misfortune itself, is a by-product. By-products, however, have often turned out to be more important in the end than the primary products themselves. Conservation has proved to be more important than distribution in several lines of insurance and this may turn out to be eventually the case in other lines. In all lines conservation is coming to be relatively more and more important. The purpose of this paper is first, to explain how this by-product, conservation, should have found a place in insurance, and second, to establish a basis for a judgment with regard to the importance of conservation in the future development of insurance.