'QUAKE LOSSES.

Auckland Star, Volume LXII, Issue 37, 13 February 1931, Page 8

'QUAKE LOSSES.

INSURANCE COMPANIES' DECISION. EX-GRATIA PAYMENTS OPPOSED. STATE'S LEAD NOT HEEDED. (By Telegraph.—-Press Association.) WELLINGTON, Thursday. A meeting to-day of the controlling officers of the Associated Insurance Companies operating in the Dominion unanimously decided that no payment could be made in respect of losses arising out of the disaster, in Hawke's Bay, except to those policy-holders who were insured against loss the result of earthquake. An official report stated that the meeting expressed the hope that on reflection the Government would realise that their hasty proposal-that the State-Fire Office should make .ex-gratia, payments indicated a narrow view of the problem confronting, them and the means to be taken to solve it. The, Prime Minister's proposal was to make a gift to a-limited number of State' Fire Office - policyholders, and Mr. Forbes was reported to have said that the action was intended to. be a, lead; to /insurance companies.That implied that the State Fire. Office and the insurance companies were 011 a parity, but "beyond the "fact of their being competitors, there was no' resemblance between them. Question of Capital. The report declared • that the. State Fire' Office had .no capital and confined its operations to New Zealand, whereas the insurance companies operated on capital provided by private individuals, only a small portion of . whom resided in the Dominion.' To establish the precedent of paying losses the result of earthquake which were specifically excluded from the contract, would strike at the very root of. that security and sound practice upon which insurance is founded. • • '"■ ■■> ' •••' ' f Referring to the ,San 'Francisco .earthquake, the report stated that- in that case the companies were liable for fire, but, hot for shock damage, and to remove the risks of jeopardising the security of policies issued all over, the world-and causing the total extinction of shareholders' capital, a claUse was framed eliminating all losses in any wayattributable to earthquake. At the same time provision was . made whereby property owners could obtain protection. Until now, the report stated, tho rate at Napier would have been 5/ per cent to cover both fire and shock damage. "Considerable Losses." "By making this form of insurance tho subject of special contract, the demand was limited and could be provided for," the report concluded. "Companies; are, faced with losses in respect of interests which were protected by suc'hi special contracts. The extent of these : losses.is not yet assessable,-but must; be considerable. The companies have no justification for placing on a parity a 1 policy-holder >vho has not availed himself, of this protection with one who has ; paid a-premium for earthquake cover for years. I lie fact that the insurance companies' policies as now worded do not',co.ve.r. losses .attributable to or in consequence of earthquake was definitely established after the disaster in Japan by the highest Courts; which in-every case ruled- that the policies did not extend to sueh losses." !.'■ - \ '