DEPRECIATED EXCHANGE.

Auckland Star, Volume LXII, Issue 127, 1 June 1931, Page 4

DEPRECIATED EXCHANGE.

EFFECT ON MARINE INSURANCE. ] It is well known that fluctuations in exchange rates put considerable difficulties in the way_ of trade. A curious example of this is to be found in the repercussions on the insurance world in London of the depreciation of the Australian and New Zealand currencies. In the past the variations In the values of sterling compared with Australian and New Zealand currencies have been so slight that marine underwriters in London have ignored the question of exchanges in making settlements with policy holders in those countries. Now, however, comments "Fairplay," underwriters are compelled to consider carefully their position in this respect. The difficulty arises in connection with policies issued in London, but made payable in either Australia or New Zealand, and also with policies issued in either of the two Dominions, but made payable in London.

It is possible that in future policies it will be definitely stated in what currency any claims are to be paid, but the problem is to decide upon a uniform system to adopt with claims made under policies now in force. In the case of policies issued in England and made payable in the Dominions, claimants may not be satisfied with payment in their own currency, while, _on the other hand, holders of Dominion policies made payable in England may expect to recover their claims in sterling. It would seem, says "Fairplay," that the only equitable solution is to pay claims in the same currency as that in which the premium was collected, just as is customary with policies issued in foreign currencies. The difhcultv is most apparent in cargo policies, but it also .arises in connection with hull risks. Repairs to vessels carried out in the Dominions and paid for in Dominion currency should be adjusted in accordance with the exchange, and not charged against underwriters in English currencv, and general average contributions collectable in the Dominions should be remitted in Dominion currency.