WHEN DISASTER AT SEA STRIKES THE UNDERWRITER

Evening Post, Volume CXVIII, Issue 114, 10 November 1934, Page 25

WHEN DISASTER AT SEA STRIKES THE UNDERWRITER

The'" Salvage Association has re-1 ported that the fire in the Morro Castle is extinguished. The vessel is thus' officially declared to be a complete constructive loss. This means that it would cost moro than the insured value of £560,000 to repair her. As tho vessel is now to bo regarded aa a total loss, additional insuiances amounting to about £280,000 will have to bo paid, writes an underwriter in, tho "Daily Mail." The loss of the Morro Castle is going to cost the underwriters of Lloyd's considerably more than the members involved in. the vessel's insurance on the London market first anticipated. The business of underwriting risks on ships usually Tuns that way. The underwriter seldom learns from the first messages exactly how he stands. In the spring of 1932 the Prince David, a Canadian-owned ship, went ashore off Bermuda. Her crew and passengers were taken off. The insurers abandoned hope. It was taken for granted that she would become a total wreck. But a salvage company took her over, refloated her after three months of hard and dangerous work, got her into a dockyard for repairs, and she is now in service again. The unexpected is always happening in this game." There was the~Bermuda burn-out —a case which almost suggests that'the-..ship and the insurers were under some evil' spell.' In the summer of *1031V-sTie was loaded, ready to sail, at Hamilton, when she caught fire. The group fof "underwriters and insurance companies" who had accepted her risk paid up, and again accepted her. The law of probability practically ruled out another such disaster. / ' But, brought home to a British ship-

yard to be repaired and reconstructed, ■ she was almost ready to be put into commission again when fire broke out in her once more.. This .time, she was; gutted.The underwriters sighed, and paid up, for the second time. ' : These-big bosses are bad luck,- but all in the day's business at Lloyd's. There is a false idea that when bad news comes through, Lloyd's, becomes a pandemonium, rather like the Chicago wheat pit, or the New York Stock Exchange on a panic day. There was not even much excitement in the huge pillared and domed "Room" when the news came that L'Atlantique, the pride of the Trench i Mercantile Marine, was drifting out of , control athwart the shipping lanes in the Channel, waves hissing into steam i as they splashed her red-hot hulk. And ;■ that was a far bigger loss; than the '. Morro Castle. British underwriters were i responsible for practically the whole of . the total insurance of £1,300,000. Every active Lloyd's member has a group of names, a syndicate, behind , him. The list may vary from ten to 1 twenty-five. Bach "name" in. the p gronp is down for a fixed proportion 'of all the underwriting business accepted by tho * active . operator. No ; group accepts a greater proportion of i any risk offered than it can carry corns fortably. i Any shock thus strikes.the apex of a ■ pyramid,, and is • buffered all the way , down tp .the base; and the base is as. > wide as the city itself, resting, as it i does,- on.the shoulders of the world's : sturdiest, most reliable, and conserva- ) tive body of business men, large and ; small, backed by the traditions of cen.turies and a matchless accumulation of • experience.