WAR DAMAGE RISKS
If the creation of an insurance fund to cover possible war damage were to involve high administrative costs there would be some reason for suggesting that the risk should be carried by/the country at large, without a special premium being levied on property. From what was said on the second reading of the War Damage Bill, however, it appears that administrative costs should be low. The insurance companies have offered, as a war contribution, to collect the premiums without charge for their services. This should cause the Government to keep central administrative costs as low as possible, so that the premium income may be paid almost wholly into the reserve fund. It is prudent to have a moderate fund of this kind, out of which urgent claims may be met if war damage is suffered. One may say: It is a national risk, and why not cover it with the whole of the national wealth? But the creation of a special fund follows the sound business principle of setting aside funds to meet possible calls, instead of leaving everything to be charged against the general capital. This principle, however, is lost sight of if an unduly large fund is created, or if wide possibilities of diversion to other purposes are admitted.
The Minister of Finance was certainly right in changing his original idea that unexpended war damage funds might be used for tfee rehabilitation of soldiers. This would involve indirect special taxation on one form of property for a purpose which should be a charge on all forms of wealth and income. A limited power of diversion, to cover, say, (earthquake damage of a special kind, might be allowable, but if this is carried far it is open to objection, because it would give cover not based upon, premiums calculated on that particular risk —a risk now insurable. In any case, the fund should not be unduly swollen, for that would be a tax on industry and would bring in its train requests to divert the funds to .other purposes,
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Bibliographic details
Evening Post, Volume CXXXII, Issue 86, 8 October 1941, Page 6
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343WAR DAMAGE RISKS Evening Post, Volume CXXXII, Issue 86, 8 October 1941, Page 6
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