INSURANCE RESOURCES

Evening Star, Issue 23500, 14 February 1940, Page 6

INSURANCE RESOURCES

COMPULSORY WAR RISKS TREMENDOUS SUM INVOLVED [Per United Press Association.] WELLINGTON, February 13. The circumstances leading up to the biggest series of insurance transactions in the history of the world—compulsory war risk on stocks and commodities in Britain—were outlined to-day by Mr A. K. Gray, of Wellington, who has just returned from abroad. Mr Gray, who is a director and general manager of Messrs Bennie S. Cohen and Son (N.Z.) Ltd., paid a high tribute to the flexibility and tremendous resources of the marine insurance market in England for its ability, with the assistance of a Government pool, to absorb the whole of the marine war risk offering. This included not only the risks on British hulls and cargoes, but also by far the greater part of neutral marine insurance, in itself a striking testimony of faith in the ability of British markets to pay. Referring to the compulsory war risk, Mr Gray said that about two years ago, as a result of the experience in the Spanish war, Lloyds and British insurance companies decided that they would not take any more war risks on land. Even before the September crisis the insuring public had been eagerly seeking war risk insurance and the insurance interests came to feel that such a tremendous sum would be involved in a calamity caused by an air raid that the market might not be able to pay. No one knew just what damage might ho done by a heavy attack from the air, so that from a sense of fairness the companies had refused to accept the premiums. When the Government decided on compulsory war risk insurance, Mr Gray said, it meant the handling of the biggest block of business in insurance history. Lloyds’s brokers and companies were handling the business acting on a commission basis for the Government pool, but neither Lloyds nor the brokers carried the risk. Considerable opposition to the Government scheme had boon voiced. For instance, some of the combines might have stocks worth £2,000,000, and the additional insurance on top of the ordinary fire risks made a very big item of expenditure. The Government’s idea seemed to he that if there were serious air raid damage the rehabilitation of the businesses affected would ho an important factor in trade recovery. I One change wrought by the war nt Lloyds, Mr Gray said, concerned the Chamber of Horrors, a small room where there was a series of boards, on which were posted reports of casualties or disasters of all kinds throughout the world. That portion of the room was now enclosed with a waiter in attendance at the door, and only members of Lloyds were permitted to enter. The

famous Lutino bell had now ceased to rins. Of the insurance market. Mr Gray said there was no panic. The market was steady and the underwriters were taking their losses calmly.