DISASTER AT SEA

Greymouth Evening Star, 16 November 1934, Page 13

DISASTER AT SEA

UNDERWRITERS’ LOSSES. The Salvage Association has . reported that the fii’e in the Mo*rro Castle is extinguished. The vessel is thus officially declared to be a complete constructive loss.

This means that it would cost more than the insured value of £560,000 to repair her. As, the vessel is now to be regarded as a total loss, additional insurances amounting to about £280,000 Will have to be paid, writes Un underwriter in the “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 vbssel’s insurance on •the London market first anticipated. The business of underwriting risks on ships usually runs 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 1931 she was loaded, ready to sail, at Hamilton, when she caught fire. The group of underwriters and insurance companies wno 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 shipyard. 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 losses 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 camo . that L’Atlantique; the pride of the French Mercantile Marine, was drifting out of control athwart the shipping lanes i in the Channel, waves hissing into eteam as they splashed her red-hot hulk. And that was a far bigger loss than the Morro Castle. British underwriters were 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 twenty-five. Each “liame” in the group is down for a fixed proportion >of all the underwriting business accented by the active operator. No group accepts a . greater proportion of ■any, risk offered than it can carry cothfortabiy.

Any shock thus strikes the apex of a pyramid, and is buffered all the way doWn to the base; and the b-ase is as wide as the city itself, resting as it does, b'n the shoulders of the world’s sturdiest, most reliable, and conservative body of business men, large and sinall, backed by the traditions of centUi’ies, and « matchless accumulation ok experience.