EARTHQUAKE RISKS

Poverty Bay Herald, Volume LIX, Issue 17950, 30 November 1932, Page 2

EARTHQUAKE RISKS

SCHEME OF INSURANCE „ • , ' 1 ‘ 7 '*' * INTERNATIONAL BASIS SUGGESTION BY MR. J. S. BARTON Tho establishment of. an international system of insurance agaiust earthquakes, floods, hunicanes, and cyclones, to cover damage which can be justly claimed to be catastrophic, was advocated b> Air. J. S. Barton, Napier Commissioner, in an address to the Hastings Rotary There could be. no possibility of any adequate system of insurance against earthquakes and similar catastrophes, said Mr. Barton, unless the system was on an international basis, nor unless it was based upon the co-operation of all countries. There was one basic principle: the risk must be so spread that the insurer received the benefit of the law ot averages. For example, a shipping company "might own a single ship valued a L 60,000, and the company might ask itself why it should not carry its own the position would be that the company would be carrying a simple njsmance on one ship. It went on a rock, and risk immediately materialised If the company had put aside tor t y amount equal to 20 per be a •yahie of the ship, it would still be a very heavy loser. broke in five seconds On the other hand a company like • the Union Steam Ship Company, which Jnd had the benefit of about 80 yeais slices and to gam experience, aiid #c“ had a large fleet of ships oyer which to Sauee the law of averages, could carry fts g own Insurance. In such a position the company’s own insurance scheme became actuarially sound and could be ‘‘Thfwkins o( the law ot averages ' asked . l „° earthquake countries of the world. i little flicker on the side of the beast upon which we are all sleeping, he S" Cl the damage «** wM *J done in fi ve seeonds vvould break wy national scheme of insurance. Even before the 1925 earthquake m Japan, where earthquake insurance had been far further developed than m any other country, the insurance companies had found that they could not stand up to the burden that was put upon

th The countries that he had in mind as being members of an international scheme of earthquake insurance were New Zealand, Japan, Italy, Greece and others of the Levantine coontnes California and other parts ° ” States, all the smallvepublicsthatfom Central America, and parts o: the Vwtfk clones of South America. He was satis fled that a scheme could be based upo a reasonable premium so long as countries co-operated. A BEGINNING MADE The beginnings of a scheme of relief had already been made, and had then origin in tne International Relief Union which sprang from the Internationa Red Cress. The union was now undei the wing of the League of Nations. The suggestion was first made by an Italian senator, who brought it before an international conference of R«d, orobS c^( ll ties at Geneva in 1921, when a scheme of international relief against disaster was being discussed, lhe suggestion dealt not with local comities such a shipwrecks or mine explosions, but witn earthquakes, great floods, typhoons, and cyclones, with catastrophes like the lecent cyclone in Cuba, where the‘lamag done in a few hours made the total damage done by the Hawke s Bay eaithquake hardly worth mentioning. Tho suggested scheme was submitted to the League of Nations in 1922, and the League gave a general recommendation to the principles put forwaid. A commission Lorn the League was appointed to deal with the scheme, and submitted the first draft of its report to Senator Serola, who originated the proposals. Later the League of Nations sent out to all earthqiiake countries a questionnaire asking whether or not the scheme found approval, and set up a commission to draft a copstitqtioq and later set up statutes to govern the administration <?f the scheme. SMALL PREMIUM NECESSARY

Twenty-five out of 55 governments concerned approved the scheme and joined the international. relief league, and in each case the government concerned ratified the Geneva Convention relatin,, to it. It now remained for only a few governments to subscribe their share towards the basic financial fund, and each government was under an obligation to take up a certain number of shares It seemed now that the proposals would be entirely consummated, -but uptd, that time they could not be put into practice Several governments had not signed the convention, but had made it clear that they would adhere to it. Sneakin' 1 ' of the scheme that he him, self P had worked out, Mr. Barton went on to sav that voluntary subscriptions to raise'a basic sum would be necessary from 24 countries for the purposes o humane help after a disaster, and that help would he available as of right, 'there was another main suggestion contained in the scheme, and it was that in all the countries concerned a small super-tax should be put on all fire and life insurance. Re suggested 3d W*bnsed upon the amount of the premium. With immunity from any great• f»Wjr trophe for two or three years the sum would grow to an immense size, bucn a pavment would not hurt anyone and would be spread over the whole, of the countries likely to be affected by earthquakes or other catastrophic happenings. Till some such international scheme was put into operation, concluded Mr. Barton, the ■ people were just Paying, with terrible risks; and lie hoped the time was coming when the peop e < -wliole not in any sense of panic, bur indent men, would consider some such scheme, and that New Zealand would become a party to it-