PAYMENTS FOR FIRE LOSS

Taranaki Daily News, 21 August 1930, Page 13

PAYMENTS FOR FIRE LOSS

OFTEN LESS THAN INSURANCE RE-ADJUSTMENT BY ASSESSORS. BUSINESS MEN VOICE PROTEST. / —- • Strong criticism of the policy of Insuranee companies in frequently not paying the full amount of insurance when buildings are destroyed by fire was expressed at the annual meeting of the Taranaki Chamber of Commerce last night, when several members considered that the position was now a serious one, and it was quite time the chamber took action in the matter.

The matter was brought up by the president (Mr. J. McLeod) in moving the adoption of the 1 annual report of the council. Business men and business institutions, said Mr. McLeod, were becoming very concerned over the fact that in many cases the amounts paid by insurance companies after their inspectors or assessors had dealt with losses by fire fell far short of the amounts for which the buildings had been insured, and on which premiums had been paid. If this practice, was to continue he felt that companies should at least acquaint their clients of the amount they intended to pay out in case of fire. Under tho present conditions lending institutions were liable to suffer serious loss, as they were quite in the dark as to what the value of their security might be in the case of loss by fire. It -was an arbitrary system, with no means of redress against the insurance companies when it was felt that an injustice was being done. The’worst feature of the matter was that premiums were often collected year after year without an inspection being made of the property concerned. Mr. S. E. Shaw said that most of the public were probably not aware that companies did not by any means always fiay out the full amount for which any property was insured. Efforts had been made to persuade the insurance companies to inspect properties and submit estimates of the amounts they were prepared to pay in case of fire loss, but so far these efforts had not been successful. The position was now a serious one, and it was proper that the chamber should take action.

Mr. R. Cock pointed out that there were a large number of buildings in the district that were grossly over-insured. He knew of some buildings with insurances up to as much as £5OO or £6OO that were not worth £5O. The wb- j thing was totally wrong. Mr. Cock proceeded to criticise in detail the methods of the insurance companies in insuring buildings without inspecting them. He knew of one building, insured for £5OO, that was now being used as a fowlhouse. He thought it was disgraceful that the companies could just pay out what they liked. A lending institution with which he was connected had had experience of five fires recently, and in no case had th© full amount for wlfich tho building was insured been paid out. It was a very serious position, and the chamber should certainly take the matter up. Mr. A. 8. Clark, manager of one of the local branches of insurance companies, pointed out that there were two sides to every question. No company, he said, wanted over-insurance, and the biggest difficulty the companies were faced with at the present time was the reduction of insurance. Mr. Cock and the institution with which he was connected might have been a little unfortunate with their recent fires, but he would remind his hearers that insurance was merely an indemnity against actual loss. Mr. Cock was on the right lines in circularising the companies requesting them to make individual inspections of all tho institution’s securities with the object of a proper adjustment of insurances. There were a lot of difficulties in the way. For instance a man might have had a house built in 1921, during the time when building costs were high, insured it for £BOO, and sold it under stress subsequently for £750. Was the new owner entitled to £BOO insurance if the house was burnt? Mr. Coc-k had submitted that the companies should pay out the amount on which clients were paying premiums. But take the case of a storekeeper who insured a heavy stock for a certain amount, reduced stock, and was then burnt out. It would be obviously unfair to pay him more than the value of the stock destroyed. He thought the position was not as bad as some of the speakers had made it out to be. By law the companies could not issue a valued policy, but must issue an indemnity policy.

Mr. McLeod said the trouble of overinsurance lay not so much with the responsible officers of the companies as with the agents. (Cries of Hear! Hear!).