EARTHQUAKE INSURANCE

Taranaki Daily News, 13 February 1931, Page 5

EARTHQUAKE INSURANCE

FACTORS GOVERNING RATES.

HAZARD OF TOTAL LOSS.

Earthquake insurance and some of the factors governing the rates were dealt with by a Wellington insurance manager on Wednesday. After mentioning that there was certain information in connection with the whole matter which he thought should be made generally known, he said that most people regarded earthquake rates as being high in comparison with, what they considered was the risk. ‘ " “In assessing the rate for fire insurance,” he continued, “one of the main factors which is taken as a basis is the estimated loss ratio of the interest involved. Naturally certain interests are subject to a higher loss ratio than others and the ratio is also .affected by the proximity of other buildings and the proximity of other trades and. occupations. The underwriters’ council has tabulated the results over a number of years in New Zealand and the actual loss ratios have been worked out in connection with occupations and trades. “So far as earthquakes are concerned no one can estimate the loss ratio. For instance, a comparative severe - shock. is experienced in, Wellington, which does certain damage to plate-glass windows, brick facades, etc. In Napier there is a complete loss of the interest involved. Looking at the question from that point of view earthquake insurance should be based on a ratio of total loss, but it does not seem to be realised by the insuring public that a rate of 4s per cent, means payment of premiums over 500 years to pay a total

loss; . ‘‘The insurance companies regard earthquake insurance as a rather desirable type of business from one aspect. That is, the moral hazard oi the insured, since no man can start an earthquake. One ray of comfort is that there is no need to inquire into a mans financial standing or the moral hazard.