REPORT OF THE WAR DAMAGE COMMISSION ESTABLISHED UNDER THE WAR DAMAGE ACT, 1941, FOR THE YEAR ENDED 31st MARCH, 1944

Appendix to the Journals of the House of Representatives, 1944 Session I, B-11

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1944 NEW ZEALAND

REPORT OF THE WAR DAMAGE COMMISSION ESTABLISHED UNDER THE WAR DAMAGE ACT, 1941, FOR THE YEAR ENDED 31st MARCH, 1944

Presented to both Houses of the General Assembly \ pursuant to the Provisions of War Damage Act, 1941

Wellington, 20th July, 1944. In accordance with the provisions of section 18 of the War Damage Act, 1941, the following report and statement of accounts is presented respecting the operations of the War Damage Commission for the year ended 31st March, 1944. (1) Mr. W. B. McKenzie, who replaced Mr. 6. E. Brangwin as a member of the Commission whilst the latter undertook military duties, resigned in favour of Mr. Brangwin on the latter's return to civil occupation, and Mr. Brangwin was reappointed on 23rd October, 1943. Otherwise the personnel of the Commission remained unchanged. During the year ten meetings of the Commission were held.

(2) The following statement shows the figures comparatively for each period reported upon since the Act operated : —

(3) By Amendment No. 3 to the War Damage Regulations 1941, the premium rate of ss. per cent, was reduced to Is. per cent, as from Ist March, 1944. The premium income for the year under review thus includes one month at the lower rate. The same amendment — (a) Excluded any security for death duty,; Native succession duty, gift duty, or stamp duty from the definition of the term " mortgage," thus releasing the Crown in connection with such securities from the obligation to contribute to war damage premiums: (b) Amended the obligation of mortgagees to contribute half the premium to the extent that the premium contributed shall not exceed the amount of interest payable under the mortgage for the preceding year, and also limited the right of recovery of premium for which mortgagees have liability to a period of two years after payment of the premium : (c) Extended the right of a mortgagor to recover a proportion of the premium from a mortgagee to any person who is bound to pay the war damage premium under any contract or agreement with the mortgagor. (4) The Earthquake Damage Emergency Regulations 1944-, operating from Ist March, represent a logical development of the principle of collective responsibility for a calamity loss which was expressed in the War Damage Act, 1941. The regulations provide the framework of a national and universal scheme of earthquake insurance the necessity for which has been recognized since the Hawke's Bay disaster in 1931. Prom an insurance point of view the risk of loss or damage through enemy action m wartime has many aspects in common with the risk of loss or damage through earthquake. Neither the locality where the risk is greatest nor the extent of loss can be predicted, and the individual is relatively powerless to protect himself. While it cannot be claimed that war risk to property is yet at an end—and the recent explosion disaster in Bombay is a reminder of one aspect of war risk which is independent of direct enemy actionthe present position in the Pacific war area warrants the hope that the balance in the War Damage Pund provides a substantial reserve at the commencement of the earthquake insurance scheme which it would have taken a very long time to build up out of earthquake premiums alone. The Commission recognizes that as there is no precedent elsewhere for a national earthquake insurance scheme, the regulations may be regarded as experimental. A review of the legislation is in hand at the present time.

, ' ® r Twelve Months Twelve: Months in,, ! C6 o, f' ended 31st March, ended 31st March, V°ioo 1943. .1944. March, 1942. Income-— £ £ £ Premium .. •• •• 877,369 1,611,218 1,423,305 Interest .. • • • • • • • • 1® > 57,46,9 Outgo— Claims . 55 Salaries .. •• •• ■■ 1,018 5,696 2,070 Other working-expenses .. .. ■■ 1,261 919 1,311 Audit fee .. • ■ • • • • • • 120 100 Surplus .. •• •• 87.5,090 1,620,150 1,477,238 Total of Fund . 875,090 2,495,240 3,972,478 Ratio per cent, of working-expenses to premium 0-260 0-418 0-245 income Ratio per cent, of working-expenses to total 0-260 0-413 0-235 income .. fsSm v.gij mm

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The intention of the regulations is to give indemnity insurance against loss or damage by earthquake over all tangible property insured under— (a) A fire policy : (b) A houseowner's or householder's comprehensive policy : (c) An earthquake fire policy : (d) A baggage policy : (e) A motor comprehensive policy : (/) An all risks policy. The cover is subject to the following conditions : — (а) The Commission is not liable for the first £5 of damage occurring in a period of forty-eight consecutive hours as the direct result of earthquake (exclusive of earthquake fire): (б) If the property is otherwise insured against earthquake, the cover attaches only in respect of so much of the loss as exceeds the amount to which the property is otherwise insured : (c) The Commission is not liable if at any time prior to the commencement of the regulations any insurance office had refused to insure the property against earthquake or earthquake fire damage because of defects of construction, unless such defects of construction have subsequently been made good : (d) The Commission is not liable if at any time before the occurrence of the damage a local authority has required any earthquake damage to the property to be made good, unless such requirement has been complied with : (e) The Commission may cancel or reduce the insurance under the regulations if the property is insured excessively against earthquake damage or there are defects in the physical condition of the property. The regulations authorize the reinsurance of the liabilities of the Fund. The Commission fully appreciates the desirability of relieving the scheme of disaster risks, if that can be done at a reasonable cost, and appropriate inquiries have been made, and are still proceeding, as regards suitable reinsurance. The Commission .proposes to undertake an expert survey of all buildings in what are judged to be the more hazardous areas, with a view to the later institution of workable insurance standards. This survey has already begun in the City of Wellington, but progress must be slow until the war ends, because of the difficulty in securing the services of qualified full-time Inspectors. (5) Administration expenses were lower than in the previous year. Up to the 28th February, 1944, as a war contribution, all insurance organizations gave their services, with attendant administrative out-of-pocket expenses, free of all cost to the Fund. As, however, the scheme, on account of the inclusion of earthquake insurance, ceased to be a purely war measure on the Ist March, 1944, it was considered reasonable to allow insurance offices per cent, on premiums collected as from that date. The amount payable for the month of March only appears in the accounts for the year under review. (6) The Commission has pleasure in again acknowledging the excellent work of the Secretary and staff, and the continued helpful co-operation of insurance offices. J. H. Jerram, Deputy Chairman.

WAR DAMAGE FUND (Under War Damage Act, 1941) Income and Expenditure Account for the Year ended 31st March, 1944 £ s. d. £ s. d. £ s. d. Sections 15 arid 17 premiums 106,081 9 0 Claims .. .. .. .. .. 55 0 3 Loss refunds .. .. 23,625 0 11 Salaries and overtime .. .. .. 2,070 3 4 83,056 8 7 Printing, stationery, and office equipment .. 85 0 0 Section 14 premiums .. .. .. 1,340,248 4 (i Rent, fuel, light, postages, telegrams, and sundry Interest .. .. .. .. .. 57,409 7 10 charges.. .. .. .. .. 282 13 Audit fee .. .. .. .. .. 100 0 Commission .. .. .. .. 942 19 I) Balance transferred to War Damage Fond .. 1,477,237 18 7 £1,480,774 0 11 £1,480,774 0 II Balance-sheet as at 31st March, 1944 Liabilities Assets £ s. d. £ s. d. £ s. d. Balance as at 31st March, Government stock .. .. .. .. 3,800,000 0 0 1343 .. .. .. 2,495,240 0 1 Cash in Public Account to credit of War Damage Net income for year ended Fund .. .. .. .. .. 85,931 12 7 31st March, 1944 .. 1,477,237 18 7 Interest accrued but not due .. .. 13,840 19 5 — 3,972,477 18 8 Section 14 premiums accrued but not due . 73,648 5 8 Sundry creditors for commission . . .. 942 19 0 £3,973,420 17 8 £3,973,420 17 8 Bth June, 1944. T. L. Seator, Secretary. I hereby certify that the Income and Expenditure Account and Balance-sheet have been duly examined and compared with relative books and documents submitted for audit, and correctly state the position as disclosed thereby. —Cyril G. Collins, Controller and Auditor-General.

Approximate Cost of Paper.—Preparation, not given; printing (1,193 copies), £5

Authority: E V. Paul, Government Printer, Wellington. —1944.

Price cid.]

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