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Rh system applied to the insurance of vessels. In the case of these there were black lists. No insurance was available in the United Kingdom in respect of any vessel on such lists.

While the work falling on underwriters and insurance companies was steadily increased, the staffs of the offices were also steadily reduced as more and more men were required for the fighting forces. The difficulties of carrying on business at Lloyd's became immense, and a scheme was introduced which provided for the establishment of a Signing Bureau. An ordinary marine-insurance policy may be underwritten by a large number of syndicates of names, and the signing by hand of the policies by the representatives of all the syndicates was a slow undertaking. A policy might be passing from syndicate to syndicate for many weeks. Objection was raised to any departure from this practice on the ground, inter alia, that it was important for the representative of each syndicate personally to see that the terms of the policy were in accordance with the conditions of the insurance as underwritten. In the critical times these difficulties were overcome, and a Signing Bureau was established, which had authority to stamp the policies on account of a large number of individual syndicates and names. As regards despatch, the system had very considerable merits. A policy deposited at the Bureau for stamping was available a very few hours later, completed. Later the system was extended to the settlement of claims, authority being deputed by individual underwriters to the Bureau for that purpose. The practice of stamping the Lloyd's policies on behalf of various syndicates was reflected in the adoption by the insurance companies of issuing a joint policy. Previously each company had issued its own policy and prided itself on doing so. The issue of the joint policy was adopted as an emergency measure, and was not liked by the insurance companies. Most of them agreed to adopt it, but were glad to revert to the individual system later. In order to save paper the size of the policies was reduced during the war, and a standard form of proposal was adopted.

Some underwriters refrained entirely from writing war risks. Nevertheless, it was impossible for them to escape the consequences of the war. Many ships, for instance, became missing. No direct evidence was available as to the loss of the ships, whether through marine or war perils. Vessels were being destroyed promiscuously by the enemy's submarines, and it was clear that, largely owing to this cause, many of the ships became missing. In ordinary times a certain number of vessels set out on voyages and never reach their destination. No trace remains as to the cause of loss. In such cases, after a long interval, the circumstances of the voyage are considered by the committee of Lloyd's. The names of the vessels are then posted in the rooms for inquiry. If nothing, in the meanwhile, is heard of them, the vessels are posted as missing, and settlements are then made by the underwriters in respect of ships and cargo. The position respecting the enormous increase in the number of missing vessels during the war period was considered by a committee representative of shipping ownerships, insurance clubs, Lloyd's, the Liverpool Underwriters' Association, the Association of Underwriters and Insurance Brokers in Glasgow, and the Institute of London Underwriters. As the result of the deliberations, an agreement was drafted providing for arbitration in the event of vessels becoming missing. The underlying idea was that an arbitrator, after hearing such evidence as was possible, could form an opinion as to the probable loss of the vessels, whereas if the question had been taken into court, the proceedings might have been very lengthy, and no better judgment could be expected. In some cases the loss was apportioned by the arbitrator in such proportions among the war-risk and marine-risk underwriters as seemed reasonable.

In the years immediately preceding the war a good deal was heard of over-insurance. Many ships had been built during periods of active trade, and owners found themselves possessed of ships which were worth more to them lost than if still afloat. There was an epidemic of mysterious losses of ships which were, admittedly, over-insured. While suspicions

may be formed, the scuttling of ships may be very hard to prove. In order to deal with a difficult situation, which was discussed in a paper read before the Insurance Institute, at the end of 1912, by Mr. Edward F. Nicholls, underwriter to the London Assurance Corp., a clause known as the 15% disbursement clause was prepared, which reads as follows:—

“Warranted that the amount insured for account of assured and/or their managers on disbursements, commissions, or other p.p.i. or f.i.a. interests, other than those hereinafter mentioned, shall not exceed 15% of the insured value of hull and machinery; but this warranty shall not restrict the assured's right to cover premium reducing freight, chartered freight, or anticipated freight to a reasonable amount; provided always that a breach of this warranty shall not afford underwriters any defence to a claim by mortgagees or other third parties who may have accepted this policy without notice of such breach of warranty.”

Underwriters considered that by the use of this clause the risks of under-valuation and over-insurance were eliminated. The risk of total loss is naturally coverable at a lower rate of premium than that of all risks, and any owner who had nefarious designs on his ship would have been tempted to secure a large amount of total-loss insurance at as low a rate as possible. It was held that, by limiting the amount which could be covered for disbursements, etc., to 15%, the inducement to an owner to lose his ship was minimized. The disbursements clause has been maintained throughout since its institution.

Following a period of severe competition and heavy underwriting losses, an agreement was reached among the underwriters of the insurance companies and at Lloyd's on the subject of the conditions on which steamers should be insured for time. This agreement laid down the terms on which vessels should be insured, the conditions being reconsidered from time to time. It was carried on successfully for many years, and then collapsed in June 1921. Agreement on certain important points, such as values, rates of premium and the underwriting lead, could not be reached, and it was decided, while maintaining certain terms which are set out in the Institute Hull Clauses, to give underwriters complete freedom on other important points. This was certainly one of the most important developments in the conduct of marine insurance for many years. It meant that the individual initiative and enterprise of underwriters, which had been curbed by the agreement, were once again given free play. Instead of all owners being treated alike, underwriters were at liberty to discriminate between the good and indifferent ownerships. It seemed to be in the interests of the good owners, while it might possibly be to the disadvantage of those whose record is not so good.

There then set in during the summer of 1921 a period of severe competition, although this was restrained, to some extent, by the withdrawal from the market of a number of offices which had been writing considerable accounts during the period of hectic activity traceable to the war and its effects. As long as there was an immense amount of war-risk insurance to be effected, and values of ships and commodities were inflated, there was sufficient business to feed a much-increased and hungry market. When trade became extremely quiet, some of the newcomers thought that they must continue to secure a large share of the business, and the only way they could do so, in competition with the older and more firmly established offices, was to reduce rates of premium. The cutting of rates went on for some time without apparent evil effects, while the more experienced underwriters refused to accept business on such terms. Early in 1921 claims poured in at a rate which had never been experienced even by the oldest underwriters. There was a cataclysm of claims, both in respect of ships and cargoes. The claims in respect of ships were due, especially, to the fact that while tonnage was in active request, repairs, necessitating the laying-up of ships, were postponed, and also to the fact that the repairing establishments were heavily preoccupied in making good damage done to ships through the submarine warfare and the general stress of working under war conditions. A very large number of ships were unfit to go to sea until the damage they had suffered had been made good, and work on such vessels naturally took priority over repairs which could, by any possibility, be postponed. Incidentally, the cost of repairs was steadily mounting for many years, owing to the rise in wages and in the cost of materials. The following figures show the settlements actually made by a leading insurance company on a large underwriting account of hulls. Taking the premium income written in 1916, the first year's settlements amounted to 13%. By the end of 1917 the settlements had risen to 51%; by the end of 1918 to 72%; by the end of 1919 to 84%; and by the end of 1920 to 93%. These figures were only for actual claim settlements. They show that at the end of the fifth year only 7% of the large premium income remained, from which the working costs had to be deducted.

An extraordinary feature of marine underwriting in recent years has been the extended period over which claims have been made. Before the war it was considered that an account might, for practical purposes, be considered as closed at the end of a third year. There