The Sun.
London, England, 1856-03-27 00:00:00

AfERCANTILE MORAUTY-FRAUDS o.ti
UNDERWRITERS.

---o-- --

An unusually large attendance of members of Lloyd's
took place yesterday, at the annual meeting at the Sub-
scription Rooms, Royal Exchange, in consequence of a
notice given by one of the members of his intention to
bring for Ward a motion in relation " to the condition of
the under% riting business as it now exists." T. Baring,
Esq., M.P., president, in the chair.
The private business having been disposed of,
Mr. WATTS rose and said he had been compelled to
give the notice attached to the requisition summoning
the present meeting, as it seemed to him the only avail.
-able means of calling the attention of members gene-
rally to the serious condition of a considerable and an
increasing portion of the underwriting business to
some of the mischiefs that had already occurred, and
to the inevitable result that must take place, unless
some immediate and effectual steps were taken to
arrest that downward tendency which the room for
some time past had exhibited. Take, for instance,
what had occurred during the last year or there-abouts.
The unusual event—to the honour of that association
it might be so detcribed—had taken place of- several
members declaring themselves enable to meet their en-
gagernente. Next, they had witnessed the withdrawal
of a body of influential members from the underwriting
department, on the groand that the risks and liabilities
were so disproportioned to the premiums, that the lousi-
ness of underwriting was to a great extent not only as
unprofitable, but a ruinous operation. Then there had
been individual secessions, some giving up busisede
wholly, some in past ; some determining to refuse to in,
sure goods to any port of export, especially manufacis
tobutohid•eeider: o
goods odds
hesiopms,eto a s
and o open shippedfimi
roomla:the Mersey or the Clyde;
policies, because
with respect to
because the expe-
rience of late years .had proved that no possible profit
could be made out of such a class of risks. Was this a
state of things to be permitted to prevail without some
effort being made to put an
_end to it ? Was it fitting
that such a condition of business ought to be allowed to
exist in such an important and influential -association as
that of Lloyd's—an association which was a commercial
necessity, and intimately interwoven with the whole
vast commercial fabric of the empire ? What was the
cause of this state of things ? The answer was not
difficult. Of late years a complete charge had oc-
curred, not only in the mode of conducting business,
but. is the principles which governed business trans.
actions ; and, he might add, a new race had come
forward, with a new code of commercial morals, to put
those principles into action --that while everything had
done homage to what he supposed, in the phrase of the
day, he must describe as the "progress of the age,"
there had been no analagous movement on the part of
the underwriter, who• had not adapted his system of
business to the alterations that had occurred. And the
natural consequence was, that, uuder the pressure of
competition, which acted with peculiar severity in the
direction of profits, he found himself distanced in the
race—he saw, without any corresponding counteraction
on his part, that business year by year became more
uncertain, more speculative in character—in fact, to a
great extent, as he should endeavour to show, almost a
matter of gambling, but of that kind of gambling in
which the stake was the underwriter's whole capital,
and where marked earls and loaded dice were used
against him. He would briefly remind the meeting of
the purpose for which that room was established. It
was established on simple and intelligible grounds—
for securing the shipper and shipowner against the
perils of sea and storm ; and, though the underwriter's
liabilities were extended in various directions, and
embodied in that piece of antiquated incomprehensible
jargon called a policy of assurance, still the liabilities
and responsibilities of the underwriter were sufficiently
limited and defined to enable him to make those calcu-
lations performed in all other occupations, and by a fair
adjustment between premium and risk, to see his way
with tolerable clearness to- a reasonable profit. But
would any member attempt to define the extent of an
underwriter's liability at the present ? He bad in vain
attempted to ascertain them. He found the most exag-
gerated, contradictory, and preposterous notion afloat
on that question. In fact, it weuld appear that the
genetal practice was to assume that the underwriter's
liability began everywhere and ended nowhere—that it
was only necessary to get an underwriter's name on a
policy, by the lure of a small premium, of which, in
particular classes of risk, it was intended he should
never see a shilling, to make that circumstance the foun-
dation for 'every conceivable and unfounded kind of
claim. Look at the increased risk for yi hich under-
writers now were responsible. First, there was the
great change in the ide s of mercantile vessels, tboeun-
, wieldy and dangerous class of vessels now employed,
the clipper nuisance and danger, the use of iron in the
construction of large ships, the difficulty—as every ship-
owner well knew—of procuring competent captains and
mates, the impossibility of manning ships with able-
bodied British seamen, the necessity of making use of
unders'zed, drunken, otoport, and foreign lubbers,
quite unfit for seamen's duties—thanks to legislative
tinkerirqs of the laws by ignorant statesmen, for the
most part set in motion by interested adventurers, who
now feel the consequences of their own selfishness, and
are the most eager to retrace their steps. Above
all, look at the increased risk of collision arising
from the haroductiou of steam, and the reckless Racii-
ties of safsty to speed. Each of these changes would
constitute a large item in the list of additional liabilities,
but combined, they press with such crushing force on
the underwriters' profits and capital, as to make the
underwriting business one of certain loss, and petbais
of ulihrove ruir, if persevered in to any extent.. It
might be urged that this was a question of premium
only, and that underwriters bad the remedy in their
own hands, by insisting on a suitable advance of pre- eo
mium. He denied that the view he was about to pre-
sent to the meeting of the question had anything what-
ever t t do with premium. It was on higher grounds
that he placed his question. But he would observe,
with respect to the feeling that underwriters had the
remedy in their own hand , practically such was not
the case. That which would be found at the root of all
the existing mischief, and if nothing was done, all the
mischief in store, was the utter want of unity in that.
room. It was an associeti:ni without the association
principle. There was no co-operation for the common
interest, as was the case in all other societies founded
for a specific object. There were no general rules for
keeping businesa within legitimate channels, and for the
guidance of members in cases of emergency ; hence it
was that, as every new member was obliged to conduct
business according to his experience or want of experience,
an irregular system of business was introduced, and inno-
vations and novelties, all telling aeaiest the underwriter,
became established usages. It was therefore hopeless to
expect, as experience proved, that any co-operation,
even for the common benefit could be traught about.
He bad st %tett that the case he proposed to bring under
the notice of the meeting was not a question of pre-
mium, it was a question involving the character and the
honesty of a portion, and au increasing portion, of tbe
business trausacted in that room. He asserted that a
shameless system of imposition was practised or, the un-
derwriter ; that there was an organised system of premt-
dit ited frond in the guise of claims for particular averae •
for damages by sea water, which was rapidly identifying
itself with ordinary business, and against which the
underwriter bad no sufficient protection. It was impos-
sible to write goods to any port in the world without
having a claim for alleged :sea damage. Toe extent and
audacity of this system irelicstod a condition of commer-
cial morality perfectly appalliuo. shippers and mai ufac-
turers looked not to the profits of markets so leech as to
the profit they could extract from the pockets of undet-
writers by manufactured claims for pretended sea
damage. It was necessary to check this nefarious busi-
ness ; it could not, howet er, be done by the present
safee'uards. "ft was a detosion to consider the law as
afferdieg any protection to underwriters against die-
honest claims. The extra costs, if successful, which
was very doubtful indeed, and the annoyance, would be
found in nearly every instance to-outweigh the swot:lnt
of the dishonest claim. Then, again, the system of
agents was rather a favourer of manufactured
claims than an obstacle, because the agents, though
disposed to act fairly could hardly be expected to do so
when it was considered that their duty and their interest
were placed at variance by the mode of payment. It
was the same with the class of persons called average.
staters. They were, :with some honourable exceptions,
rather an assistance to the fraudulent claimant than a
protection to the underwriter. The proposition he bad
to make was fur the meeting to agree to establish a. board
of investigation, to which all doubtful and disputed
claims sheiuld be referred: The decision of this board
should be binding, either for the elaim to be paid er re-
sisted, out of a common fund. He also proposed that a
register of claims, the names of parties, and the nature
of the claims, -be kept for the use of the members. He
was satisfied that these securities must be afforded to the
underwriter, in order to put a stop to scandals which
every Aar were becoming more prevalent. It-was ne-
cessary to have some tribunal to which to refer claims,
and to do that which underwriters could net, or would
not do for themselves ; and it was equally necessary to
have a register for claims, in order that underwriters
might know who they were who dipped their hands so
deeply into their pockets, and also that unscrupulous
traders might be!warned that henceforward they would
be Marked and known, and that the source of dishonest
profit, through the agency of fictitious claims for damage
would be closed for the future.
by sea water, whichtheyhao oTphereiedspfeakor tehremthseenlverse,_
vetted to the commfriattmeee, as4esuggegneesrtael u
drles for the consthat they should
be erapowered to
iduugc t
twoof portionsi
oonf h s ttoe
the
that d
ic ot
wn ca
sl u de
xe dp
ebdtti
emntow.
to
appoint a tribunal to investigate claims, and that a re-
gister
of claims be kept, to which underwrites were to
have unrestricted access.
Mr. HOPPER seconded the motion, which was put and
declared to be negatived.
Mr. WATTS was quite prepared for this . result. lale,
was satisfied that the time was at band when all mem-
bers--leading members and junior membene—must com-
bine for self-preservation. The male over-trading that
bad occurred with respect to Australia, and for which
the members• bad been made to suffer by unprincipled
shippers so severely, would noon be repeateo, now that
peace was at hand, and Speculation and aver-trading,
with their consequent reaction, might be expected to
go on in their customary round.
Mr. Wtoos thought that the proposition for a board
of examination of claims Ras beset with insuperable'
difficulties and could not be advantageously carried out.
The other proPesition for a register of claims might be
of •use to members, •and was worth further oonsidera-

tion.
It was arrangea that the discussion should be revived
by ancther motion for next Wednesday; and, sifter a
vote of thanks to the chairman, tb• PNlting adjourned.