Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1894-09-05
FIRE INSU RAN CE.
THE CORPORATION OF LLoYDS AND
ITS SHIPPING BUSINESS.
s,rce.s In This Line Not n Warrant for
Claiming the Success Of the Proposed
System Of Fire Insurance.

4 Claiming the Success OF INC Troposeu
| System Of Fire Insurance.
| To the Editor OF the Dispatch:
A new system OF insurance against
loss by fire Is being introduced here.
and II IL said by those Introducing IL to be
| English YOU know" Iehave been asked
by several parties II this is so. and
whether the system Is in operation In
| England, and IL so whether 1t Is found
satisfactory. With your permission VIII
answer these queries through your
columns. as the matter is one OF pubic
| interest. 1t is Of the essence OF the value
OF either life OF fire insurance that II
shall absolutely insure. Any plan or
| system which falls short OF this Is
| de.usIon and q snare. wildcat bank
ing has been universally condemned. but
| l doubt whether in its results IT Is worse
| than wildcat insurance, and any IN
surance which falls short OF being an
| absolute indemnity against loss TO the
extent TO which that loss has been Insured
| against is nothing but wildcat insur-
ance. and TO be as strongly condemned
and discountenanced as wildcat bank
| ing Now, 10 the question Of what Is
Lloyds. and what the system OF insurance
| hereunder. and is 1t to be commented
| al being absolutely good as an insur-
| ance?
A GREAT CLUB.
Lloyds. In England. IS a great corpora
nkHEG
| is carried on at the Royal Exchange In
| London. and which business Is s6eiy
concerned with shipping. 1t took its name
from one Of the old-fashioned coffee
houses in the city OF London, where the
owners OF ships were in the habit OF
meeting every day to learn OF the. sa ing
and arrival Of their vessels at the diner
ent ports. and Of their being SPOKEN 10
by other vessels at sea out or these
meetings grew the system of supervision
OF shipping interests now carried on Ny
means Of Lloyds. As the great Shlpplhs
business of England grew the owners o.
vessels and the lreighters by them rea''@eu
the necessity for insuf1ng both NeSSels
and carroes from loss by tho perllS Vi
the deep" and as incidental TO this ne
cessity the importance OF surveys Oh
shins during and after building as bearing
uDon the rates to be charged for insuflnS
the vessels and cargOcs. Again, out OF ms
grew the necessity for agents all over
the world. who would look to the interest>
of the insurers in the event OF damage
or loss TO vessels and cargoes. The cor
poratjon Of Lloyds undertook on behalf
Of all it's MEMBERS these duties. and now
all British ships are built in accordance
with the requirements of Lloyds' sur
veyors and are rated on Lloyds' register
I'm certain specified classes according 10
their build, age, and condition. a vessel
rated Al at Lloyds Is one which has
complied with all the requirements OF
Lloyds' surveyors to make her safe
and good insurable risk at the lowest
rate with an ordinary cargo.
FAIL TO COMPLY.
Vessels rated under other numbers or
denominations fail. in some respects TO
comply with Iloyds' requirements as be-
ing as safe as they ought 10 be. and
bear the penalty in incro's Il rates Of
insurance. At Iloyds' office. on the royal
Exchange, every British vessel Is reported
WheneNc r she sails or arrives, or Is
spoken al sea by another vessel in
mediately that vessel touches port. In
this way the ship-owners and brokers who
compose the membership OF LlOyds are
kept fully posted az to the vessels in
which they are interested Having thus es-
tablished a system under which close super
vision could be kept over all shipping, the
members Of Lloyds undertook the in
surance OF vessels and cargoes from loss
or damage by disaster at sea. This in
surance is not done as is fire or life in
surance by a continuing policy for a
year or a number OF years, but simply for
each voyage. and for each cargo.
member of Lloyds asked TO insure a ship
or cargo, refers TO the register. ascer-
tains the vessels rating and cargo and
then agrees to indemnify the owner from
loss either for the whole amount desired.
or for part Of It at such a premium
as he is willing to accept as a reward
for taking the risk. but only for the
particular voyage on which the vessel IS
entering.
UNDERWRITING
on an average, the term Of a voyage Of
any vessel is usually only for a very
short period. Probably the average dura-
ton of all voyages is not thirty days
For such a limited time az this the in
demnity of an individual or firm Of
brokers of good standing is usually sufii-
cient, and may be safely accepted. espe-
cially as it is the custom for all brokers
TO reinsure themselves either wholly or
in part by getting the policy underwritten,
Il
certain specified portion Of the risk In
consideration Of premium agreed upon
between the original insurer and the un-
derwriter. This business of underwriting
policies is large one. and partakes
largely Of the element OF stock-eXchange
speculation. If a vessel Is overdue, and
has not been spoken, or there has been
n great storm reported from the region
in which she is sailing, then the rate Of
sci RAPIDLY advances. and the original IN
surer and underwater seeks to cover his
probable loss by Offering heavy induce
rnents to other underwriters TO indemnify
him.
THE PREMIUM.
The premium Of vessel believed to be
in great peril goes up TO So Co. or 20 per
cent. If after all she comes into port
safely, a great profit is thus made by the
man who was paid so highly TO take
part OF the risk, and the original insurer
makes 50 much less on his venture. II,
on the other hand. the vessel is lost. the
original insurer receives from each UNDER
writer the proportion Of the loss which
he undertook to indemnify against. For
marine insurance this system. as worked
under the supervision of Lloyds. has been
found satisfactory one. The owner OF
the vessel or cargo selects the man or
firm OF brokers whom he knows TO be
good enough 10 indemnify him under or
binary circumstances for so short period
as the voyage of vessel from one port
to another and he leaves that man or
firm or brokers TO protect himself II he
so desires by getting a part OF the risk
undcrwritten by other men, whom ne
can trust 10 indemnify him. i am not
aware that this system has ever been
extended to fire or life Insurance in Eng
land. nor does 1t seem 10 me TO be ca
pable of being safely so extended. The
length Of time over which policy OF
insurance against fire is required to run
usually is against the adoption of sys-
TEN Of indemnity by only one individual
or by few individuals. A man or firm
In business may be reasonably accepted
after investigation as good enough to in
demnfy against loss for snort period.
but the experience OF every day shows us
that such an indemnity is at best very
risky one for a long period. Had expe-
rlence not demonstrated this, corporate
action 10 indemnify against loss by fire,
by accident, or by fraud would not have
attained the success 1t has done.
CORPORATE INDEMNITY.