New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1897-03-28
WHAT REINSURANCE is.
LEGITIMATE AND GAMBLlNo Hi'N'
TAKEN BY MARINE INsUR-
ANcE COMPANIES


The fact that the last winter has peen reco'"
breaking one in the number OF marine "'S"''e.' "
all kinds has been the cause Of unusual activity
IN that most uncertain of all Insurance transac-
tions tho reinsurance OF overdue vessels never
before has there been n season In which SO mahS
ships have been lost or disabled and IN which the
premiums for reinsurance have risen 10 such ms"
figures.
There are really two classes OF marine re'nsur-
ance entirely distinct from each other one Is re-
carded in shipping circles as Legitimate. 10 use
the term of some underwriters while the o'her Is
regarded as species OF particularly HAZARDOUS
gambling policy of reinsurance In the former
sense is usually taken out under some such CIR
cumstances as these: II the vessel or cargo 10 nc
insured Is ~of great value. so that the company APP
piled to does not care TO assume the entire rish'
that company frequently arranges at once before
the sailing OF the vessel. to let out part OF the
amount to another association. Sometimes large
sum is divided up in this way by the original I'M
derwriters among three or four different compa->
niles.
The second kind Of marine reinsurance the gam
bling variety Is the one which has received such
an impetus this season. 1t comprises the policies
taken out on overdue vessels and their cargoes'
When a ship has failed to arrive in port within
few days of the proper time the company winch
has insured her begins to feel uneasy and TO wish
that some of the liability might be shifted upon
other shoulders The representatives OF that COM
oany then set out TO find some corporation or IN
dividual who will be willing, for the sake OF high
premium to relieve them of the risk and take
chances upon the vessels return AZ the days go
by and no news comes from the missing craft. the
premiums on such reinsurance rise steadily. Start
ing perhaps at % or 30 per cent they advance rap
idly as time goes on TO %, 60 and sometimes as
high as 90 and IS per cent. 1t might be supposed
that at such a rate it would not be thought worth
while to reinsure at ALL but when the original I'M
derwriters are pretty we'll convinced OF the vessers
loss they snap at the chance OF saving even vi ~
per cent out Of the wreck
All sorts Of Considerations are taken into account
IN determining the amount OF the premium asked
and received Among them are the build and
sanchness Of the craft in question. the nature OF
her cargo the kind OF weather she is supposed to
be encounterng. the length and route Of her voy-
age and the ability of her captain and crew.
case the outcome OF which has just been de-
cided Is that of the Californian ship T. F. Cakes.
which arrived at this port last Sunday. after
voyage Of 259 days from HongKc The Cakes Is
an iron, three-masted ship, commanded by Captain
Edward W. Reed, of Haverhill Mass She left
Hong Kong July T. 1896. and as she had been out
nearly three times as long as is usually required
for the trp-loO days-hopes Of her safety had been
almost entirely abandoned by old sailors. Never
theless with the chances strong against her she
was reinsured on March Is at 80 guneas premium
Allowing for the difference between pounds and
guineas this represents about "a per cent Inc
only fact In connection with the matter which In
Huenced the second insurers TO hope for the return
of the Cakes was the existence of report rather
vague one that Captain Reed intended to come
home by way OF Cape Horn instead of by the usual
and shorter route around the Cape of Good Hope.
This 1t turns out. was precisely what happened.
though the change Of route forced upon the
captain while at sea, instead of having been de-
cided upon BY him before he left Hong Kong. When
only few days out in the China Sea the .untortu-
ship encountered successfully two terrlnc ty-
phoons alter weathering which she far off
her course in the North Pacific that Captain Reed
determined upon the Cape Horn route as being
under the circumstances. the easier and shorter.
Subsequent bad weather and the even more serious
disaster OF being snort-handed. owing 10 sickness
and death among the crew prolonged the vessels
voyage toaiis remarktple length ms was q case
in which The gambling spirit scored victory.
though the prospect for such an outcome Seemed
wcllnigh hopeless.
The Lord Dufferin is British bark which sailed
from Monteyideo for this city on october and has
not yet been heard from She was reinsured on
January y at ninety Guineas premium and has
now been posted at Lloyds. in London, lost.
That, however, has no effect upon companies here,
rensure the missing vessel An instance In which
the Of the original insurers proved grOundlcss
occurred TWO weeks ago last Thursday when the
a voyage of 2OG days from IIiogO. Japan She had
been rensured at thirty guneas premium sim
steamer Lake Winnipeg which arrived at Liver
pool from brunswick few days ago. having
She had been reinsured on the day before her ar
rival at thirty-hve guineas
Sometimes. when a vessel which has not been in
sured for its full value becomes overdue. the owner
fearing lis loss, takes out an additional insurance
po9hcy lie Is Of course Sc Obliged TO pay the same
ing rensure The taking out Of these second
insurance papers by the vessels owner. though it