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Aviation History
1915
1915 - 0548.PDF
I/LIGHT explain why that is. To begin with, the country districts are not aimed at, and the damage done there is only by accident. What the raids aim at are the industrial centres, and particularly those where munition works are being carried on. In a case which came before my Committee where a bomb had been dropped amongst crr>p>, there had been no damage that exceeded 3.c, 4^. or 5-r.— nothing but the cost of filling in the hole. Again, in no case has the crop itself been damaged. Then with regard to the farmer's stock, he has not his whole stock in one place, as in the case of munitions. We have had a large number of farmers' claims, and the whole of them have been settled at a really nominal figure. Il is really out of all proportion to suggest such a sum as 3*. and e,s. 6d. respectively on farming stocks, live and dead. . . . "Then as to ' Contents of all buildings other than those specified in Nos. 1 and 5.' Here the rates are 5*. and ft. respectively. I do not know where any such figures can possibly have come from. Lastly, as regards certain merchandise and so on the rate is js. 6d. and iar. respectively. These figures are so extravagant in propor tion to our experience that I can only say frankly that I cannot understand on what basis they have been fixed.'' In view of the fact that Lord Parmoor is one of those who, we believe, held the opinion, as has been advocated in Flight, that it would have been better for the Govern- .ment to have taken over full responsibility for damage by aircraft as a national liability, it is not surprising that he should protest against what appears to him to be a really remunerative Government trading proposition at the cost of the public. But, after all, the individual cost is not very serious, and there is the distinct advantage that any margin of profit accruing from the scheme must, in the natural order of things, go into the public exchequer and become an asset to lessen, in however small a degree, the amount which has to be found by the people for the successful prosecution of the war. Another feature of the scheme criticised by Lord Parmoor was the remuneration to the insurance offices and their agents of 10 per cent, plus 5 per cent. According to the experience of his Committee, he con tended this was simply spendthrift extravagance on the part of the Government. " Let me criticise," he said, " not unduly I hope, the proposals contained in the Keport of the Aircraft Insurance Committee as compared with our experience. The first matter in this Report is that— " ' In consideration of the companies placing their staffs at the disposal of the Government, we recommend that a remuneration of 10 per cent, on the gross premiums should be paid to the com panies. . . .' "At a later stage in addition to that there is 5 percent, for agency purposes, so that the companies will get 15 per cent, on gross premiums. Now, what is our experience, because we have had ample experience upon this point? We have had to deal with claims of over £ 100,000—I mean that it is an experience over a wide margin ; and our experience is that so far from the cost being 15 per cent., plus whatever the cost may be of a new State Insurance Office, ours has been just one-third per cent. In other words, the cost proposed in this scheme is forty-five times the cost according to the experience we have gained during the last seven months. Truly when experts get to work there is no knowing where differences will crop out. Here we have a state ment that the remuneration is forty-five times too much. Per contra a very strongly-worded letter has appeared in the Press from Mr. V. H. Haines, F.C.I.B., the managing director of a firm of insurance brokers of high standing, who claims that so far from the commission being forty- five times too great there is nothing left but bare bones after the miserable agent has finished his work. It would certainly appear from Mr. Haines' statement that the insurance offices and agents will assuredly be doing their 41 little bit" in working for the public's good. Let us hope, however, things are not quite so bad as he makes out in the following criticism of the Government scheme:— 548 JULY 30, 1915. " In insurance business we appreciate the fact that in every class of risk there are many individuals whose insurances are most desir able, whose risks are below the average, and whose premiums are needed to reduce the claim experience ratio. To bring this good business in to the companies the services of insurance agents and brokers are required. The insurance canvasser is employed to talk them over. Now, turning to the Government scheme, it is quite certain that outside of the districts subject to air raids there will be little or no 'voluntary' insurance, i.e., uncanvassed, unsolicited proposals. To remedy this obvious selection the services of the insurance community are urgently required to bring in a volume of business from other districts, so that the premium contributions may be distributed throughout the country. You will agree that this is so ; but, to my amazement, those responsible for the scheme have only provided the inadequate remuneration of 5 per cent, commis sion to the men, brokers, and agents, who will have to do the real hard work of canvassing for proposals. " Now, I say, this commission is a miserable pittance, totally insufficient, and not at all in accordance with the ordinary commission rates that obtain in the insurance business. Apparently the projectors of the scheme had in their mind the insurance ot large mercantile risks, on which the rate of 5 per cent, commission might be adequate ; but numerically considered the bulk of the fire insurance policies of this country are on small risks, and a commission of 5 per cent, on each individual war risk proposal is grossly insufficient. " Let me state the following facts. In this district the average ' content' of private houses would be ,£250. The war risk premium thereon (aircraft) is 5^. Five per cent, commission on this amount is $d. According to the instructions we have received from some companies, we are to send the money with the proposal, as it is a cash transaction. But a cheque or postal order for the amount named would cost id. ; and the postage on one case would cost another id. ; this leaves us with id. actual cash remuneration with which to meet wages, rent and all stationery charges. I have calcu lated out that on these terms, if the public were crowding to secure policies, at the end of the day I should have made a loss—assuming that the clerk did six cases per hour, which would be a fair average when one remembers how many explanations the public require on this class of business. You may say that the postage, &c, would not run into id. per case; but the Government scheme provides that a fire company cannot transact war business except with its fire clients, and so we may have as many companies to send to as we have proposals." In spite of Mr. Haines' "frightful example," we fancy he has gone far astray in his views as to the fate of the Government measure when he concludes his letter with the hope that " someone in authority may wake up to the situation and take steps to lift the Government scheme out of the rut of failure in which at present it seems doomed to lie." At least all the arguments of Lord Parmoor and those who supported him are emphatically in favour of our contention since last October, as to the comparatively small damage likely to eventuate from aircraft, and as to the large profits which must necessarily have accrued to the underwriters. In the meantime matters are progressing well. Special efforts have been made by a number of the big insurance companies, some of which have issued special pamphlets upon the subject. Most of them greet the measure as one of considerable relief. One manager puts it as follows:— o r W> hLTL1^ thiLS<?eme W!" simPlify matters in one direction. alrisk ™°J?harded WIthPr°P°^ from clients respecting and could ^ ?T rnthS' and thouSh many of «s would not shnnbftMh.W ft I*6 b,US!neSS' this new scheme wi» g"atly simplify things after this rush is over, because instead of actuallv premium." Y ' PerCentaSe all°wed of the Government «JahL^°yal.InSUranCe ComPaQy ^ their circular HeSfw v? ;nterventlon of Ae Government as not only desirable, but necessary." Taken all round, therefore, all concerned with this measure have cause to be genuinely satisfied.
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