Insurance Offices Explain Earthquake Risk Covers

Taranaki Daily News, 26 August 1942, Page 4

Insurance Offices Explain Earthquake Risk Covers

Press Assn.

Wellington, Aug. 22.

The executive of the council of underwriters, in reference to the discussion in Parliament regarding earthquake insurance, points out that earthquake damage, whether by fire or shock, is normally excluded from fire insurance policies issued throughout the Empire. If owners of properties, however, desired to include the risk of earthquake that cover might be granted on the payment of an additional premium, subject to certain conditions at varying rates. The cover was granted to protect the property owner against a major disaster or claim but it was never intended, nor could be granted, to protect those who did insure against earthquake for minor damage. The conditions onder whi.h insurance companies throughout the world grant earthquake cover provide that the insured must bear a certain amount of the damage. If this condition did not apply no insurance company would grant earthquake cover in New Zealand. Not more than one dwelling in 5000 was insured against earthquake, so only a very small percentage of householders had been affected by the conditions oi the earthquake cover. All policyholders were notified to read the conditions of their policies. The liability of insurance companies in the Wellington province alone was estimated at not less than

£300,000. If the recent earthquake at Wellington had been slightly greater the severity of the claims on the companies would have been enormous, particularly had a conflagration such as that at Napier resulted. A conservative estimate of the losses to be paid by companies in the Wellington province as a result of the two recent earthquakes was £300.000 Earthquake insurance was granted by insurance companies only when cover was specially applied for. The insurance companies, realising the huge liability Involved, did not seek this class of insurance. It would be impossible at the rates charged, or ev'en at greatly increased rates, to grant earthquake cover for minor damage. Insurance companies would welcome discussion with the Government on the subject and would be pleased to place before the Government any further information It might desire.