Wairarapa Times-Age WEDNESDAY, AUGUST 26, 1942. EARTHQUAKE INSURANCE COVER.

Wairarapa Times-Age, 26 August 1942, Page 2

Wairarapa Times-Age WEDNESDAY, AUGUST 26, 1942. EARTHQUAKE INSURANCE COVER.

'PIIAT an entirely new approach is needed to the whole question of insurance against earthquake damage' is made manifest in a statement issued a few days ago by the executive council of the New Zealand Fire and Accident Underwriters. The council said, for instance, that in the whole of New Zealand not more than one dwelling-house in every 5,000 was insured against earthquake and further that

earthquake insurance was granted by insurance companies only when the 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 even at greatly increased rates, to grant earthquake cover for minor damage. , The rate charged for insuring wooden dwellings against earthquake (fire and shock) risk, is 3s per cent in the Wellington Province, “and 2s fid in the less hazardous zones, such as the districts of Auckland, Otago and others.”

The rate of 3s per £lOO charged in the Wellington Province for the insurance of wooden dwelling-houses against earthquake risk is subject to the condition that no cover is given for the first £5O worth of damage. It is perfectly true as the underwriters’ council observes,, that this condition is brought to the notice of people taking out insurance. It is also true, however, that insurance in these terms gives no cover against the' principal damage, or the only damage, suffered by a very large proportion of wboden dwelling-houses in a series of earthquakes.

It is somewhat remarkable that in spite of the present restricted scope of earthquake insurance, a conservative estimate of the losses to be paid by insurance companies in the Wellington Province as a result of the two recent earthquakes, according to the underwriters’ council, is £300,000. Presumably this amount of loss is chiefly in respect of large buildings of one kind and another.

For a number of reasons, amongst them the extent to ■which earthquakes are liable to cause fires, and so, in the absence of special insurance, to make ordinary fire policies useless, the admitted difficulties of working out a satisfactory system of insurance against earthquake risks should not be allowed to stand in the way of an early and complete examination of the ■whole position.

lii support of its contention that insurance against what it calls minor earthquake damage—that is damage to dwellings up to an amount of £so—cannot be granted for the present rate or even at greatly increased rates, the underwriters’ council observes that of every 3s now received in premiums, insurance companies are paying approximately 2s in taxation, while account has to be taken also of reasonable expenses. This certainly suggests that the question of building up an earthquake insurance fund by the most direct and simple method that can be devised should be given immediate attention.

Apart from any question of the ultimate disposal of the War Insurance Fund, should it happily not be needed for the purpose for which it is earmarked and of necessity reserved meantime, the establishment of this fund might very well be taken as a precedent for establishing an earthquake insurance fund, either on a national basis or on an alternative basis. The creation of an earthquake insurance fund ought to get early and practical consideration in spite of the fact that an attempt to treat earthquake and fire risks separately is likely to give rise to more or less serious complications.

In the case of earthquake risks, what the insurance underwriters call “the huge liability involved,” might be and should be reduced greatly by the enforcement of approved Standards of construction in both large and small buildings. Where dwelling-house chimneys are concerned, the solution of the problem may be not in devising a chimney calculated to withstand all possible shocks, but rather in devising one that could be reconstructed or replaced at moderate cost if it were thrown down.