In Germany, as in England, one effect of the war on marine insurance seems to be to produce a tendency toward the amalgamation of companies.

The last decade before the war, owing to the keen competition, was in general not very profitable for German marine insurance; in the very week before war was declared many German insurers, incredulous of war with England, undertook war risks at ridiculous rates, to their own undoing. In 1914 and 1915, therefore, many German companies showed a considerable decline in their receipts from premiums, and in some cases they registered actual losses.

The companies, however, accommodated themselves to the changed conditions. The war gave them the monopoly of the German business, which previously was placed in England, either directly or by way of reinsurance. Full advantage was taken of the growing shipping boom in neutral countries, particularly in Scandinavia and Holland. Business was satisfactory apart from a few isolated instances, and the falling off in premiums was being made good, until the intensified submarine activity not only occasioned the German companies serious loss, but also limited their neutral business.

The satisfactory development of business during the war seems now to be causing many German marine insurers to entertain exaggerated hopes for the years following the war. As is intelligible, there is a strong desire to keep the monopoly of German business, and to exclude England altogether from the German market. Negotiations are in progress under government direction for the purpose of reserving to German insurers and their reinsurers in Allied and neutral countries the insurance of the large volume of imports expected during the transition period. It may be assumed that they will be successful, although the values to be covered by each separate policy must, of course, both as regards cargoes and hulls, be many times greater than before the war.

Amalgamations in Germany

The demands made on the individual companies will thus be greatly increased. Many of them are already preparing for these eventualities, partly by increasing their capital and partly by fusions. Examples of the latter policy may be found in the amalgamation of the Frankfurter Allgemeine Versicherungsgesellschaft with the Deutsche Transport Versicherungsgesellschaft, the Thuringia, and the Fortuna; and the alliance between the Union and the Friedrich Wilhelm companies. New companies are also being founded; examples are the establishment of the Hamburger Lloyd by the Duncker group and the utilization of the Berliner Land und Wasser by the same group after an increase in its capital. The Mutzenbecher group is strengthening its position by an arrangement with the Securitas, Bremen ; and another big Hamburg concern has associated itself with a well known reinsurance company.

In face of all this, it is difficult to understand why a new plan is being considered for setting up, on the model of Lloyd's, a Seegilde" (Sea Guild), in Hamburg, which is to consist of individual insurance brokers. Each of these is to deposit M. 100,000; and the policies given are to be secured, in whole or in part, upon the fund so created as well as the individual insurer's other property. In the interests of Germany's economic strength, this scheme must be opposed as likely merely to increase competition. The individual insurer of the Seegilde" will have to be content with lower premiums, in order to attract business from the insurance companies, which, of course, offer greater security. Premiums are, however, already depressed.

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The writer can not restrain his surprise that the general secretary of the International Transport Insurance Union, Berlin, should be in favor of this Seegilde" idea, indicating that if it does not mature in Hamburg the "Seegilde" will be set up in Berlin. He would, moreover, call attention to two specifically war insurance institutions, both in Berlin, in the establishment of which the Empire participated.

(1) The Deutsche See-Versicherungsgesellschaft von 1914 (German Marine Insurance Company, 1914), which was set up at the outbreak of the war; and

(2) The Deutsche Versicherungsbank (German Insurance Bank), established in 1916.

Both these concerns are expected to render assistance in the insurance of the enormous imports and exports during the transition period and of ships of the Imperator and Columbus types. It may be doubted whether the state will participate to any great extent in transport and marine insurance, since these branches of insurance business hardly lend themselves to state enterprise. Moreover, it is questionable whether it would be in the economic interests of the country to limit German marine insurers to German business. Marine insurance requires more possibilities of adjustment than do other kinds of insurance. Hence interchange of business with other maritime nations should be aimed at, always bearing in mind that the predominant position which the English marine insurance market occupied before the war must not again be tolerated.1

MARINE INSURANCE IN JAPAN

In no other country, except in the United States, has the war had a greater effect in stimulating the carrying trade than in Japan. The government of this country, in order to protect its shipping and encourage its development, provided government assistance in granting insurance for the merchant marine.

1

1 Münchener Neueste Nachrichte, quoted by the Journal of Commerce, August 20, 1917.

The system of government marine insurance instituted in Japan shortly after the declaration of war in 1914, differs materially from that established by other governments which undertook to relieve the scarcity of war risk marine insurance. In most cases a regular fund or bureau has been started which actually receives premiums and distributes payments in settlement of losses. In some cases, also, excess lines written by private companies are reinsured. The method employed in Japan is outlined in the following extract from The Fifteenth Financial and Economic Journal of Japan (1915), issued by the Japanese Government.

The War Marine Insurance Indemnity Act was promulgated on September 11, 1914, and the Ordinance No. 19 of the Department of Agriculture and Commerce on the following day, and both were immediately put in force. According to the act above referred to, if any Japanese Insurance company, or any foreign insurance company having branches, offices or agencies in Japan, makes a marine insurance contract at a premium not higher than the rate fixed by the competent authorities and makes good therefor any loss or damage caused by war, the government is to grant as indemnity to such insurance company a portion of the sum thus made good. It is provided for in Ordinance No. 19 of the Department of Agriculture and Commerce that the amount to be so granted by way of indemnity shall be 80 per cent of the sum thus made good.1

MARINE INSURANCE IN SWEDEN

In Sweden, a nation with an important merchant marine, government assistance was also granted. This plan provided both for direct government insurance and also for acceptance of war risk insurance for the account of different private insurance companies.

MARINE INSURANCE IN RUSSIA

With a few exceptions the Russian insurance companies which undertook marine insurance before the war, restricted at first their business to the national rivers and waterways, but later there was

a considerable extension of the field of operation, and the majority of companies have added the transaction of marine insurance generally to their program. Before the war, the greater part of the surplus from Russian marine business was reinsured with German companies, who appreciated the

value of this business; but all these contracts are cancelled, and the London market assumed a large share of the business.

Most of the companies have agencies in London, chiefly for the purpose of reinsurance business. The Rossia was the first to establish a branch office in England, and it also has a branch office in the United States at Hartford, Connecticut, where it erected its own building in the spring of 1914. The First Russian, the Moscow, the Northern, the Warsaw, the Salamandra, the Second Russian and the Jakor are also licensed to transact United States business.

In those cases where separate figures are given, the marine war risks section for 1915 is seen to have been decidedly profitable; 75 per cent of the liability is undertaken by the Russian government, the remaining 25 per cent being pooled among the companies.1

SUMMARY

It may therefore be stated by way of summarizing the effect of the war on marine insurance: first, that all the leading nations have found it necessary to grant, either directly or indirectly, aid in the insuring of war risks; second, this has not meant the absorption of the private companies, but on the contrary a cooperation with such companies, and in all probability a healthy competition which has had a marked effect in keeping down rates, and at all times stabilizing such rates, just as the governmental activities in relation to food supplies and certain important commodities in great demand on account of the war has had the effect of preventing violent fluctuations in their prices; third, the private insurance companies have in practically all the leading countries enjoyed a period of prosperity, and in many cases their financial returns have been in excess of that enjoyed in times of peace.

1

The Economic World, n. s., vol. xii, No. 14, p. 435.

V

THE EFFECT OF THE WAR ON FIRE

INSURANCE

It might seem upon first thought that fire insurance would be but slightly affected by the war. It is true that this form of insurance is not so directly affected by such disorganizing agencies as the submarine in marine insurance and the higher mortality in life insurance; yet there are certain disturbances resulting from the war which are common to all forms of insurance, and in fire insurance there are unfavorable factors peculiar to this form of insurance.

In recent wars, damage and destruction of property, in so far as fire insurance was affected, were largely confined to the immediate territory occupied by the hostile forces. The older plan and operations of war under which both the enemy and his lands were objects of destruction, had given way to the idea that the countries or nations alone were hostile and that the suppression of the military power of the nation was the end to be achieved in the conduct of the war. Under such a theory of what might ironically be called civilized warfare, the noncombatant and private property not in active use against the enemy were not considered proper subjects of attack, capture and destruction. Even principles of compensation for the taking of such private property by the enemy under circumstances of great need had some application. But the present great war seems to be, in its method of conduct, a reversion to the earlier state of lawlessness. Destruction of private property far removed from the regions of combat is common.

NEW FIRE HAZARDS

There have been, therefore, in operation not only the ordinary fire insurance hazards of warfare, but there has been introduced