14 
Report on Insurance of British Shipping.—Part HI. 
x 
A 
case of cargoes we recommend tlie adoption of a fiat rate for all voyages, irrespective of 
the risks involved. But we recommend that this flat rate should be subject to variation, 
up or down, within a maximum of 5 per cent, and a minimum of 1 per cent. In order 
to facilitate business, the State office must be authorised to accept risks for provisional 
insurance at the current fixed rate for a certain period—say, fourteen days—before 
actual shipment takes place. If on any day following an acceptance and before the 
commencement of the risk the State should alter its fixed rate up or down, the risk 
accepted will be hiyding on both parties at the original rate. 
75. We admit that it can be argued that a flat rate will in some cases involve a 
hardship, and appear unfair to particular voyages, hut, on balance, we think that it will 
work out fairly for all shippers. It must be remembered that if the war risk on a 
particular voyage is very slight, the open market will probably be willing to take it at a 
lower premium than that charged by the State; or, alternatively, the owner of the 
cargo may in that case elect to run the risk of capture himself. 
76. Nor do we believe that the charging of lower rates for less hazardous voyages 
would be found in practice to benefit the consumer. Assume, for instance, two cargoes 
of grain coming to this country from Odessa and Philadelphia respectively. If the 
Odessa cargo were charged a premium of 4 per cent, and tbe Philadelphia cargo only 
2 per cent., we are of opinion that the price to the consumer in this country (provided 
that the Odessa cargo is essential to maintain our food supply) would be based on the 
higher premium, and the advantage of the lower rate go to the importer. 
77. Apart from these considerations, the administrative difficulties connected with 
the issue of policies would be immeasurably greater if the rate for each risk had 
to be separately considered, and many of them referred to the Advisory Board for 
adjudication. 
78. R is possible that under this arrangement the State will get all the bad risks 
and the market all the good ones, when once the market is again working. This is 
quite true, but then we recognise that the main object of the State will be not to 
compete with the insurance market, but only go secure the continuance of voyages after 
the outbreak of war, which might be arrested owing to inability to cover insurance against 
King’s enemies. It will not mind, therefore, if' it does little business in war risks so 
long as these risks are being covered elsewhere. 
79. We propose that the State insurance of cargo shall be confined to vessels 
insured by the State. The State will thus have the power under the hull insurance 
policies to stop voyages, if it considers them unduly hazardous, and in this way will be 
able to avoid losses in respect of cargoes the prompt arrival of which is not essential to 
the community. 
80. We understand that practically all insurance is effected through brokers, who 
receive a brokerage of 5 per cent, on the premiums. For this purpose the premiums 
quoted are in guineas, the broker receiving the shillings as his remuneration. We 
suggest that the same practice shall be adopted by the State office, the premiums 
being treated as net premiums, and therefore not subject to discount. 
81. With regard to the ownership of cargo, this question was gone into 
thoroughly by Mr. Austen Chamberlain’s Committee, who came to the conclusion 
that it was impossible to impose any effective restrictions as to the nationality of 
the owner. It is, to begin with, very difficult to sav who is, at a given moment, the 
actual owner of any cargo afloat. Such cargo may change hands twenty times during 
the course of the voyage. Again, if an attempt were made to distinguish between 
British and foreign-owned goods in British bottoms, it would soon be found that all 
goods shipped in such vessels were British goods. We do not, therefore, propose 
to suggest any restriction for State insurance on the ownership of goods in British 
vessels, except, of course, that we exclude enemy goods. Nor do we propose to suggest 
any discrimination between different classes of goods or between different voyages. It 
may be argued that shipments of American hosiery from New T York to Buenos Ayres 
in a British vessel cannot have any practical interest for us in time of war. But this 
vessel, when she arrives at Buenos Ayres, is available to carry foodstuffs back to this 
country ; and if, for want of facilities for insurance of war risks, that voyage was not 
undertaken, a link in the chain of communication with this country would be disturbed, 
if not broken. It is, in our opinion, just as essential for us that these cross voyages 
should be maintained, as far as possible, in time of war as it is that the movement of 
shipping direct to and from this country should not be interrupted. 
82. This brings us to the consideration of an important point in administration. 
At the present time many marine insurance policies are issued, on behalf of British 
underwriters, at the port of shipment of the goods abroad. One of the reasons for this