The Insurance of Cargoes. 
15 
is doubtless the requirement of bankers at the foreign or colonial ports that, before 
negotiating the drafts drawn against a shipment, they must have documentary proof 
that the marine insurance on the goods has been properly covered. We have already 
indicated that the State office must require the production of the marine insurance 
policy on the goods as evidence of values, and although there will be no necessity to 
produce this document when the State insurance for war risk is originally arranged, it 
will probably follow that, as a matter of convenience, most marine policies will, during 
time of war, be issued in London. How will it then be j)ossible to satisfy the banker at 
the port of shipment abroad that either the marine insurance or the war insurance has been 
properly covered ? We admit that this is an administrative difficulty which will in the 
beginning be the cause of some friction and delay; but we refuse to believe that 
a satisfactory way out of the difficulty will not be found by the parties concerned. It. 
cannot be expected that everything will run as smoothly immediately after the outbreak 
of war as it does in times of peace. 
83. We may add that, for the protection of bankers and others who may be 
holders for value of shipping documents, we have inserted in the State policy a provision 
that a breach of the warranty regarding the movements of the vessel carrying the 
goods shall only become operative as against the cargo-owner, provided that such 
breach has happened with the connivance or assent of the holder for the time being of 
the State policy, or of the persons seeking to enforce the policy. 
84. Mr. Austen Chamberlain’s Committee were much impressed with the 
administrative difficulties of working the State insurance of cargoes through a single 
Government office, and quoted in their report the statement of an underwriter that in 
peace time from 50,000 to 100,01)0 policies were issued every day in London alone. A e 
believe these figures are very much exaggerated. There are in London some thirty 
companies transacting marine insurance business of importance; and we were told that 
the average number of policies issued by each of them would be from fifty to a hundred 
a day. If we assume much larger figures for Lloyd’s underwriters, it is difficult to 
believe that the number of policies issued daily in London can exceed 10,000, and it is 
probable that a large number of these policies refer to the same shipment, since the 
larger risks are usually spread through the market. The State war risk policy will 
cover the whole shipment, and therefore the number of policies which the State office 
might have to issue would probably be substantially less than 10,000, even if the trade 
of the country suffers no diminution in consequence of the war. Nevertheless, the 
number of policies is likely to be a formidable one to contemplate being issued from one 
office daily. We do not indeed wish to minimise the difficulties of establishing and 
administering the State office. We realise that they will be very great; but we are 
assured that, with the cordial co-operation of the insurance market, they will not prove 
insuperable. 
85. We have already indicated that a Board of Advisers will have to be established 
to assist the Government both with the administrative work of the State office and 
with the settlement of claims. We are inclined to think that one hoard should be 
sufficient to deal with these matters; but it may be found necessary to have two 
separate boards with separate functions. In any case, there should be representative 
underwriters and average adjusters on these boards, together with one or two 
representatives of the Government. 
86. We recommend that one of these boards should be appointed at once with 
a permanent secretary. Its first function will be to fill in all the details of the 
organisation of the State office, so that it may come into being at once when required. 
These details will require constant revision, as the personnel from which the staff of the 
State office will be selected will be constantly changing. The details of insurance 
business will also change in course of time, and many improvements in organisation may 
suggest themselves, which it would be wise to adopt. 
87. Another important function of this board will be the following: We under 
stand that there are special standard clauses in marine policies covering certain articles 
such as meat, timber, wheat, and nitrate of soda, which have been settled after years of 
experience and negotiation between assurers and assured. These clauses define clearly 
he risks of the voyage which the underwriter insures against, and those other risks 
which have nothing to do with the perils of the sea or of war, and which therefore 
remain at the risk of the cargo-owner. But these and other clauses and conditions in 
marine policies are constantly being altered ; and it is essential, in our view, that a 
committee of experts should revise these clauses periodically in the interests of the 
mte, and settle from time to time what the standard clauses are which the State will 
assume to be included in marine policies when it is called upon to cover the war risks 
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