1© Report on Insurance of British Shipping.—Part III. 
“ to make unduly large profits out of them, the evidence we have collected does not 
“ bear out this view. Nor has it been proved that in future wars the market would be 
“ so restricted or the rates so prohibitive as to necessitate interference by the State. It 
“ is impossible to give any estimate of what the rates are likely to be in any future war 
“ in which we may be engaged, or to state with any approach to exactness what the 
“ extent of the facilities would be. They will vary with the circumstances and the 
“ episodes of the particular struggle. That the rates will be sometimes high enough to 
“ handicap seriously particular trades must, we think, be admitted as probable.’’ While 
expressing great hesitation in offering an opinion of their own, they were (paragraph 56) 
“ inclined to believe that, though the market for war risks might be seriously restricted 
“ just before and after the outbreak of a great naval struggle, and though rates might 
“ be subject to violent fluctuations at such a time, yet that if our Navy did not sustain 
“ any serious reverse the market would expand and become steadier as. the situation 
“ developed, and that there is not sufficient evidence to justify the belief that private 
“ enterprise would be insufficient to bear the financial strain that is likely to be put 
“ upon it.” 
49. From the evidence submitted to us, we gather that the attitude of the insurance 
market towards the insurance of war risks has in recent years changed considerably. 
Not many years ago the war risk was included in the marine insurance policy without 
extra premium ; and a careful perusal of the evidence given by insurance representatives 
before Mr. Austen Chamberlain’s Committee gives the impression that at that time 
underwriters as a body looked favourably on those risks, and did not wish to part with 
the business. Now, some of the marine companies refuse to cover war risk, except for 
special customers; and many underwriters at Lloyd’s have adopted the same policy. 
Others, as one of the witnesses put jt, “hop in and out” of the market. One of the 
reasons given us for this change of view is that many underwriter's believe that, if they 
had to realise their securities in time of war to meet their losses on war risks, the severe 
depreciation in values would not in any way be compensated by the higher premiums 
they were receiving. 
50. At the same time, we were told that there is still, in times of peace and in the 
absence of war rumours, a sufficiently large market to deal with all the war risks 
offering. The premium charged is a nominal one compared with the usual normal 
premiums for marine insurance. When there are rumours of war the market contracts, 
but all war risk insurances offered can still be placed. The rates of premium rise, owing 
partly to the contraction of the market, and partly to the increased demand for war 
risk insurance ; but the rise is not very great as long as there is not much likelihood of 
this countiy being involved in war. If war was regarded as imminent, and this country 
was likely to be a belligerent, there would be little or no market; and the same 
conditions would prevail on the actual outbreak of a war in which this country was 
involved. 
51. At present very little cargo is insured against war risk. The estimates of the 
amount vary considerably : some say not more than 10 per cent, of the total, while one 
witness estimates it at something like 50 per cent. Nitrate of soda and specie are 
always insured against war risk, but practically no grain, or wool, or cotton. The 
increased demand for war risk insurance in times of t umours is stated to be mainly due 
to the requirements of bankers. 
The Insurance of Cargoes on Voyages current at the Outbreak of War. 
52. We have now to consider whether we are to recommend that the State should 
provide facilities for the insurance of King’s enemy risks on cargoes afloat at the time 
of the outbreak of a war in which we are a belligerent. It is evident that if such a war 
broke out suddenly, a great deal of cargo then afloat would not, under present conditions, 
be insured against war risk; and it may be argued that if the State is providing for the 
insurance of war risks on ships afloat at that time, it ought in equity to provide similar 
protection for cargoes. Otherwise the owners of uninsured cargo on ships, which will 
continue their voyages under protection of the Club policies extended as recommended 
in Part II, paragraph 17, may find themselves compelled to run uncommercial risks 
which may prove uninsurable except at prohibitive rates. We felt the force of this 
contention, and gave therefore the fullest consideration to a number of proposals that 
were put before us. 
53. It was suggested that the State should undertake to make good to cargo- 
owners, without premium, 80 per cent, of the invoiced value, leaving the remaining 
20 per cent., together with the estimated profit, shipping charges, &c., to be covered in