657
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and other companies in places where, at the present time, the British company is not seriously challenged.'
"The Committee fear that any legislation on the part of the British Government which may have the effect of restricting the freedom with which British offices have hitherto conducted their business in the Far East, whether in regard to their selection of agents, or in respect to the firms to whom they may grant insurances, would be of no assistance whatever to the companies, but would, on the contrary, materially assist their chief competitors to extend their influence to the disadvantage of the British.'
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(6) MARINE INSURANCE. The following is a summary of the views expressed by the leading insurance associations in the Far East :—
Singapore. Very little competition existed before the war, and it is not expected that more serious competition will be experienced after the war. It is suggested that legislation should be introduced enacting that every company transacting fire and marine insurance business in the colony should hold at least 10,000. value of approved British Government Stocks. It is held that the introduction of such legislation would prevent small, unsound concerns from doing business, and would, at the same time, afford protection to native policy-holders. This suggestion is one which H.M. Government might consider after consultation with the Governor of the Straits Settlements.
Hong Kong -The Committee consider that no enemy subject should be allowed to enter the colony after the war.
The following suggestions are offered as affording a measure of protection against the competition of neutrals, and, so far as the terms of the Paris Conference admit, against the competition of Allies:-
(1) Legislation providing that British traders or insurance companies shall
insure and reinsure only with British companies.
NOTE. They suggest that this may need modification under the terms of the Paris Conference, and that the Local Companies Ordinance must be so amended as to prevent foreigners from forming companies registered under the Ordinance, and so becoming entitled to the designation "British."
(2) Legislation obliging British insurance companies doing business through
agents to employ only British agents ou Empire territory.
NOTE-They suggest that this may need modification under the terms of the Paris Conference.
(3) Legislation to provide for a special tax on all premia received by foreign
companies doing business on Empire territory.
NOTE. They suggest that this also may need modification under the terms of the Paris Conference; that the books of all insurance companies should be open to inspection by properly-appointed auditors, and that it should be obligatory that the books of all companies doing business on Empire territory should be kept in English.
The above suggestions are intended to be protective measures for British insurance companies and their agents. Inasmuch as British insurance companies in Hong Kong before the war had practically no competition to meet and held a predominant position, I contend that such protection is unnecessary and undesirable.
Shanghai --In a carefully considered memoranduma the insurance sub-committee of the Slinghai British Chamber of Commerce state that Chinese coastal business is practically all in the hands of native companies, while the overseas trade from China to Europe and America is controlled by British companies in China, London and the United States, and the rates are governed by the London market. As the financial position of British companies has improved during the war, the prospect of their being able to continue holding their own against the competition of non-British companies is decidedly good.
Before the war, agencies of British companies were freely offered to German merchant firms, and the heads of German firms were placed on local directorates for the purpose of influencing business. The sub-committee state that the future policy with regard to the employment of German agents, &c., will necessarily be governed by the position of German merchants in China. If German merchants enjoy the same shipping and banking facilities as before the war, they hold that no useful
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purpose would be served in prohibiting British companies from covering German cargo, although it is admitted that German merchants may possibly look askance at British policies in future if they are unable to collect the claims arising out of interned cargo.
The sub-committee very clearly state :-
"Insurance follows trade, and it would not appear to be to the interests of British companies that their business should be hampered by any artificial means such as legislation against insuring German risks. As long as German trade with China is allowed to be resumed on the old scale, British insurance companies would only be cutting their own throats by refusing to take the insurance. The keynote of the situation would appear to be banking and shipping facilities. By placing sufficient obstacles in the way of German shipping and banking, the German merchant in China is at once placed at a disadvantage as compared with the British merchant, with the result that more British business will come the way of the British insurance companies, and there will be no object in running after German agents to represent them.
After commenting on increasing Japanese competition and the unsatisfactory position of British insurance companies in Japan, owing to the inexperienced administration of the Marine Insurance law of that country, the sub-committee conclude by stating:-
"British insurance companies are confident that with a free hand they can hold the insurance on the bulk of the import and export trade of China." The Shanghai Marine Underwriters' Association somewhat naively state that. they find themselves "in entire agreement with the sub-committee on the point of being able to protect their own interests should it unfortunately be left to them to do so after the war, but they would insist that where such vital matters as finance. shipping, and insurance are concerned, every precaution should now be taken to hereafter impose restrictions, legally enforceable, upon those facilities which enemy firms undoubtedly enjoyed before the war.
I would endorse the views held by the insurance sub-committee of the Shanghai Chamber of Commerce, that it would not be in the interests of British companies that their business should be hampered by any artificial means, such as legislation against insuring German riske.
Kobe. The Kobe branch of the Foreign Marine Insurance Association of Japan state that their competition in the past has been solely from Japanese companies. When war broke out there were no German companies holding a licence from the Japanese Government to underwrite marine risks, and German shippers, finding themselves unable to cover their risks with British companies, were driven to insure with Japanese companies.
The Japanese companies have secured a stronger position during the war, and increased competition may be looked for in the future.
The only suggestion that is made is that it would seem advisable to keep a careful watch on Japanese legislation, lest any measure be introduced which would place British companies at a disadvantage in the matter of the deposit of funds or otherwise, and would prevent them from having an open field and fair treatment.
Yokohama. The Yokohama branch of the Foreign Marine Insurance Association of Japan anticipate increased competition after the war. They consider that the inconvenience and loss caused by the sudden breaking-off of business relations between enemy subjects time of war will cause all nations to see the advantage of insurance contracts being formed exclusively with companies of their own nationality, with the result that whereas formerly the British companies and underwriters handled the bulk of the insurance for all nations, the tendency will probably be for each nation to establish underwriting facilities for its own nationals all over the world.
They state that the Japanese companies will be greatly strengthened by the present prosperity of Japan arising out of the war, and that the help of the foreign companies, both as regards original insurances and reinsurance contracts, will be required to a lesser degree. They point out that whereas a foreign company has to pay a deposit (50 per cent. of its premium income with a minimum of 10,0001, deducting only reinsurances effected with companies registered in Japan) before being allowed to underwrite in Japan, a Japanese company may do business in the United Kingdom and the Crown Colonies without payment of deposit, and they consider that
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