accepted on behalf of a large number of underwriting syndicates and also of two insurance companies. It was recognized that aviation insurance required close study and that one or two underwriters who could give the necessary attention to it could expect to be more successful than those who tried to transact it in addition to many other forms of insurance. The principle was also adopted by many of the leading insurance companies.
Weather insurance was being developed by underwriters at Lloyd's before the war. It was transacted in connexion with the business side of amusements and also in connexion with the spoiling of holidays by wet weather. Naturally little business of the kind was transacted during the war. Yet the importance of the weather upon world affairs was demonstrated again and again during the war. Operations on the western front were frequently affected by the weather, and there is no doubt that the Germans were successful in forecasting it. The battle of Jutland was also affected by “low visibility.”
With the resumption of peaceful activities great progress was made with weather insurance. In 1919 the ground was being prepared and a very large amount of data was collected, tabulated and employed respecting the experience in the United Kingdom for many years. In 1920 the volume of business of the kind transacted in the United Kingdom was on a large scale. Insurances were taken out to cover losses due to a falling-off in gate receipts, and to losses of caterers at open-air amusements such as race meetings, cricket matches and regattas. The summer of 1920 in the United Kingdom was wet, and the underwriting experience there was very unfavourable. The business was gradually being extended in foreign fields and the profits which were earned in other countries were believed to have just offset the losses suffered in the United Kingdom. The bulk of the business which had been transacted at Lloyd's was transferred to a leading insurance company, and it was known that the company was satisfied for losses to be on a substantial scale in 1920, because these demonstrated the utility of the business. At one time weather insurance was regarded as a somewhat frivolous form of business, but its importance came gradually to be recognized. It has been realized that there is an immense field open for insurance in connexion with the risk of damage to crops by bad weather. This is a form of business in which large sums of money could easily be lost, and prudent underwriters proceed somewhat carefully with it.
Credit insurance has long been transacted in the United Kingdom by a limited number of underwriters and insurance companies, and in 1920 and in 1921 it was hoped that the principle might be applied to overcome the difficulties caused by the collapse of the credit of some countries especially hard-hit financially by the war. A number of discussions took place between representatives of the Government, banks and insurance companies, but the problem was felt to be beyond the power of the insurance companies generally to solve, and, while the offices showed sympathetic interest in the different schemes discussed, they did not, as a whole, give practical support.
The Insurance Institute movement has developed notably in recent years. It dates back to 1873, when the Insurance Institute of Manchester was formed. The example was quickly followed in other leading centres in the United Kingdom. At the invitation of the council of the Insurance Institute of Manchester the various institutes were asked to send delegates to a meeting held on March 12 1897, at which the decision was taken to form an association to be called the Federation of Insurance Institutes of Great Britain and Ireland. The objects of this federation, as set out in its constitution, were to encourage the study of all subjects bearing on any branch of insurance, to promote the technical education of junior insurance officials, and to do such things as might be deemed desirable to advance the welfare and efficiency of the insurance profession. A scheme of examinations was inaugurated in 1899, which has steadily been developed. The Insurance Clerks' Orphanage was also the outcome of the Institute movement, and has done splendid work amongst the dependents of insurance officials throughout Great Britain. A journal has been published annually since 1898, and the 22 volumes now in print contain papers on all subjects cognate to insurance business. In 1912 the federation received a Charter of Incorporation. The objects of the new Chartered Insurance Institute were set out in 14 clauses, of which the first reads as follows:—
To provide and maintain a central organization for the promotion of efficiency, progress, and general development among persons employed in insurance business, whether members of the Institute or not, with a view not only to their own advantage, but to rendering the conduct of such business more effective, safe, and scientific, and securing and justifying the confidence of the public and employers by reliable tests and assurances of the competence and trustworthiness of persons engaged in such business.
In June 1921 the membership of the Chartered Insurance Institute approached nine thousand. The membership included that of 30 local institutes in the United Kingdom. In addition, seven institutes in British dominions overseas were affiliated to the Chartered Insurance Institute, namely, those of the Cape of Good Hope, New South Wales, South Australia, Western Australia, Victoria, Toronto and the Transvaal. Primarily, the Chartered Insurance Institute is an examining body, and its present curriculum includes all subjects under the headings of fire, life, accident and marine insurance. For the examinations held in 1921, applications were received from 2,530 candidates, who entered for upwards of 12,000 subjects. Simultaneous examinations were held in 43 different centres throughout the United Kingdom. The council decided in 1921 to extend their operations in this connexion throughout the world. The diplomas of the Institute are sought after, and a fellowship diploma, secured as the result of an examination, may well be regarded as a hall-mark of proficiency in insurance business.
United States
Insurance in the United States during the years 1910-21 developed along lines of increasing adaptability to the needs of policy-holders and solidified its standing as an essential and reliable financial instrument.
Extent.—In practically all lines of insurance the figures show a remarkable increase in extent and variety of risks carried under insurance contracts. This resulted from the need to provide for hazards not previously covered, from the general expansion of business, from the increasing recognition of the desirability of insurance of all kinds as a means of reducing personal and business risk, and from an increased activity on the part of insurance carriers in providing new forms of coverage. There was also considerable activity in the organization of new companies by interests which had formerly specialized in fire or casualty insurance and thus became enabled to offer coverage in all fields with the exception of life.
Effect of the War.—The World War affected in greater or less measure all forms of insurance. The seriousness of the resulting problems varied in proportion to the intimacy of the connexion between war hazards and particular kinds of insurance. The insurance business as a whole was affected by war inflation and subsequent deflation, leading to increased expenses, increased taxation, depreciation of securities, increase in interest rates, fluctuating property values, and marked changes in the moral hazard. During the period of inflation there was a general tendency to increase the volume of business, with an improvement in the moral hazard, as it was distinctly contrary to the interests of policy-holders to have losses. With the period of deflation, decreasing values and less intensive industrial activity, insurance companies were confronted with a large volume of insurance on depreciating property values. At the same time there was a decreased interest on the part of policy-holders in avoiding losses. In many cases it became profitable to collect insurance rather than to preserve the values insured.
In certain lines the increased volume of business and apparent prosperity of insurers led to the organization of many new companies and the introduction of inexperienced personnel. Subsequent events tested these new organizations and in many cases caused their disappearance.
The extreme depreciation of securities might have caused
