p.2 Marine Insurance - Last year the Canadian Marine Insurance Companies adopted a higher tariff than that which had been acted upon previously, but in consequence of the general dissatisfaction expressed by ship-owners, and the want of co-operation on the part of the American companies doing business on our inland waters, the new tariff was, after some delay, abandoned, and the old one acted upon. This year, however, the Americans have moved on their own account, and as will be seen by an article elsewhere, the tariff which they have adopted for 1855 is in some particulars much in advance of the one objected to last year. There can be no doubt, however, that the severe losses sustained by the Underwriters during the last three years have rendered necessary the steps which has just been taken, if the business of Marine Insurance is to be continued with anything like mutual advantage.
Lake Insurance - The New Rates
As something a little more explicit than what has heretofore been published upon the subject, and as an exhibit of the reasons which induced the late Convention of Underwriters to advance their rates of insurance on hulls and cargoes, we give the following from the pen of a correspondent of the Cleveland Herald, who appears to speak "by authority":-
The underwriters were convinced that the rates charged by them were inadequate to the risks incurred, owing mainly to the increased size in the sail and steam vessels built within the last three or four years. Formerly, vessels carrying seven thousand bushels of wheat were deemed as large as the depth of water in our various lakes and harbors would permit with safety in bad weather. This class of vessels, when stranded on a beach free from rocks, could be got afloat at a small expense, very frequently not exceeding three or four hundred dollars, and sometimes not half those sums. The repairs consequent upon their stranding were so trivial, that frequently they did not reach the necessary average to make a claim on the insurances. Other disasters to them bore a like proportion.
This class of vessels have been rapidly giving place to vessels carrying from fourteen to upwards of eighteen thousand bushels of wheat or corn, and as they must necessarily be constructed with reference to the water in our harbors, they cannot have the same strength as smaller vessels. It costs more than quadruple former expenses to get such vessels off the beach, and at least the same increase in their repairs. Knowing from past experience that large vessels cannot be profitably insured at the rates for smaller vessels, the Underwriters have made a discrimination in the rates of premium. For the year 1855 they will charge for the business season commencing April 1st, and ending noon November 30th,
On sail vessels less than 200 tons, 6 1/2 per cent.
" 200 and less than 300 " 7 1/2 "
" 300 and less than 400 " 8 1/2 "
" over 400 tons, 9 "
No discrimination has heretofore been made in the size of sail vessels, and 5 1/2 per cent has been charged for the season.
It is admitted that a satisfactory profit was made in past years at 5 1/2 per cent for sail vessels of less than two hundred tons, but the increase in the number of vessels now navigating the lakes largely increased the danger from collision, whilst labor and materials are very materially enhanced, making repairs as well as removal from the beach much more expensive. To meet these two points, one per cent additional is charged on the small tonnage, which is believed by the Underwriters to be barely equal to their increased hazard and expenses. There was no dissenting opinion among them that they would rather take vessels of less than two hundred tons at 6 1/2 per cent than any other of the grades with the rates named for them.
The favorite rig of vessels on the lakes is schooners, and they are consequently much the most numerous. From sundry tables which have been placed before us we extract the following losses by disasters to schooners in the years named:-
The returns for the year 1854 are not yet completed, but they are known to far exceed any previous year. The number of schooners meeting with the various disasters to which they are liable to in our lake navigation, were as follows in the years named:
1849 49 Schooners damaged or lost.
1850 96 "
1851 150 "
1852 120 "
1853 150 "
1854 175 " (estimated)
The next important change made is in the advanced rates on Steamboats and Propellors. A large proportion of the value of Steamboats has, as a general rule been uninsured, and the interest therefore centres in the Propellors. When they were first adopted on our lakes, their tonnage was small, ranging from 200 to 250 tons, and being a new invention in navigation, the masters of them felt the necessity of untiring watchfulness. By their prudent management they were eminently successful in avoiding loss, and for a time they were in great favor with the Underwriters, some making a discrimination of one per cent, in their favor over sail vessels, by the season. Use gave confidence, and they have been gradually enlarged, until they now rival in tonnage the steamboats of half-a-dozen years ago, say 800 tons. The increased tonnage has not brought with it increased strength, and in place of models which should resist successfully our worst storms, we have an unwieldy mass of planks and boards, artistically made to show to advantage, but totally incompetent to battle successfully with gales. In the last year, seven was totally lost by weather and collision, and two by fire. Built for the purpose of carrying the largest amount of cargo, with a light draught of water - stowing very frequently more than half their cargo on the main deck - they present the anomoly in navigation of an ark with ten feet below water line, and some twenty feet of plank and weather-boarding above the same line. Some of them are known to have rolled over, becoming a total loss, and the wonder is that many more have not perished in that way in our heavy gales. The common practice now of building with single wheels, makes it impracticable to give reliable security to the rudder, and such is the hazard from fire, from the open spaces on the main deck, which cannot be closed in a gale, and their great exposure from their lofty upper works, that every Underwriter present felt the unavoidable necessity of materially raising the rates, increasing them in proportion to their tonnage. The following table shows the losses by sail and steam in the years named:-
1846 1850 1851 1852 1853
Steam 185,900 281,700 348,700 626,650 520,850
Sail 155,350 262,740 381,815 364,365 533,500
The table of losses for steam in 1854, is not yet completed, but it is known to far exceed any previous year. The returns to the Secretary of the Treasury to June 30th, 1853, show the tonnage of the Western Lakes to be 166,154 tons sail, 86,336 tons steam. Your commercial readers are aware that on Lake Ontario and Lake Erie, our largest and most valuable steamboats carry little or no cargo, and they will bear this in mind in comparing the losses by steam and by sail.
The rates of premium fixed by the Underwriters on Steamboats and Propellers, are:-
Less than 400 tons, 8 per cent, from April 1st to Nov. 30th.
400 tons and less than 600 tons, 9 per cent, " "
600 tons & over, 10 per cent " "
The next important change made is not to extend any Hull Policies after the 30th November at noon. Many vessel owners think with the underwriters, that it is to their mutual interest to close the business at that time, for shippers being aware of the rule, will be anxious to get their property forward earlier in the season, and there will consequently be an earlier advance in the rates of freight. The losses every December far outstrip the premiums received for the risks, and the high rates of wages paid to seamen and other advanced expenditures leave less profit to vessel owners than is generally supposed.
The losses after November 30th, are known to be:-
1854 (est'd) 700,000
The advance on cargo rates has been principally in the months of April or November for the Lakes at large; and a general advance on all cargoes of produce throughout the business season from Lake Michigan ports. The latter advance was caused mainy by the well known defects of the large sized vessels employed in the trade. It was repeatedly stated at the Convention, that in April and in the Autumn months, a large majority of the vessels laden on Lake Michigan, discharge their cargoes at Buffalo under Protest against damages from the weather.
To guard against over insurance on Hulls, which makes it to the interest of the owner to abandon under any plausible pretext, the Convention resolved to limit the insurance as follows:
Sail vessels worth less than $5,000, insure 2/3 value.
" worth $5000 and less than $12,000, 3/4 value.
" worth $12,000 and upwards, 5/6 value.
Various other matters were acted upon by the Convention, but as they are deemed of minor importance to ship owners and shippers, we omit them, having already extended this article beyond our intention; but the importance of the subject to a large class of your readers, we hope, will be sufficient apology for the space we have occupied.