NETHERLAND

WAR RISK

INSURANCE

ACT

By Assistant Commercial Attaché Rolland Welch, The Hague

Effective May 1, 1939, the Netherland Government has issued a decree containing regulations for the execution of the so-called War Sea and Air Navigation Insurance Act 1938. This law, along with 7 other emergency laws, was issued in the critical days of September 1938, when a European war was seriously threatening. These laws, being emergency measures, have been extended to July 1, 1939, and will no doubt be extended beyond that date. The text of this law may be found in Staatsblad No. 639, September 30, 1938. It contains authorization for the government to enter into reinsurance agreements with Netherland underwriters against war risks (molest) as well as ordinary transportation risks. The reinsurance does not only cover Netherland sea vessels and airplanes, but also merchandise contained in Netherland or neutral foreign sea ships and airplanes in which Netherland interests are involved, and goods stored in foreign countries with Netherland destination. The law makes the following provisions:

The risk of the Government may not be greater than 19 times the amount of the risk which is borne by the original underwriter for his account.

The premiums of the original insurance may not be lower than a percentage or an amount to be established by the Minister of Economic Affairs.

The Minister has the right to establish certain conditions under which the original insurance must be contracted for. Further, the Minister of Economic Affairs is authorized to reinsure the risks assumed by the government of The Netherlands.

The regulations issued by the Minister of Economic Affairs on the basis of the above act, which are explained in some detail below, came just in time to take away the handicap which Netherland shipping experienced after the establishment of the British "War Risk Pool." For instance, for the important route British India Great Britain, the premium for the so-called "King's Enemies Risk" was only onefourth of 1 percent, whereas all other risks involved as a result of war conditions could be insured at the same time at an additional premium of one-fourth per mille. However, for goods transported from The Netherlands to the Indies, and from the Indies to The Netherlands, shippers in The Netherlands had to pay 18 percent and 2 percent respectively for the same risks. Given as a definite example, was a shipment of Lancanshire cotton goods, which the British exporter could cover in total for 2 per mille; the same goods transported by Netherland vessels had to pay a premium which was more than 6 times higher, namely 1 percent. Therefore, Netherland interests appealed to the government, which appointed officially 2 competent delegates, namely the firms Jan ter Meulen, at Amsterdam, and R. Mees and Zoonen, at Rotterdam. Business circles formed a committee of advice, to assist the Minister in the execution of the law. After various discussions in the Ministry of Economic Affairs in which all interested circles participated, the decree above mentioned was issued. The wish of both government and businessmen to try to make business function as nearly normal as possible, was taken as a basis for the executive measures, from which the principal provisions have been derived.

REGULATIONS

Attention is called to the distinction made between insurance and reinsurance: In Article 2 it is stated that insurances and reinsurances shall be concluded through the official delegates, who, according to Article 3, shall always have the right to refuse without stating any reasons, with the exception of ships which should be required by the government in case of war; these shall always be

insured.

Article 5 provides that the conditions and customs prevailing at the exchanges in Amsterdam and Rotterdam shall be followed insofar as possible.

The minimum premiums and the s, ecial conditions shall be established by the Minister of Economic Affairs after consultation with the delegates and the advisory committee, until later revision. If a vessel insured does not undertake the trip within the period established by the delegate, or goods insured are not shipped or stored outside the country within that period, an extension of the risk may be accepted by the delegates against a special premium to be designated by them. In extraordinary circumstances the Minister may increase the premiums within these designated periods, also without consultation of the committee. The rates and the revisions will always be communicated to underwriters, brokers, and others in time. This is set forth in Article 6.

INSURANCE OF VESSELS

With respect to insuring ships, it is stated that insurances may be concluded to maximum the amounts against which the vessels have been lastly insured against the ordinary transportation risks. If any ship has not been insured against the ordinary transportation risks, and the owner appeals for insurance with the government, the maximum amount of the insurance to be contracted for, including the proprietor's own risk, shall be established by the delegates for each case individually. If, in the owner's opinion, the value of any ship is higher than that against which it was lastly insured, the delegates may increase the insurable sum at the owner's desire. These provisions which are found in Articles 7, 8, 9, and 10, apply to both sea and air vessels.

With respect to the amount involved in the insurance of merchandise, against war risk, this may also not be higher than the amount at which the goods were insured against ordinary transportation risks. If such ordinary insurance did not exist, the rule will be that the maximum which may be insured will be the amount of the invoice, including freight to destination, expenses and insurance premium increased by 10 percent. This is established by Article 11.

Article 12 states that the premiums due to the government are collectible immediately. They are payable to the Netherland Bank, countersigned by the delegates. For reinsurance of goods the settlement may be fixed by month. All reinsurances concluded during any 1 month must be settled within 30 days after expiration of that month. The delegates have signing power in the name of the government, of all documents involved.

According to Articles 15 and 16 all underwriters wishing to be dmitted for reinsurance with the government should apply to one of

the delegates with full information as to the amounts involved. The Minister may refuse or admit any underwriter at his discretion.

Articles 18, 19, and 20 regulate the damages emanating from any reinsurance and the obligation of the reinsured people under such conditions. After the claims have been approved by the government the latter has the right to pay in terms against 4 percent interest per annum, but the total amount of the claim must be paid within 6 months after approval of the claim.

In Article 21 it is stipulated that the Minister shall establish the brokerage or commission which underwriters shall have to pay from their gross premiums to the brokers and agents. The Minister shall also establish reinsurance commissions which the underwriters will receive from the net premiums. It is forbidden to make any payment in any form whatsoever from the brokerage or commission first mentioned. Neither may the underwriter allow any part of the premiums due to him in addition to the above-mentioned brokerage or commission in any form whatsoever; in case of violation, exclusion from reinsurance may follow for the man or firm involved.

Article 22 and 23 deal with direct war risk insurance with the government, for which only the services of recognized insurance brokers or similar middlemen will be accepted, who have been engaged in this business for at least 3 months preceding the period during which the law has been in effect. Also these persons may not deduct anything of the established premiums or brokerage for payment to third parties. Damages are settled in a similar way as described

above for the reinsurance.

Articles 24 to 29 concern settlement of controversies, which should first be settled amicably, otherwise by 3 arbiters, or, finally, by the judge.

According to Article 14 the Minister of Economic Affairs has the right to change all of these provisions after consultation with the government delegates and the advisory committee. Such revisions will be made public.

On

May 5, the Netherland press announced that the government delegates, the firms of Jan ter Meulen and Company, at Amsterdam, and R. Mees and Zoonen, at Rotterdam, had published the following premiums and conditions on which the government would assume reinsurance of war risk (molest) for Netherland seaships and merchandise:

PREMIUM TARIFF NO. I

INSURANCE OF NETHERLAND SEA VESSELS

This tariff is valid until revision or cancellation provided, so far as insurance per trip has been concluded, the ship starts the insured trip within 7 days after the conclusion of the insurance. The insurance of war risk (molest) occurs according to Amsterdam and Rotterdam conditions and customs. The insurance is exclusively accepted for amounts in Netherland currency. Vessels sailing already could be accepted only up to and including May 10. The premiums given are per month for the categories A, B, and C, and per round trip for the remainder. The Minister of Economic Affairs reserved the right to terminate the insurance intermittently, if political conditions give him reason to do so. In that case the risk will terminate upon arrival in the first safe harbor. The schedules follow:

(a) For sailing in the territory of European West coasts up to the North Cape, including Great Britain, Eire, Denmark, Sweden (not eastward of Trelleborg), Germany (not eastward of Swinemunde): threefourths per mille;

(b) White Sea and neighboring ports, such as Onega-Mesame, including the ports eastward of North Cape; the Baltics including the ports in the Bothnian and Finnish gulf not falling under (a), seven-eighths per mille;

(c) Trips in time charter in the territories (a) and (b). the

same premiums as given in (a);

(b)

not

(d) Other ports in Europe, not included in the (a) and territories, as well as North-African and Minor Asian ports: 1 eastward of Malta, 1 per mille (per round trip); 2 the other ports in this territory, 1 per mille;

(e) West Coast of Africa, seven-eighths per mille;

(f) South and East Africa: 1 there and back via the Cape, 1 per mille; 2 one time via the Cape, and one time via Suez, 1 3/8 per mille; 3 there and back via Suez, 14 per mille;

(g) Iraq, Iran, India proper and Ceylon (via Suez), 1 per mille; (h) Further India, Burma, Gulf of Bengal, Netherland Indies, Straits Settlements and Federal Malay (via Suez), 21 per mille, for mail boats 1 per mille;

(i) Australia: 1 there and back via Suez, 2 per mille; 2 there and back via the Cape, 2 per mille; 3 one time via the Cape, and one time via Suez, 24 per mille;

(j) Far East, eastward of Singapore there and back via Suez, 29 per mille;

(k) East coast of North America and Canada, seven-eighths per

mille.

(1) Ports in the Gulf of Mexico, North Coast of Central America, North Coast South America, including the West-Indian Islands, 1 per mille;

(m) East Coast of South America, 1 per mille;

(n) West Coast of North America and West Coast of South America via Panama, 1 per mille;

(o) For one sailing through the Mediterranean from Gibraltar to Suez or vice versa, both ports included, with liberty of stopping 48 hours in a Mediterranean seaport, three-fourths per mille; for each other touching port of Mediterranean, 10 percent premium increase.

PREMIUM TARIFF NO. I. MERCHANDISE INSURANCE

This tariff is valid until further revision or cancellation, provided the ship departs within 30 days after the conclusion of the insurance or the making of a declaration under a contract-policy. This tariff is valid for insurance of the war risks (molest) according to Amsterdam and Rotterdam conditions and customs. The insurance is concluded exclusively in Netherland currency.

It concerns exclusively the insurance of merchandise (not including stocks and other money values) to and from The Netherlands. Goods on so-called option Bills of Lading are not insured, excluding grains and seeds, in the understanding that the risk for grains and seeds shipped on option Bills of Lading shall terminate, as soon as it has been decided that the goods will be unloaded elsewhere than in The Netherlands.

Sailing parcels can only be accepted up to and including May 10. The Tariffs are:

1. For trips oversea between ports or places in The Netherlands, three-fourths per mille;

2. For The Netherlands to the East Coast and the South Coast of Great Britain up to and including Southampton, vice versa, 1 per mille;

3. From The Netherlands to Belgium and Northern France up to and including Cherbourg, vice versa, 1 per mille;

4. From The Netherlands to other ports or places in Great Britain beyond the limits mentioned before and to Scotland and Eire, vice versa, 1 per mille;

5. From The Netherlands to the Continent, other than abovementioned, situated between Bordeaux and Denmark, as well as Iceland, Norway and Sweden, not more eastward than Malmo, vice versa, 11 per mille;

6. From The Netherlands to the Atlantic ports of the United States of America and Canada, Gulf ports, West Indies, Surinam, vice versa, 1 per mille;

7. All other trips to and from The Netherlands, 2 per mille; 8. For ports to the Far East northward of 20 degrees northern latitude, excluding Haiphong, 14 per mille.

This risk of strikers' molest according to Amsterdam and Rotterdam conditions is also covered by the above-mentioned premiums. However, for shipments to and from China, Hongkong, and Palestine, the strikers' molest there before on board or after unloading from the sea vessel is not included. If conclusion of strikers' molest is not desired, the premiums mentioned under 2 to 7 will be decreased by one-fourth per mille.

For gold shipments, only 50 percent of the above premiums have to be paid.

No special premiums have so far been given for the insurance of air vessels.

LIBRARY

DIVISION OF COMMERCIAL LAWS

BOOKS RECEIVED

Reviews and Journals: Institute of International Finance of New York University, May 1939; The Guaranty Survey, May 1939; The American Law Institute, Restatement of Torts, Property and Security, (Groups 1 thru 6) 1939; Harvard Law Review, June 1939; Revista Del Colegio De Abogados de Buenos Aires, MarchApril, 1939; Journal of the American Judicature Society, June 1939; Juris-Classeurs, May-June 1939; Documents Administratifs, 1939; La Semaine Juridique, May-June 1939; La Informacion, April 1939; Export Trade and Shipper, June 1939; The American Agency Bulletin, June 1939; Commercial Law Journal, June 1939.