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for the amount he intends to write, that document will assume
the following appearance:
Form of Slip.
The slip, when signed, will be retained by the broker, but the particulars contained therein will be at once entered by the underwriter in his Risk Book, a ruling of which is shown on the adjoining page.
The signing of the slip is provisional, and in no way completes the contract, which does not become legally perfect until the signing of the policy. Between these two dates, which may be separated by varying periods of time, not only may the amount agreed to be written be increased or reduced, but also the rate itself may be altered. It follows, therefore, that the entries in the Risk Book must also be provisional; and, in fact, this book contains only memoranda, and does not in any way form part of the double-entry. For this reason, it will be observed that the separate risks intended to be written for each name are not differentiated, the Risk column only containing the total amount which the underwriter agrees with the broker to write.
2 March 1903.
In spite of the tentative nature of the slip, however, in the event of a loss occurring before the policy is signed, it is customary for underwriters, as a matter of honour, to at once sign a policy, just as if no loss had occurred, and then settle the loss when the documentary proofs come to hand in the usual way. No underwriter could refuse to recognise his own signature on the slip, unless he could at once charge gross fraud on the part of the broker.
s.s."Nymph" Quebec U.K. Timber I.&O. W. F. & Co. Nov. 20 100
Though this book does not form part of the double-entry, it is exceedingly valuable from a statistical point of view, and is essential to every underwriter in one form or another. The purpose of it is to afford a scientific classification of every risk into geographical divisions, and to record the history of every risk from its commencement to its close.
There are many forms of this book, more or less complete, in use among underwriters. The one annexed may be said to combine both practicability and usefulness.
6 Gns. 37
The book is divided up into a number of sections, on the principle of an ordinary Address Book, the place of letters being taken by geographical divisions-e.g., Coasting, North Sea Out, North Sea Home, Baltic Out, Baltic Home, France and Spain, Mediterranean, &c. These divisions, however, will not be the same in all cases, varying in number and designation according to the convenience of each underwriter, and the nature and extent of the business he transacts.
The space accorded to
each division will vary similarly. All risks other than ordinary
The entries in the first three columns are made from the Risk Book, and the date entered will be that of the signing of the slip. The Risk and Premium columns will only be filled up after the signing of the policy, and will be entered from the Premium Book. The remaining columns will also be entered up from the respective books named in the Folio columns.
It will be seen, therefore, that when the transactions in respect of any one risk are completed, the whole history thereof is displayed in a single line of this volume; and it follows that, by analysis, extremely valuable tables of statistics can be compiled. Moreover, the geographical divisions allow the underwriter to ascertain the nature and course of the voyages that are, taken on the average, profitable or the reverse to him.
Premium or Signing Book.
This book, a form of which is annexed, records the completion of the risks, and the premiums that become due to the underwriter thereon. It is usual for this book to be of a small size, and frequently several are required to contain the transactions of any one month. In no case is it desirable to record more than one month's transactions in any one Premium Book, in order that the posting thereof may be kept well up to date.
The premiums are usually entered in this book, and posted to the brokers' accounts in the Ledger, less the 5 per cent. brokerage only, ignoring altogether the 10 per cent. discount, which, as already stated, is always deducted by the broker, no matter when he pays his account. This practice was originally essential, as in former days the underwriter was in a position to refuse to allow this deduction to the broker unless he paid his account promptly on the day of settlement; consequently at that time it was, both in theory and in practice, a cash discount, and was treated correctly as such, not being taken into account until payment was made. Now, however, the state of affairs is different, as the majority of underwriters are no longer able to enforce their right to refuse to allow discount, and while, in theory, the discount still remains a cash one, in practice it has become almost equivalent to a "trade discount."