Hungarian ice and reinsurance ltd

Magyar Jég- és Viszontbiztosító Részvénytársaság is a joint foundation of the Trieste General Insurance Company (Generali), the Hungarian Calculation and Exchange Bank and the Hungarian General Savings Bank. Its primary profile was ice insurance, but it was also active in reinsurance in the fire, ice and burglary insurance sectors. At the time of its foundation in 1890, it was the only insurance company in the form of a joint stock company specialising exclusively in ice insurance. Throughout the 50 years of its existence, the company has always been part of the Generali group, using its infrastructure and its network of agents. In 1940, it was merged into the parent company and ceased to exist.

Magyar Jég- és Viszontbiztosító Részvénytársaság was founded by Generali, the general insurance company of Trieste, in which two financial institutions, the Hungarian Calculation and Exchange Bank and the Hungarian General Savings Bank, also participated. However, the strategic decision to set up the company was clearly taken in 1889. According to the official justification, the company organised the operation of ice insurance in order to focus its life insurance activities, in a similar way to the way it had previously done with accident insurance (First General Accident Insurance Company).

At that time, the Hungarian insurance sector had been unable to swallow or spit out ice insurance for decades. Every decade, extremely damaging years occurred regularly, which ate up the accumulated reserves of the previous years and caused huge losses for insurers. Since its foundation in 1932, Generali has repeatedly closed down and then restarted operations in the sector. In the second half of the 1880s, a new approach was adopted in the form of the creation of specialised companies to deal with the situation and increase penetration. In 1887, the First Hungarian General Insurance Company set up an ice insurance cooperative, called the Hungarian Farmers' Ice Insurance Cooperative, which farmers could join at a lower premium than the market rate if they committed themselves to the company for 12 years. The cooperative was reinsured by the parent company until 100%, so ultimately the risk was borne by the parent company. The creation of the Hungarian Ice and Reinsurance Company by Generali was a response to this market innovation. Generali's management traditionally did not trust the efficiency of the cooperative form, so the insurer was set up as a joint stock company. The company was set up with a share capital of HUF 1 million and used Generali's buildings and agent network.

Like the foundation of First Hungarian, Hungarian Ice has not managed to radically increase the country's ice insurance coverage. It was a common complaint that farmers insured only where hail was typical and that if they avoided the area for a few years, the demand for insurance would immediately decline. Even in the 1910s, only a fraction of crops were insured. Differing calculations in the trade press put the ratio at between 1/6 and 1/8. Farmers were discouraged from insuring in early spring by uncertain crop prospects, then by rapid seed ripening and prices that were considered expensive, and companies did not have enough staff to cover the whole country. No wonder the question was raised again and again whether insurance against ice damage should be made compulsory. Of course, there was also an immediate counter-argument: public insurance would not work 'where there is no shame in cheating the fin man', and perhaps even a new concept of 'age-related damage assessment' would be born. State-organised claims settlement could easily become a tool for parliamentary and county election campaigns, during which time the pencils of the loss assessors might be sharpened.

Coverage did not increase, but the vagaries of the weather soon caught up with the new company. In the disastrous year of 1898, only the intervention of the parent company and a capital increase saved the company. At that time, the company's portfolio included 17 480 ice insurance policies with an insured amount of nearly HUF 56 million. Of this, the annual revenue amounted to HUF 941 000, while more than HUF 2,1 million had to be paid out for the 4 259 claims, mainly due to the two major hailstorms of 26 June and 28 June. It was a terrible year for the market as a whole, with First Hungarian, for example, ceasing to be a member organisation of Hungarian Farmers and the company ceasing to exist after 12 years. However, Generali persisted with its ice insurance and its specialised institute. As a new solution, it spearheaded cooperation at market level, setting up a joint claims settlement organisation with six companies as early as 1890, to which all companies joined after 1898. The resulting Central Bureau of Reinsurance later extended its powers to the standardisation of conditions and underwriting premiums and became the long-established and efficient cartel organisation of the insurance industry.

Disastrous years like 1898 were to follow. In 1924, Hungarian Ice was again faced with a claim for damages that it could not meet on its own. Generali once again took over from its subsidiary, and in 1925 it was forced to accept ice insurance on its own account, and it was only from the following year that the reorganised Magyar Jég resumed its business. This period of crisis also coincided with a change of management at the head of the company. Sámuel Kelemen, who had been managing the company since its foundation 35 years ago, retired and was replaced by his former deputy Sándor Szabó. Kelemen was one of the most respected authorities in the field of ice insurance in Hungary, although his name only appears on the company's board in 1918. Until then, he had led the company with the title of chief executive officer. In 1917, in recognition of his achievements in the development of the economy, he was awarded Hungarian nobility with the first name of Bodajk. The president of the company was then Eduardo Morpurgo, who in 1906 succeeded Sándor Hegedüs, the former Minister of Trade, who had died. From 1913 Morpurgo was appointed CEO of the Generali headquarters in Trieste, making the president of the small Hungarian ice insurance company the top executive of the huge international Generali group, which included dozens of companies.

Ice insurance was not a successful industry in the second half of the 1920s and during the depressed decade of the 1930s. However, the results of Magyar Jég were generally offset by the more predictable fire and cargo reinsurance business, although these were always less important in the company's portfolio than the ice business, which was considered the core business. The company ceased operations in 1940 and was merged into its parent company, Generi.

Sources

Jenő Csury Jr. - Imre Marosi 1931: The History of Hungarian Insurance. Hungarian Hungarian insurance.

Lipari, Marzio - Marizza, Marco - Stenner, Silvia - Delfabro, Elisabetta - Miot, Annamaria - Rosasco, Roberto (ed.) 2012: Stories from the Historical Archive.

Sándor Mihók, then Jakab Ambruster, G. Sándor Nagy, later Mihály Della Vedella (ed.) 1873-1944/45. Hungarian Compass Financial Yearbook. Budapest.

Dezső Rombay1915: The case of ice insurance in Hungary. Hungarian Insurance Yearbook (17.) 2. 289-311.

Mihály Szüts 1899: Insurance against ice damage in the hands of the state. Hungarian Insurance Yearbook (2.) 45-58.

Gábor Tamás 2019:The development of the insurance market in Hungary from the mid-19th century to the First World War. Insurance and Risk (6.) 1. 14-49.

Jenő Endre Török 1905: The Hungarian insurance business in 1903. Hungarian Insurance Yearbook (7.) 2. 293-318.

Ferenc Vaktor 1931: The 100-year history of the Triesti general insurance association (Assicurazioni Generali) and the insurance institution in Hungary. In the year of the first 100 years of the history of the Trusteeship of the Trustees of the Trustees of the Insurance Company of the Trustees of the Trustees of the European Union in 100 years of its existence in Budapest.

Founded in 1890

Date of cessation: 1940

Founders: joint foundation of the Trieste General Insurance Company (Generali), the Hungarian Calculation and Exchange Bank and the Hungarian General Savings Bank

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Principal activities: ice insurance, hail insurance, reinsurance, reinsurance

Main products are not set

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Author: by Gábor Tamás