RISE IN RATES.

Auckland Star, Volume LXVIII, Issue 26, 1 February 1937, Page 12

RISE IN RATES.

INSURANCE SCALE.

NEW SOUTH WALES STIR.

MOTOR ACCIDENT PROBLEM. (From Our Own Correspondent.) SYDNEY, January 20. Within the last few days much anxiety and apprehension have been aroused in commercial circles and among the countless motorists who make up a large section of the general public by the announcement that , the private insurance companies propose to raise their charges. The immediate cause for this threat is the increasing number of motor accidents. The companies point out that the number of accidents and consequently i the claims against them have grown rapidly within the past two or three years, ajid that the cost of repairs for cars has risen proportionately. The designs of the most modern cars is said to be partly to blame, and so also is the bad or reckless driving. But it doesn't seem practicable to make any distinction between the irresponsible motorists and "safe and sound" drivers, in regard to premiums, and the companies have apparently concluded that to safegurad themselves they must raise their rates. Apparently they intend to make this increase general, for business men have been experiencing much trouble in securing the bonds now inseparable under the new Business Agents Act, and it is the evident intention of %'ie insurance companies to make conditions harder in this respect as well. The natural outcome of this menacing attitude of the companies is a revival of the demand for State action against' what is virtually a private monopoly, and a controversy has arisen in which the newspapers are playing an active part. Protecting Public Interest. Naturally those people who hold that the primary duty of the Government is to protect the public interest and promote the public welfare are asking indignantly what the State proposes to do about it. They are, of course, well aware that there is, in New South Wale*, a Government Insurance Office, but they also know that in recent years its activities have been restricted, in very definite ways. It is a matter of history that the Government Insurance Department was established here to prevent the private insurance companies from charging exorbitant rates for workers' compensation benefits under the Act of 1926. The local Associated Underwriters had announced that under the new Act the tariff would be 150 per cent higher than before, with 2 per cent extra on all compensable diseases. The G. 1.0. "called the bluff" of the companies by fixing their rates at 1 per cent below the level fixed by the private companies and within five months they reduced their rates still further by onethird. Naturally the G. 1.0. was rushed for all forms of business and the private companies were forced to fall into line. But in spite of these sweeping reductions in charges the G. 1.0. within nine years has succeeded in piling up accumulated property to the amount of £1,000,000, and this in the face of the limitations imposed upon it by the present Government. When the Stevens Ministry took charge, after the downfall of Lang in 1932, it was generally understood that it represented the principle of "private enterprise" as against any form of "State intervention" in commercial and industrial, affairs. It was, therefore, easy for a large body of its supporters to bring pressure to bear upon it and induce it to abandon the various forms of State enterprise established under past Administrations. Steven* Government Policy. I have already had occasion to discuss the policy adopted by Mr. Stevens and bis colleagues in regard to the State brick factories, the State metal quarries and the State cement pipe works and the very heavy losses incurred by the State when these unsuccessful enterprises were "quitted at bargain prices" to private firms and companies. But though Mr. Stevens' Government naturally regarded the G. 1.0. as a "Socialistic" scheme and had apparently marked it down for destruction, Ministers soon discovered that it could not be dealt with in the same summary fashion. Because the G. 1.0. is a "licensed insurer" under the Act, it would need special legislation to close it down, and it had been so successful that any such attempt would have been unpopular and dangerous. But Mr. Stevens and Mr. Spooner —who have been largely responsible for this change of policy—did not hesitate to impose restrictions upon the G. 1.0., which were most acceptable to the private companies. Government compelled the G. 1.0. to withdraw from most of its commercial and industrial business, confining itself very largely to the form of insurance that it was originally designed to provide. At the same time the G. 1.0. was ordered by the Government "to adopt the rates fixed from time to time by the Fire and Accident Underwriters' Association." Thus on the one hand the business of the G. 1.0. was cut down unsparingly, and on the other the G. 1.0. was compelled to surrender the weapons it has used so successfully in the past to protect the public interest by undercutting the rates originally fixed by the private companies. Agitation For Increase. It ie now easy to understand why the private insurance companies during the past two years* have been consolidating their forces and agitating for a general rise in rates, and the heavy payments that have accompanied the steady increase in motor accidents recently have given them their opportunity or at least their excuse. It is obvious that if the Government Insurance Department were still in a position to undercut the private companies' in, all directions, as it did eight or nine years ago, the general public would be protected by its competition and rates need not rise. But it; is father late in the day for the hea/ls of large companies and the employers of hundreds of workers—who for the most part have always denounced : "State enterprise" . and supported "private" finance—to protest that the Government must do something now to check the depredations of the insurance companies. . , ; « It cannot be too often repeated that i;whatever , may be thought about the .virtues,,of "private enterprise" in the intervention" may be in i* the %££s. res ort, left for lijh* «ti?en against aggressive and ruthI lees;monopoly. ' ; v '■-