THE BY-PATHS OF INSURANCE BUSINESS.

Press, Volume LIII, Issue 9432, 2 June 1896, Page 4

THE BY-PATHS OF INSURANCE BUSINESS.

I The people of New Zealand do nofcurej quire to have instilled into them the I advantages of life insurance. They ! hear enough on that subject from the numerous canvassers who are to be found all over the length and breadth of this colony. There is one difficulty

which acts to some extent as a deterrent to insurers which those interested might take note of. When a man is young and strong and fairly prosperous he does not think much of the annual burden of his premium, but if he considers the future much he is haunted by the dread that the day may come when, owing to misfortune, illness, or some other cause he may be unable to continue the payment of his premiums, and his insurance may have to lapse just at the very time when there is most necessity for keeping it alive. Hβ can borrow on its surrender value and pay the premiums so long as that lasts. Moreover, by the liberal conditions of most Companies and Associations now-a-days the policy does not actually lapse until the surrender value has been exhausted. But when men have got into the position we are dealing with they have generally borrowed all they can on their policies for their own purposes. The surrender value in most cases has disappeared by this time. There is nothing for it, therefore, but to let the policy lapse. Recently, however, a way out of such trouble has been provided by the enterprise of an English Company called the Ocean Accident and Guarantee Corporation. It is said to be a very flourishing concern, the cost of management being low and the reserve fund big, and it pays something like £12 10s per cent, dividends. The scheme is to establish a new branch of the Corporation's business and to undertake, the insurance of the payment of life premiums. The insurer pays this Company a premium which seems to be about onetwentieth of the premium payable to the Life Insurance Company. For the annual payment of this premium the Ocean Accident and Guarantee Corporation will, if the insurer becomes totally and. permanently incapacitated by accident or mental or bodily infirmity from carrying on any profession or business, pay all the premiums that become due to the Life Insurance Office, and if he is temporarily incapacitated for more than ten months it will pay the premium or proportionate part, as the case may be, while so incapacitated. The Company's first insurer was a i solicitor in large practice heavily insured, and he said it simply took off his mind a care which had oppressed him for years. Apparently the insurance thus effected does not provide for the case where the inability to pay the premiums arises from poverty only. It simply provides for the case where a person is physically or mentally incapable of carrying on his avocation. Possibly this Company, which professes to do insurance business only in the by-currents which the oldfashioned Companies have neglected, may see its way to extend the scheme to insurance against inability .to pay life premiums owing to poverty generally, although no doubt it would be more difficult to undertake cases of this kind tban the others we have mentioned. We notice that this business covers insurance against robbery or embezzlement .by employees, against having to pay damages for a servant's bad driving, against loss Of interest or principal on mortgages, against the depreciation by effluxion of time of leaseholds. Several of these branches of ', business, are taken up by local Companies or by Companies doing business in this colony. We are not aware, however, that any Company doing business here insures against loss on mortgages or from the expiration of leaseholds.. We should think that unless the premiums were too high, a large business might be done in the insurance of mortgages in this colony. It would bs a great help, especially to trustees and others lending trust money if, by the payment of a small percentage on their interest, they could be guaranteed against all loss. It would have the additional advantage moreover of creating an additional check on the valuation of securities when offered, as, of course, the Insurance Company a3 well' as the lender would haVe to pass them. Moreover, the Insurance Company would probably act as a buffer between the lender and the borrower, for if default were made the odium of enforcing payment or realising on the securities would rest with the Insurance Company, who would be the real losers if any loss occurred. We do not suppose that the Ocean Accident and Guarantee Corporation will establish agencies here, but it might be well if some of our local Companies were to consider whether they could not, with profit to themselves and advantage to the public, undertake some of the branches of insurance to which we have referred.