MUTUAL INSURANCE COMPANIES

Press, Volume LXX, Issue 21329, 23 November 1934, Page 20

MUTUAL INSURANCE COMPANIES

TO UH* IDITOB or TUB PF.BS3. Shy-In your issue of November 2, Ih'ere appeared a report of a Chamber of Commerce meeting at which Mr McCaul, as vice-president of the Wellington Chamber* of Commerce, attacked mutual insurance companies, in view ol the unfairness of this atlack, t'n.e real reason of which we ■wish to explain to the public, we would be pleased to place the position before the public through the medium of your correspondence columns. These published statements, together with - circulars lo practically every premium payer in the country, have, as one of their mediums, the various associated chambers of commerce of New Zealand, and ,it is through these various chambers of commerce that the proiit-seeking companies are issuing propaganda which is actually wrong in fact, and which must therelore , recoil on the heads of the vest or! interests represented by the prolit-secking companies.'

Wo would explain here that fire, marine, accident, motor-car, and workers' compensation insurance in New Zealand has been catered for by limited liability companies, whose shareholders conduct their insurance business for the same purpose as any merchandise firm conducts its business, namely, to make a profit for the shareholders.

Tn ■ a circular issued to premium payers, the profit-seeking companies used .such innuendo as the following: "Trap to Unwary—Company's Stability Questioned," etc. It is obvious that (tie only people who question mutual insurance are those with vested interests, who are going to lose by the activities of the mutual offices.

We shall now deal with the published report, which quotes extracts 'from a speech by Mr M. G. C. McCaul, of Wellington. This speech was made recently by Mr McCaul, at a meeting of the Associated Chambers of Commerce of New Zealand. Mr McCaul attempts to infer that mutual insurance offices come under the category of certain other companies now being investigated, but the public would indeed be blind were they unable to see (hat there is no comparison of the aims and methods of the finance companies being investigated. Rather, is it not that the mutual insurance companies are entirely opposed to profit-seeking companies, and aim to give the public full value for ther premiums, as will be shown later in this article.

The State Fire Department, after cutting the profit-seeking companies' monopoly rates considerably, has still been able to build up reserves of more than £1,250,000, and the profit-seeking companies have in the past been j forced 1o reduce their rates to compete with the State Fire Department. The Government knows that even at the present-day rates of premium, no mutual company can possibly fail to meet its obligations; rather does it Know that as .far as profit-seeking companies are concerned, the rates are •AWL unnecessarily high. Mr McCaul is prepared to agree that private concerns relating to particular branches of industry are not referred to in his criticism; he knows full well that private concerns can conduct their own internal insurance as they wish, and no amount of propaganda or attempted bluff would dissuade them from refusing to pay abnormal premiums to the profit-seeking companies. He therefore attempts to discount those companies which, as he .••ays, are "touting" for public business. Personally we do not know the meaning of this word "touting." as we did not understand that insurance companies of any description "touted" for business. We understand that insurance business is obtained and increased according to the service rendered to the premium payer, and this can hardly be called "touting." However, Mr McCaul overlooks the fact that if mutual insurance in a small private concern can be made to pay, even more handsomely can this be done if carried out on a large scale. Mass production reduces costs and it is in the massed handling of insurance that the public will obtain their best return from their mutual insurance policy. Mr McCaul further overlooks the fact that mutual insurance companies are subject to the same lav/ of average as is disclosed by the actuarial figures regarding losses, as applied to the profit-seeking companies. It would seem that some supernatural power might cause a general catastrophe among the risks held by mutual offices end that the profit-seeking comoanies would be free from that catastrophe. The public can judge how absurd it is tn suggest that a mutual office may be subject to a more severe loss than n profit-seeking office. No New Zealand mutual office has ever had to make a levy, and in every instance wo find that bonuses and further reduced rates are the reward for mutual supporters. Of the several small mutual insurance societies, each one has been able to build up considerable reserves, even though their premiums are lower than those of the profit-seeking companies. We can quite understand the concern "with which the profit-seeking companies view the activities of th« mutual offices. Various' profit-seeking companies Jiave in their various centres "local directors," men who are paying bj" insurance premiums and who receive a more or less considerable director's i«e fpr the ngure-hcad non-executive position of the "local director." Some of these directors are members of the various chambers of commerce, and jnany members of the various chambers of commerce are actually managers or agents of profit-seeking companies. & The public; can, therefore, see that propaganda issued through the various chambers of commerce, whilst appearing solicitous of the public welft're, has. behind that veil, one niotivo supplying insurance covers to the pubir/Jh» arR M- We bclicvo and know - 'L ° publ,c ar ? welcoming mutual J.ismarico a s an alleviation of the cost oC a service, which, until recently has IZ"! ? onl ™ Jlod ' charged &r, and'die! I ;£ d h & the P rofit -seeking companies, y h ch though respectable are unneces.n y middle men in our economic system.—Yours, etc.. „.. a C G. D ALLEY, n 11- £ < f , A Sent, Christchurch, i üblic Mutual Insurance Co, of NZ 1 .November 22, 1934.

est by the association in its inlerprovincial representative crew.

Take a careful valuation of this and last year's selection committee and coach for the representative crew. The answer is, "Hopeless," two at least being entirely out of touch, and the third more or less without the necessary knowledge or experience. The motion to row inter-club eights one and a half miles was defeated. Although three clubs supported this, the motion was defeated by outside delegates, proving once again that the association is packed.

Then wo have the lack of notes and information in the local papers. _ If those who govern the sport are listless and unenterprising, then the public interest will bo the same. What we want is younger blood, with push and drive, on the association. At the same time, I must, admit that the possibility of this looks hopeless, as these older men are well dug in and surrounded by their own kind, and it will be difficult to bring about a change. I sincerely hope that now this matter has been brought up. "Rip Van Winkle" and his family will bu awakened from their long sleep and got going, or be asked to make room for those that will. Here's hoping.— Yours, etc., WETBOB. November 17, 1934. [Officials of the Canterbury Rowing Association, to whom this letter was referred, had no comment to make.!