THE INSURANCE BUSINESS

Press, Volume LXXVI, Issue 23086, 31 July 1940, Page 10

THE INSURANCE BUSINESS

COMPANIES TO MAKE DEPOSITS SECURITY AGAINST LIABILITIES /From Our Parliamentary Reporter.] WELLINGTON, July 30. Authority for the compulsory winding up of insurance companies of doubtful solvency is provided in the Insurance Companies Bill, which was introduced and read a first time in the House of Representatives to-night. The bill also stipulates that substantial deposits must be made by insurance companies operating in New Zealand as security against liabilities. There is a section dealing with local companies, which are defined as companies established, incorporated, or having their head office in New Zealand, but do not include mutual lire insurance associations, incorporated under the Mutual Fire Insurance Act. Local companies beginning business sre required first to deposit the following sums with the Public Trustee:— For fire insurance business. £22,500; lor employers’ liability insurance business, £22,500; for other classes of insurance business, except under the Motor Vehicles Insurance ' (Third Party Risks) Act, £SOOO. Local companies already in operation are required to deposit £IOOO, together with a -further £IOOO for each complete £2500 of premium income during the last financial year in respect of each specified class of business, until the stipulated deposit is reached. A further section, which deals with motor vehicles (third party .risks) business, defines a company as any association of , persons, whether corporate or incorporate, and includes agents of British and foreign underwriters, and every person who in New Zealand acts as an underwriter. All companies commencing third party risks business are required first to deposit if lO.uuu. Where they are already operating, however, tney will have to deposit £IOOO, together with a further £IOOO for each complete £2500 of premium income from this class of business, until the sum of £IO,OOO is reached. Companies already in business may, instead of depositing the whole of the required amount in money, deposit not less than one-fifth in money, and the balance in securities. The income from the securities so deposited is the property of the company; but is not to be separately assessed xor income tax. In a section dealing with the winding up of companies, power is given to the Minister lor Justice to petition for the winding up ot an insurance company on the ground that it is unable to pay its debts. The Minister may serve notice on a company requiring it to supply him with any information he requires to determine whether it is insolvent. If the information is not supplied, the Minister may serve on the company a noty:e that he proposes to appoint inspectors to investigate its affairs, and if objection is raised by the company, he may apply to the Supreme Court for leave to appoint inspectors. The costs of an investigation are to be met out of the Consolidated Fund; but where the Court grants leave to appoint inspectors, it may direct the company to repay the amount. If a winding up order is made by the Court within 12 months the expenses are to be paid out of the assets of the company.