Reduction in loan funds when bill becomes law

Press, Volume CXII, Issue 33033, 28 September 1972, Page 22

Reduction in loan funds when bill becomes law

'New Zealand Press Association)

AUCKLAND, September 27. The implementation of the provisions of the Accident Compensation Bill covering industrial accidents would reduce the loan funds of insurance companies, the chairman of the New Zealand Insurance Company, Ltd (Mr D. H. Steen), told the annual meeting.

It was thought that the accident compensation scheme would come into effect in October next year. The scheme would cover compensation for industrial accidents, which now comes under the Workers’ Compensation Act, 1956. Mr Steen said it was believed that the insurance companies would be asked to administer and settle claims in the early years of the new legislation, but the Inland Revenue Department would be responsible for collecting dues.

The loss of workers’ compensation business would be felt by the industry, because payments in settlement of claims for accidents already occurred would coincide with the absence of new premium income. This would lead to a reduction in the loan funds available to the public and private sectors of the economy, Mr Steen said.

Mr Steen added: “While we must, and do, support the attempt to provide through the implementation of some of the ideas conceived by the Woodhouse Commission a greater measure of social justice to the greatest possible number, insurers are disappointed that a Government which has frequently stated its adherence to the principles of private enterprise has decided that the bill, when enacted, will be administered very largely in the public sector.” Over the years competition had ensured that insurers had provided a similar social service through the efficient administration of the workers’ compensation insurance.

“We can but hope that the same efficiency will apply to

the development and operation of the bill and that costs will fall within the estimates already prescribed by the sponsors,” Mr Steen said.

Mr Steen also told shareholders that although the British government’s decision to “float” the pound would inevitably have some effect on the New Zealand Insurance Company’s world-wide opera-

tions, the company’s affairs throughout several major currency areas tended to “balance out.” Future earnings would not be significantly affected, he said, and there would remain, subject to the usual stock market fluctuations, a very healthy surplus of market value over book value in investments.