A Peculiar Concern.
The history of the British and Colonial Property, Finance, and Assurance Company, Limited, is most instructive, especially in view of recent legislation in this colony on the subject of fire and marine insurance. The statistical information concerning this company which is at our disposal is rather meagre, consisting merely of its report and balance-sheet for the first half- year, submitted at a meeting on February 20, 18S9. From this document it appears that the company is a land jobbing concern, with an authorised capital of L 500,000; shares to the value of L 50.000 have been issued, and calls to the amount of L 23.271 have been paid thereon. On this basis the company has purchased lands in sundry districts, and paid for these lands LI 43,457 in bills, besides a cash deposit. It has then cut up these lands, and sold some, receiving the greater part of the purchase money in bills. There is a reference in tho report to tho inadvisableness of " forcing land so favorably situated on a temporarily depressed market," and it is stated that the " directors postponed further sales for the present. " This, apparently, callow product of the late Melbourne land boom, would have no interest for New Zealanders if its directors had not, seemingly as an afterthought, tacked insurance on to its other business, and invaded this colony with a resident secretary, a brass plate, and a bundle of forms. We note that during their first half-year's existence the company had taken in premiums whether fire, life, or marine we are not told —the sum of L 943 15s lOd, less "reserved" (whatever that may mean) L 314 12s, leaving net premiums L 629 3s. It is rumored that in New Zealand they have collected altogether L 2.800 of premiums, of which L 1,200 was contributed by Wellington. It has been notified here that the company are retiring from business, and that there is no money at present to pay back to the policy holders the unexpired portion of their premiums. This means that the only recourse of any of the policy-holders who may suffer loss by fire is to sue in Melbourne a limited liability insurance company with L 25.000 called up, and L 25.000 uncalled, and with, as other assets, certain lands bought at speculative prices, in payment for which bills amounting to L 143.457 are maturing. As a matter of fact, one case is already pending in the Wellington Supremo Court against this company, in which L3OO odd is claimed by the assured on account of a fire loss, and in which the company's anßwer practically is " Come and take it."
The circumstances of this company's peculiar constitution, and of their withdrawal from the insurance field, should furnish grounds of reflection to every policy-holder in a fire, marine, or life assurance company, and we propose to state how the law affects the local and English offices, and the offices of other nationalities than English, which are doing business in New Zealand. At present all New Zealand incorporated insurance offices are of unlimited liability, and any policy-holder may inspect their registers and ascertain the names of the shareholders, whose ultimate farthing of property is liable to pay the company's debts. An Act was passed during last session of Parliament authorising the existing local offices to register themselves as of limited liability if they have L 50,000 capital intact, and permitting small mutual offices to become registered with limited liability if they have L 25.000 paid up; but so far the provisions of the Act have not been used. Insurance companies incorporated in any other part of the world may carry on business here, whether they ate of limited or unlimited liability, and the • degrees of security they offer the policy-holder are various. All life companies doing business in New Zealand must deposit securities or cash to the extent of L 5.000; there is no stipulation of this nature with fire or marine companies. No fire or marine insurance company of Australian, British, or foreign origin has, W9 believe, any assets of consequence in New Zealand. It follows, therefore, that should any claimant obtain judgment against any such company, and attempt to realise on this judgment, he may have to attack the company 'a assets wherever he can find them in Australia, England, Germany, or the United States. This may be a very difficult process, as the claim may require to bo proved over again in the country of the ilefendant company, and the defendant might possibly place every legal obstacle in the way of the plaintiff, Every holder of a fire or marine policy issued by a company not of New Zealand birth has to face the fact that in case his claim is disputed, and he ibtains judgment, the defendant company has no assots in this colony [which he can Boizc, and it may force him to attempt to levy en its assets at its head office, as in the case of the British and Colonial. It will be argued that no respectable company would resist piyment of a just debt ; but unfortunately
there are instances of issuers of policies bear- j ing the best insurance names having I descended to subterfuge to combat the j claims of colonial insurers. Wo will instance , a case arising out of the great Panama street fire here in February, 1887. It is a fact that Lloyd's Fire Underwriters of London i disputed a just claim of L 5.400 made by one : of the sufferers assured with them, and that \ it is only within the last few months that < judgment was awarded to the policy-holder. | Again, in Australia lately, one of the most. I prominent English offices put forward as \ a plea against a claim the fact that it was j not an incorporated company, and that; therefore every individual shareholder was j a partner, and should have been served with j a writ; this plea, however, being subse- j quently withdrawn upon the indirect remon- j stranco of the presiding Judge. And we j extract from the ' Sydney Morning Herald' | of 28 th August last a sentence from its j report of an action in which a great Ameri-1 can life office was defendant—" Mr Wise, i before going into the case on its merits,! relied on the absence of any incorporation of the company by registration in New South Wales; and His Honor, holding this view to be fatal to the proceedings in the action, nonsuited the plaintiff." Taking out an insurance policy is theact of a provident man, and the policy has hitherto been considered as of unquestioned security and cash value in case of the happening of the event which is insured against. Through the legislation of last session permitting the establishment of local "pocket" limited liability companies, and through there being no legislative restrictions on the advent from elsewhere of offices of the "wildcat" genus, it is clear that every insurer must consider not only the chances of occurrence of the event assured against, but also the chances of his being paid by the office which issues the policy. And therefore it has become the duty of the Government to see that every insurance company doing business here has to keep in this country in some shape or form sufficient assets to meet any probable claim, assets which may not be withdrawn until every farthing of liability under any possible claim has been met. And, further, that each company shall nominate in this colony some person, service of a writ on whom shall be deemed service on its head office, as the Phoenix Company and the Liverpool and London and Globe have done. We deem it our duty to place this very important subject plainly before the people. A case has occurred which illustrates possibilities, and without casting undue reflections upon any company doing business within New Zealand borders, we do not think it is too much to demand that all insurance companies shall give substantial proof of bona fides, both as regards legal representation and meanß to be levied upon when emergency arises. We have indicated a weak place that admits the intrusion of such affairs as the British and Colonial. It must be dealt with by legislation.—'New Zealand Times.'
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A Peculiar Concern., Evening Star, Issue 8037, 14 October 1889
A Peculiar Concern. Evening Star, Issue 8037, 14 October 1889
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