FIRE INSURANCE

Manawatu Standard, Volume LIV, Issue 303, 20 November 1934, Page 3

FIRE INSURANCE

ADDRESS TO ROTARIANS. Tho members of tlie Palmerston North Rotary Club were addressed yesterday by Mr D. E. Wilkie, of Wellington, who is president of the New Zealand Fire Insurance Underwriters’ Association, on general fire insurance matters. The speaker dealt with his

subject from the historical side and from tho angle of tlie business of fire insurance as it is to-day, pointing out that the companies had to make reasonable profits to build up the great reserves necessary to meet a possible flood of claims following a con-

flagration. Tlie chair was occupied by the vicepresident (Mr W. E. Winks) in the absence of the president, Mr W. S. Carter. Mr Winks introduced the speaker. _ Fire insurance had been carried on

since 1666, when the first companies were formed-, said Mr Wilkie, who added that there was not a company which did not lose all its reserve and all its capital in the Great Fire of London. Tho speaker proceeded to give instances of great fires in cities in various parts of the world. In all the instances he cited, he said, the British companies liad paid the claims .in full. In New Zealand the first fire insurance company had been formed in 1859, followed by others in the decado after 1870. In Australia tho first company was formed in 1849, while the second followed in 1862. Every year insurance became more involved in all business life, he proceed-

ed, and without it business nowadays could not be carried on. In New Zealand there were 20 companies operating and the rule of too much competition applied in fire insurance just as it applied in other business. With excessive competition the companies had their rates forced down to levels that wore ,not economic. In New Zealand we required prosperous companies and prosperous people. It was out of profits that higher wages could he paid, and it was to the betterment of any community that its companies should ho prosperous. There was a tendency to-day to expect everything at cost price and . also _to the view that the big companies could look after themselves. Often fire insurance companies were attacked and tho person making the accusation pointed to a few good years the com- ! panics had had and remained silent I about tho bad ones. Insurance coin- | panics did not make big profits over all, and they paid a great amount in taxes, which benefited the country.

The coin; mies had to build up big reserves to be able to meet possible emergencies when a great fire might occur, causing very heavy damage. The speaker said that heads of Government departments should confer before action was taken and politicians should not be allowed to meddle in insurance matters. lie gave an instance where lack of co-operation had resulted in a drop in the taxes paid by companies from £623,000 in the i

years 1918-1922 to £191.000, from 1928 "to 1933. An economic council would not have allowed that. It was doubtful, however, if the people would allow tho government of the country to be run like a business. If it had been, however, the heads of departments : would have conferred and co-operated instead of allowing such a loss through : non-co-operation. The cost of lire insurance in Now Zealand now was about 9s Id per cent.

and it had como steadily down since < 1922. Fire insurance at present was cheaper than it had ever been. It was essential that tlie companies be . allowed to charge rates which would - enable them to provide for a rainy ] clay. It was essential, too, that tlie 1 companuics operating be big enough ; to stand a heavy loss. An insurance ] company based its rates on long i periods of experience and even when 1

the final calculations had been made 1 they were not certain. In the great 1 Chicago fire, for instance, tho com- ‘ patties had lost 40 years’ profits. Fire insurance circulated a great deal of money in New Zealand and it was | noteworthy that practically all cm- j ployees were enlisted from New Zea- 2 land. Cheap insurance was not a j good investment and many had yet to j learn that the insurance companies j knew what tlie rate charged should j be, and they were engaged in a busi- j ness which was different from others. S The insurance company executives I might not know a great deal about | other businesses, and, similarly, other 2 business executives could not know | what should be the rates charged so jj well as tlie companies themselves. J The average fire loss in New Zea- I land was about £3OOO a day, tlie j speaker added, and if we could stop 8 any of that it meant really a saving j in capital. In the Dominion efforts j were being made to reduce the fire ! loss. It had been reduced, but also j there had been a reduction in the j Canadian and United States loss. So j the New Zealand lessening might have I been due to a period of low loss j throughout the world and perhaps no specific reason could he advanced for I the reduction. |

The thanks of the chib to the speaker were expressed on the call of Mr T. Henderson. The visitors welcomed were ns follow : Messrs E. J. Hickin, M. J. McArtney, A. E. Kerslake. H. G. Wallace, L. G. Chetwin, R. C. Donald, T. L. Seator, K. L. Collinson, FT. L. ITartog (Pa'merston North), James Murray (Edinburgh) and L. L. Cordery (Christchurch).