THE New Zealand Herald AND DAILY SOUTHERN CROSS. THURSDAY, JULY 25, 1901.

New Zealand Herald, Volume XXXVIII, Issue 11714, 25 July 1901, Page 4

THE New Zealand Herald AND DAILY SOUTHERN CROSS. THURSDAY, JULY 25, 1901.

In the preamble of the State Fire Insurance Bill there is one assumption made so astounding as to amount w to ..a/: glaring falsehood. The preamble commences thus: "Whereas it is expedient to lessen the cost of fire insurance." This is an absurd assumption, placed in this prominent position as an argument for support to the Bill in Parliament and in the country. Here is this assumption put in the very forefront of the measure, which in itself contains no provision or guarantee whatever that the cost of fire insurance shall be lessened, but the reverse. We venture to say that this kind of appeal, this promise of a bribe which never can be paid, and is not intended to be paid, never was attempted in the wording of any Act of Parliament before. The method proposed for obtaining funds to start the Government machine is detailed in the 24th and following clauses. That method is, of course, to go to the London market for a loan. The Governor is empowered to borrow £250,000, and he also has to appoint agents for raising the money (who, of course, will, have to be well paid). Be it always remembered that this money is borrowed on the security of the colony— on the security of property owned by those people who have established and carried on the business of fire insurance for many years, and whose capital the Government now seeks virtually to confiscate. The rate of interest is specified at 3j per cent., and taking into consideration the costs of raising money in London, the commissions and pickings taken out of the amount borrowed by those friends employed in the manipulation, that money will, cost the Government 4 per cent, by the time it finds its way to New Zealand. The money would be employed in starting the head office in Wellington, with the various branches throughout the colony. The Government is empowered to appoint a manager, who . must necessarily be paid a large salary, a deputy-manager, and an army of officers all over the colony. The Government will require to obtain at least 4 per cent, out of the money unless the colony is to suffer a severe loss. This is more than any fire insurance company has been making out of their business in New Zealand for some years past. And then the Government talk about getting reinsurances. These are certainly absolutely necessary, because no company could carry on business in a restricted field like New Zealand, where no reinsurances could be had with local companies, without reinsuring abroad. And no foreign company would take reinsurances from an office which was restricted to a colony where the business at present rates only returned 3 per cent., and wide, a system, which was commenced by a declaration "whereas it is expedient to lessen the cost of fire insurance." The only chance for the Government being able to earn interest on the money borrowed in London on the security of the colony is in districts where, the Act may be made compulsory on buildings. That is to say, that the only chance of paying interest on the money borrowed to establish the scheme would be when the Government had an entire | monopoly of the business, and could

raise the rates to any figure that they chose, o» insure to what amount they chose. This section of the Act at all events would be more fitly introduced by such a phrase as "whereas it is expedient to increase the cost of fire insurance." One argument which.has been put forward for the Bill is, that the Government have established . a Life Insurance Department and might as well follow that by a Fire Insurance Department. * The cases are essentially different, and are more in contrast than a parallel. The risks and course of business of life insurance are quite different from those of fire. A life insurance.business may be worked safely over a small area such as New Zealand, while a fire business cannot. And we think it is a very powerful argument on the subject that when the Life Insurance Department was started by the Government there was no company doing business in the colony which had , its headquarters here and which was carried on by the capital of New Zealand colonists. Again, has the Government Life Insurance Department been of any benefit to the colony 1 The other insurance companies do a large business. They are better managed than the Government establishment, and in the opinion of most people confer greater advantages on those assured with them. The Department is of no benefit to the taxpayer, but rather the other way. The. risk of a fire department would be immeasurably greater, but the Government seek to obviate that by cheating ? monopoly. But in that case they would have the power of exacting higher rates. They intend to do so, indeed, would be compelled to do so, but in the meantime they think it expedient to commence their Bill by the deceptive assumption "whereas it is expedient to lessen the cost of fire insurance."