INSURANCE PROBLEMS.

New Zealand Herald, Volume XLV, Issue 13672, 13 February 1908, Page 4

INSURANCE PROBLEMS.

The annual report and balance-sheet of the New Zealand Insurance Company always makes interesting reading, for it enables the public to see at a glance the conditions under which the insurance business is carried on, and the results attained by colonial management.' For, as is generally known, one of the branches of our commercial development which has been most energetically pushed and which has secured for Isiew Zealand a world-wide reputation, is that of fire insurance. Our great local insurance corporations, of which the New Zealand Company is a type, have extended their business \ far and wide, and under progressive but cautious management have, built up reserves which give them a status second to none in the confidence of the insuring public. For instance, at the annual meeting of the New Zealand Insurance Company, hold yesterday, it was announced that of the available balance of £81,000 on the year's business, the sum of £25,000 would be transferred to the reserve fund, and the sum of £35,000 to the reinsurance fund, lifting these two funds to the very substantial sum of £390,000. In other words, instead of directors and shareholders seeking only for large dividends, they forego large dividends in pursuance of the sound insurance policy which has led our great Auckland institution to accumulate reserves in good years against the possibilities of bad years. The accumulation of reserves, the making of such preparations as will enable heavy blows to be endured without loss of strength and without undue pressure upon shareholders, is an essential feature of sound insurance management. It is strange, however, that this has never been grasped by the Government of New Zealand, that birthplace of great insurance companies. The Government has so affected the local insurance business, by opening the State Fire Office, that it is matter of common knowledge that insurance rates throughout the Dominion have for years been generally unprofitable, besides allowing no reserve to be accumulated for "conflagration risks." Our New Zealand companies, prosper because, of their

great oversea business, but that can hardly foe regarded as -justifying .'the' attitude of /the Government. ■. The chairman of the New Zealand Insurance Company pointed out in his speech of yesterday that an addi* tional burden had been placed upon the companies by the amended Fire Brigades Act of last session, and that to meet the tax it imposes rates will have to no raised. This, of course, is a matter of company man* agement ; but what is of public concern is the attack which was made upon the insurance companies simply because the idea got afloat— idea encouraged; by the Government— that extravagant profits were being made upon the business done in ISew Zealand. We all know what happened. Reasonable rates were cut in' an unreasonable manner, and it has become evident that, with rates an they exist in the Dominion, there must averagely be a deficit upon the business ' done. The State Fire Office must inevitably encounter this deficit—and the public will be required to make it good. A State Fire Office ought surely to be selfsupporting, unless the private companies are to be driven out of business and insurance carried on upon philanthropic lines as a new form of State socialism which we may fairly term revolutionary and dangerous. This is certainly not intended ; but since to make the State Fire Office or any other fire office self-supporting on its New Zealand business rates must be raised to somewhat as they were before it was instituted, we may fairly ask what is the good of a State Fire Office at all?