UNREMUNERATIVE BUSINESS.

New Zealand Herald, Volume XLVI, Issue 14103, 3 July 1909, Page 5

UNREMUNERATIVE BUSINESS.

"' A MANAGER'S STATEMENT. , [by telegraph.— association.] ' - Wellington, Friday. . Further investigations were made by a New Zealand Times > representative to-day in regard to th© position in winch the insurance companies operating in the Dominion now find themselves. * . i When/the manager of a leading insurance company in' the city was"'questioned during the "afternoon, he admitted that there are about 28 insurance companies seeking business in New Zealand, but said he could not see how that could affect». the public injuriously. • However many k companies there were, there was, after all, only a certain amount of business to go round, and any increased, competition would certainly not cause a rise in rates to the public. The only effect would be to decrease the average amount of business done by the companies, and so lessen their profits. In further conversation, the manager declared his; conviction that the four local companies, which had a revenue of about £750,000, only transacted, say, one-fifth of their business New Zealand itself. Supposing that declared a dividend, what possible indication could.-that be of the fire j buidness they did in New. Zealand? None j 'at all. It was a fact that some of the com- | panies said they ecuid very well do without. the New Zealand business altogether. There was really no material connection beI tween the dividends and the local insurance at- alt, though people in ; their ignorance might think that the fatter was really responsible for the former. Then the London offices would, he was sure, say that on the whole the business done in New Zealand,' even during what was considered normal times, had been unsatisfactory. v'For some years past, continued the ■manager,-'the New Zealand business had been absolutely unremunerative, and the balance had been quite on the wrong sidethat was ever since the companies lowered -the rates to protect themselves from competition by the State Office. Happily the companies did not rely on their New Zealand business, or they would have had to give it up altogether, but now such a position had arisen that the rates simply had to be raised. r Certainly the.premium income of some companies had increased very much during the last 10 years, but it had not gone up one jot in Now Zealand. Taking all the companies in the world/they did not make"m the average 10 per cent, on their premiums, perhaps not more than 5 per cent.,'but 5 per cent: on the turnover would be a very large amount on capital, for in the case of his own company they collected a premium of about five times their capital every year. This meant that the profit worked out at 25 per cent, on capital, which looked a very big amount. That was just where people made another mistake. " It was absolutely essential for the companies to have accumulations to meet their deficiencies.