INSURANCE DEPOSITS.

New Zealand Herald, Volume LXIV, Issue 19805, 28 November 1927, Page 11

INSURANCE DEPOSITS.

LLOYD'S DOMINION POLICIES. DEMAND FOR GUARANTEES. DISCUSSION IN PARLIAMENT. [BY TELEGRAPH. —SPECIAL REPORTER.] WELLINGTON. Saturday. Tito Insurance Companies Deposits Amendment Bill was debated in the House this morning, the discussion being adjourned at one o'clock until Monday afternoon. In moving the second reading of the bill the Attorney-General, Hoik. F. J. Rolleston, said that there was no intention to stifle competition. Nothing unfriendly was being done as far as Lloyd's were concerned. All that was asked was that they should compete on fair terms. The general object of the legislation was to ensure competition on fair terms to secure guarantees of a company's good faith and protection for the policy holders. The classes of insurance in respect of which deposits were required were fire, employers' liability and workers' compensation, and other classes which would include motorcar risks, etc. No deposits were required in respect of life and marine insurance. The deposits asked for by the bill were those fixed by the legislation of the session of 1921-22. The proposals in the bill did not in any way interfere with dairy produce insurance, which came under the marine classification. The deposit would be required from the person who signed the contract note.

In regard to the difficulty of obtaining deposits from each of the members uf Lloyd's who might be concerned in carry, ing New Zealand insuranco risks, the Minister produced a policy for £20,000, bearing tho signature of 600 individual underwriters, who each undertook to bear stated fractions of the risk. Some of the fractions were one fifty-seventh, two three hundred and twentieths, and one forty-second. (Laughter.) Next year, on the same policy there might be the signatures of 600 different underwriters. The Minister said that the legislation was not hasty. It came before him and the Post-master-General at the end of last session and since then the fullest inquiries had been made, not only with Lloyd's agents, but with others interested. Lloyd's Approval of Principle. Mr. liolleston said that an undertaking given by the Prime Minister that the proposals would be submitted to Lloyd's committee in London had been honoured. That committee had approved of the principle of the legislation and the only point in dispute was the amount of the deposit. The Minister said that if any member could convince him that the deposit should be any lower than that required of other insurance interests in New Zealand he wouid be prepared to consider the matter. There would be no hardship on tho agents as the deposits would be practically at call. The Government would pay interest at 5| per cent, and the only cost to the agents would bo the difference between that rate and the rate—probably about 6 per cent.—at which they borrowed tho amount of the deposit. Thus the cost would be only about £3OO or £4OO. The Minister added that in the interests of the people of the Dominion, of Lloyd's, and of the agents themselves, the legislation was desirable. Mr. II E. Holland. Leader of (he Opposition. said that if the Government was prepared to make the State fire insurance a monopoly it could reduce premium.'! by 50 per cent. What the agents were complaining of was not that £20.000 should be paid. but that it should be paid five times over. The Attorney-General: That is not the case. Mr. Holland said he did not think the requirement of a £20,000 deposit was tho remedy. Both fire and life insurance were profitable forms of exploitation. Even those competing with the State department were making immense profits, and if our own State offices were not in existence the position would be vastly different from what it was now. Indeed it was a question whether our own State insurance offices were not acting in combination with the insurance combine. Hon. W. Nosworthy: That is not so. A Suggested Postponement. Mr. Holland quoted dividend figures which he said showed that the big British companies had been making huge profits. He had seen a statement that the State Office in New Zealand had saved New Zealand insurers £4.000,000 in 20 years. He admitted the. difficulty of dealing with the underwriters who were acting as agents for Lloyd's, seeing that they were not a company. He suggested that the bill be left over until the beginning of next session. By making insurance a State monopoly the Government could render a service to this country that would have far-reaching effects. At present the companies had a grip fin tho farmers and the business community. Mr. Nosworthy said the Leader of the Opposition had suggested that the time was not ripe for a monopoly by the State of insurance in New Zealand whatever might happen in the years to come. He denied that there was any | combination between the Government and the companies. The Government on the other hand had done a great deal for the people in regard to insurance in New Zealand. As to Lloyd's the Government had made an effort to do the right thing. Other Speakers' Views. Mi. D. G. Sullivan (Avon) said that Lloyd's had offered the Christchurch City Council a 50 per cent, reduction ori the rates they had previously been paying to the State. He added that he was much impressed by the statement made bv Mr. Rolleston and the only question in his mind now was whether the £20.000 deposit asked for was not too much. Mr. W. T). Lvsnar (Gisborne) snid that nothing must be done to stop Lloyd's, but he thought the bill was going in that direction. Legislation that would block Lloyd's would cause great dissatisfaction Mr. Nosworthy: It will not block them doing insurance business here. Mr. H Atmore (Nelson) held that the Attorney-General would not obtain the necessary security to the public by imposing the deposit of £20,000. If the public were not now fully protected the proposed deposit would not effect the object desired. The rates charged by Lloyd's were in some case* 75 per cent, lower than the companies charged in New Zealand, The Prime Minister said that only one deposit would be required in respect of all Lloyd's agents. There was no intention to' make each agent liable for a separate deposit of £20,000.