RECEIPTS FOR PREMIUMS.

New Zealand Herald, Volume LXVII, Issue 20482, 6 February 1930, Page 13

RECEIPTS FOR PREMIUMS.

AN INSURANCE PRACTICE.

CRITICISM BY A JUDGE.

The practice adopted by many insurance agents, when writing up business, of issuing receipts in full for premium moneys not fully paid, was commented upon by Mr. Justice Herdman during the tiial of an insurance agent in the Supreme Court yesterday. A witness, Leonard George Smithers, formerly Auckland manager of a life insurance company, was asked by defending counsel whether it was not the practice among insurance agents, on receiving a deposit from a new client, to write out a receipt for the full premium in order to reap the commission paid by the insurance company.

"Yes," witness replied. ".An agent may say to a prospective client, ' Pay me half the first premium now and tho other half at any time.' He then issues a receipt for the full amount, because until the company has the full receipt he cannot draw his commission." Mr. Justice Herdman: Is that the practice of this company ? Witness: It is the practice of most companies, I should say. His Honor: It seems to be very wrong. It amounts to issuing a false receipt. Witness said he thought that the label did not quite fit the case. It merely meant that the agent guaranteed payment of the full premium to the company. Naturally agents took a risk of failing to induce a client to pay the balance of a premium, in which case they were obliged to pay the money out of their own i-ockets. There was extremely keen competition in the insuranco" business and in order to encourage agents to "write up big business" many companies offered prizes to the most successful agents. " I have known the? practice of issuing receipts of this kind to be in force all over Australia and New Zealand," witness added.

" I am surprised to hear it," was the Judge's comment.