INSURANCE STABILITY

New Zealand Herald, Volume 78, Issue 24104, 24 October 1941, Page 6

INSURANCE STABILITY

The figures revealing a record volume of business, quoted by the chairman at yesterday's meeting of the South British Insurance Company, were described by him as the fruit of many years of painstaking organisation, not of one year's effort. It is as the result of a long period of skilled direction and management also that the company has been able to absorb the shocks of war and maintain a stability beneficial to its clients as well as its shareholders. Another form of stability was mentioned by the chairman in denying a statement that the two Auckland companies handled the greater part of the insurance business in New Zealand. The spread of the aggregate risk over a number of organisations, many with substantial funds in other parts of the world, was. he suggested. an assurance of strength which might be of enormous value to the community if some unforeseen disaster caused a large volume of

claims to be presented at once. The principle is a sound one, analogous to that of branch banking as a safeguard against any unexpected strain developing in a particular territory. The United States was an example of a country in which branch banking was long frowned upon*, and actively discouraged. The result was the rise of many single-unit banking corporations each with both assets and liabilities concentrated in the one neighbourhood and community. To this was attributed in great measure the large number of bank failures during the depression. The underlying principle applies naturally to insurance, endorsing the soundness of spreading risks and resources. Not only the South British Company, but the whole insurance system, draws strength from such a situation.