GOVERNMENT LIFE INSURANCE.

New Zealand Mail, Issue 907, 19 July 1889, Page 29

GOVERNMENT LIFE INSURANCE.

COMMISSIONER’S REPORT. The annual report of the Government Insurance Commissioner, Mr D. M. Luckie, •with the , accounts for the year ISSB, was presented to both Houses of Parliament on Friday la3t. The accounts were lodged with the Treasury in the latter part of May, and at that time we gave a summary of the principal figures they contain. The report, under the heading of “new business,” shows that 2957 policies were issued in 18SS, assuring £785,092 15s ; of these 353 policies for £94,734 were issued under the temperance section. The new annual premiums on the total sum assured amounted to £21,853 15s Id. Thirteen contracts for life annuities were purchased from the Department at the price of £2795 133 7d, the annual payments to the annuitants being £312 10s Sd, Under this heading the following allusion is made to the Tontine section recently established : During the year 1793 policies for £554.830 were added to the Tontine Savings Fund Section, to the inauguration of which reference was made in my last annual report as giving promise of marked success. The , number of Tontiue policies existing at the end of the year was 2182, assuring £656 230. These figures show that the popularity expected to attach to this method of insurance, under which the policies of longest duration will secure the fullest; benefits, has been fully realised. I may remark here that to the energy of the Inspector and Superinhenv dent of branches, and of various active / agents under his supervision, a large measure of the success attending the procuring of new business is attributable. The income for the j’ear was £282,200, of which £73,421 represented interest on funds invested, showing an increase of £7040 on the interest account, and an. average rate of £5 5s 7d per cent. The death claims numbered 216, through the decease of insured persons, and the amount paid, with bonus additions, was £69,435 8s 4d. Endowment assurances matured to the number of 24, and under these, £6612 4s was paid to the assured persons, and £1193 Is 5d was paid on account of matured endowments and investments for 16 children. A curious fact is stated in connection with the deaths above mentioned, that is, the number of accidental deaths which are included in the mortality for the year. These were no fewer than 33, or 17 per cent of the total mortality, and represented £14,825, or nearly 23 per cent of "the gross amount paid for death claims. Nine of these deaths were caused by drowning, and five by suicide. The following is the concluding portion of Mr Luokie’a report : GENERAL REMARKS.—PROGRESS OS’ LIFE

INSURANCE. It is now nearly 20 years since the establishment of this Department in 1869, when the hist Ac.b was passed. The first policy Issued faom the office was dated 26th March, 1870. In June, 1871, the funds amounted to the comparatively sipaH sum of June, iS7S, the end of the first quinquennial they were £1Q9,96§ ; ip June, 1880, afteii the second quinqutnnium, they had risen to £459,336 ; at the close of 1885 they reached £1,102,035 ; at the end of 1888 the year now reported on, they were, as the accounts show, >£1,452,478 ; and at the date of this report, Ist July. 1889—the eleventh report I have had the honour to furnish—they exceed one and a half millions. This growth of the funds is eminently satisfactory especially considered in relation to the cash surpluses which have periodically accrued, : ' as shown by the last two quinquennial in- : —castigations, amounting to £j8,670. in 1880, and £242,556 in 1885. Ofthesesums, reversionary bonuses were added to the policies, of £124,5§2 for the period ended in I§&6, embracing the first 10, years of the Department ; and £319,391 as at the end of 1885, a period of five and a, hqlf years; while, in addition to ample Reserves otherwise, se't %pajVt by tfie investigating actuaries, tfiere was a further reserve of £92,556, in cash carried forward for future operations. These figures prove tfiat the establishment of the institution nearly twenty year's ago haß, in the interval, anfi particularly during the laq.t degadb* beep duly appreciated by tfie people qf this Colony.;- It pot loss gratifying tq know that tfie He-, psrtmenfc coptinqes to. grow ip faivQPT-. With suah funds and Ejqcfi profit! til® financial condition b.f the office ia »*&*»»•—’ Ruti in addition to these pec”” 5 '

tboro W the --u. ! the nee"- 1 * - _„ A ary benefits, - ' cant circumstance that „ 41( ,y of the State attaches to all policies issued byjthis Department. To this latter advantage, especially valuable to the assured, a large portion of its popularity is undoubtedly due. It engenders in the minds % of the assured a confident feeling _ that nothing can possibly occur whioh_ will de'’‘“‘prive them er those they leave behind them of the advantages which their prudence and forethought have provided. „ My report on the business of the year 1886 contained a brief history of the rise and progress of the depaitment. _ The reasons I for the inauguration of the institution were J fully narrated in Parliament at the time, the firßt Bill was introduced. These were, inter alia and mainly, the disastrous failures in life insurance institutions in Great Britain, and the grave losses which these failures i had inflicted on numerous heads of families a nd their dependents. The necessity for providing State security for the assured in this Colony was strongly insisted on by Sir I Julius Vogel in introducing the measure, and was readily acknowledged by the Legislature of the day. It would appear that the failures of British offices in past years are now beginning to form a,topic of fresh discussion among English public writers, and the question of State guarantee, similar to that attaching to this office, is not unlikely to be agitated. An article entitled Bite Insurance in 1889,” by Mr Montagu Gattie, Is published in the Universal Review of lotfc ~ April last. In his opening sentences th« 'L reviewer says : «< The recent collapse of the Briton Meaica i and General Life Association, and the Sovo ’ re ign Life Assurance Company, and tm

equivocal nature of the transactions revealed by the subsequent investigations, constitute a sufficient apology for directing public attention to the methods in which the business of life assurance is now carried on. There is reason to fear that these disasters, deplorable enough in themselves, are the forerunners of still more serious trouble ; already rumours are afloat of other impending failures.” Making this his text, the reviewer examines at length the condition of various life assurance companies, into which it is not necessary here to enter ; and he promises in a future article to discuss such remedies for existing conditions of life assurance in Great Britain as appear feasible. 1 Ho concludes by observing that—

“In any inquiry of the sort the larger question, whether the whole business of granting life policies should not be made a function of the State, cannot be left out of consideration.”

This is an important indication of what may prove a revolution in the methods of life insurance in the Home Country. Nearly 50 years ago the National Securities Savings Banks, and subsequently the Post Office Savings Banks, in Great Britain and Ireland, were established under statutory enactments because of the insufficient security previously afforded to depositors in numerous private snvings banks, and because of Berious financial irregularities which had arisen in connection with such banks. Following a similar principle of State interference, and because of the many grave failures of life insurance companies, the British Parliament, under the Government of Mr Gladstone, in 1553, passed an Act for establishing a Government system of life insurance in connection with the post offices of the couutry. But, partly through the influence of vested interests, the maximum amount of individual policies was restricted to a small sum ; and, by reason of this limitation, together with the total lack of external action by the postal authorities toward popularising the scheme, the post office insurance institution made very little progress, and its business, after 35 years’ existence, is now quite insignificant. Whether, in view of what would seem to be foreshadowed in the extracts, above quoted, the Home Parliament will ultimately be moved to take steps to create a living and active insurance department which shall, under Government management, embrace the three kingdoms, can only be vaguely conjectured. It is, however, a sign of the times that a question so far-reaching has been publicly mooted in a leading review. The marked success which has attended the New Zealand Government Life Insurance Department may be referred to as. offering another of those instances in which the Legislature of a young colony has set an example for securing to its inhabitants improved and social conditions no.t hitherto provided in any other dependency of the British Crown.

In his Financial Statement, just submitted to Parliament, the Hon the Colonial. Treasurer r®fei?r e fi ta the progress of life insurance in this Colony and In other portions of the British dominions and in America, It is considered desirable that the statistics on this subjeot, as contained in the Statement, should be reproduced in this report for the information of policyholders and others. Regarding the policies issued by this Department the Colonial Treasurer said, “ During the past year the new assurances amounted to nearly £BOO,OOO, showing an increase on the average of recent years, and approaching in i amount the whole of the neqr pu.siness j effected by tbe foreign life offices having branches in N° w Zealand. Tfie average amount of the individual assurances was larger than in previous years, being close on £270, which is an increase of fully £SO per : policy as compared with the average of the | three years immediately preceding. The average amount of the policies discontinued ; is smaller than that of any year. since , the j initiation of the office, while the policies surrendered, haye been smaller in their total j amount' than in the preceding year. The ; agcumulatod fund has been augmented by < £123,0d0. during the year. This bind at the present moment exceeds a million, and a | fialf sterling, having doufilqd in arpount j dqrlhg the last (fix years.”. j Tfie subjoined table contains the figures shoyfibg tfie existing condition qf qtdiift&ry » life insqranqe ifi Ncvy Zea,l§,nfi q& oa» v ”' with' tfia othey qqDaruuuitiea _ tfare d rained :

The Colonial Treasurer said, further, “It is gratifying to note that, while tne average sum assured by each policy is less m New Zealand than elsewhere, the total numher of policyholders in this Colonybearsa larger proportion to its total population than Is the case in any other English speaking i community ; and that, though the individuai , policies average a less sum than elsewhere . the number is so much greater that the total . sum assured divided amongst to | population gives a larger sum per head here J than anywhere else.' 3 Investment of the funds in the direction r of mortgage on real property « steadily i tending under the supervision of the f °^ r f f r of Investment. It is true, however thatff 1 the Board’s power as regards the amount 0 that can be advanced under any onemorte gage were increased so as to perm lt . e maximum of £IO,OOO, instead of the P rea ®u fc i- limit of £SOOO, more advantageous investd ments could be secured. It is proposed o ask Parliament to amend the law by granting y power to the Board to lend the larger sum. e At’preßent the funds are „pi<lly..not.a S m2, >, and will continue to grow, and it “ JSliflj h desirable that facilities should be afforded ! ie more profitably investing the available por tionß of such increase. al D. M. Luckie, ie Government Insurance Commis&ianer.

average Average Average Am. Ins. per No. of Head Policies Am. of per 1000 of Pop. £ Pop. Policy. £ New Zealand ... 24 Australia ... 19 80 65 .295 300 376 487 554 Canada ... ... 9 United Kingdom 12 United States ... 8 ' 24 26 15