Page 7 Advertisements Column 2

New Zealand Times, Volume LXXII, Issue 4733, 15 August 1902, Page 7

STATE FIEE INSURANCE ITS TRIAL AND FAILURE. iiISTrIIICAL INSTANCES OF AN IMPRACTICABLE EXPERIMENT. TiiiE circulation by the Government of a -Bill to establish a Suite Fire lnj hurasieu Uiiice, and to make other pro- | visions tor the insurance and protection I of insurable property in New Zealand I again.,! loss or dan.ago by lire, together j With the in ct that a large number of j people, who know nothing whatever üboui ; the subject, believe that such a. system j only re-julies to be inaugurated in ordci j 10 bccuii.c at once a magnificent success, renders it imperatively necessary that \ the idea should bo thoroughly ventilated j and discussed before a iinai decision be j arrived at by our legislative represeuta- ( lives. A leu- lines from the pen of one not connected with insurance, who has devoted a large amount ot time to a oarcsul consideration of the somewhat fragmentary hislorv of State firo insurance, may not lie devoid ot interest to the people of this colony, and may assist those who are desirous of enlightenment of obtaining such information as will facilitate the formation of a sound judgment upon this most important subject. HOW THE IDEA ORIGINATED. State lire insurance is not a new and original idea; it is nearly three hundred years old, and at the present day is almost, if not absolutely, obsolete. The first proposal for carrying on the business of fire insurance of which there is any record came in the shape of a scheme of municipal or State finance. The author of this brilliant proposal was no other than the eccentric Count Gunther von Oldqnberg, who is sometimes referred to in history as the “Don Quixote of Prussia.” 1 The scheme was first propounded about the year 1609. There is reason to believe that this form of five insurance was actually tried in Prussia, but there are no records extant to show that the scheme was a successful one. LONDON. 1678.—A deputy of the city brought forward a municipal fire insurance scheme, but the Corporation declined to sanction it. 1681.—A second attempt in this year was more successful, and the proposal was adopted. 1682.—Innumerable difficulties to the practicable realisation of the scheme confronted the Corporation, and tho idea was abandoned. SAXONY TRIES STATE INSURANCE. A State fire insurance scheme was inaugurated in Saxony in the year 1720. The insurance of all buildings was rendered compulsory on the owners. The rate of premium was to be fixed by the insured. The assessment of damage was made by Government officials. The scheme remained in operation for many years, and received a fair trial, but owing to the fires having been more numerous than in any other part of Europe, it was a failure from a financial point oi view-.

HOLLAND AND DENMARK. Between 1753 and 1778 municipal fire insurance was tried in Holland, also in Copenhagen, and at later periods in other parts of'Danmark. These lasted for a time, until the advent of the fire insurance companies rendered their existence unnecessary: POLAND TRIES THE EXPERIMENT. In 1815 the State insurance of buildings was commenced in Poland. The proportion of loss to the total sum insured was 5.40 per 1000, being nearly six times as great as the full average premium charged by the Trench insurance offices at the same date, and not simply for buildings, but for all classes of risk, including manu. factories and contents of a hazardous nature. It seems hardly necessary to remark that the Polish experiment ended in failure. THE EXPERIENCE OR FRANKFORT, The free • city ot Erankfort, including eight villages adjacent, had a most interesting experience. In 1815 an independent State was formed, and in 1817 a scheme of State insurance was inaugurated. No distinction was made between private houses and buildings used for industrial purposes, but there existed no compulsion to insure. In 1843 a proprietary company was founded. Competition was commenced, other companies established agencies, and the result was that the State organisation began gradually to lose its best risks. In 1837 a new State law was enacted, designed to meet the circumstances of the competition now experienced. The maximum contribution was limited to twice the amount of premium fixed by law. A new valuation was made. Notwithstanding these reforms, from 1857 to 1867 business continued to fall off, and its annual figures no longer represented the increase of the property of tho city. And now occurred the events which led to the final overthrow of the scheme. A series of fires brought up the loss for the year to 320,759 florins. The consequence was that, after' paying the maximum contribution allowed by the law of ,1857. tho debt against the insurance fund was very large. This remained as a charge against and upon the properties insured, .to be discharged in future years by means of the contributions of the double ordinary rate. The amounts insured fell off rapidly—the property still remaining liable to contribute to the losses of 1867. In 1869 the remaining fire risks insured by the State were reinsured in the various competing companies; and so the Erankfort State scheme of insurance ended in disaster and debt. BELGIUM MAKES INQUIRIES. Some time before 1845 the attention of tho Belgian Government was occupied with tho problem of whether or not the State should undertake a general system of insurance or loave»it in the hands of individuals or associations. The advocates of the State system represented that the profits ot insurance were so large that, if secured by the State, a great remission of taxation would take place. On December 27th, 1846, a Special Commission was appointed to inquire into ’the project. By tho end of 1847 this Commission brought in a proposal for ‘‘a general system of insurance” to be under, taken by the State. It turned out that this Commission had omitted to inquire at what cost to the public treasury such a law could be carried into effect, or whence the profits—estimated by some to amount to as much as HIOO.OOO per annum—were to arise. The matter was therefore again referred this time to the Central Committee of Statistics, and to some other persons specially selected by the Minister of Finance. The result was the rejection of the plan as a State measure. This Commission considered that the insurance of merchandise must be placed out of the question of State enterprise for various reasons, amongst these the uncertainty of finding suitable agents under all circumstances to estimate tho value; the difficulty of the mode of valuing in a large warehouse or factory; the constantly changing nature of their contents; the depreciation in the value of articles depending on fashions; or the removal" of articles after insurance with the criminal purpose of setting fire to the building and its contents. A second Commission was also appointed to consider tbe matter,’ and the result was that Belgium declined to take the risk. FRANCE REJECTS THE PROPOSAL. In the year 1850 a proposal was made in France to place the business of fire insurance nnon a State basis. A report dealing with the snbiect was presented to the National Assembly. This report reviewed' the attempts which had been niade in the direction of compulsory insurance in other countries ns well ns France before th’s date. It then proceeded to argue against the State system on the grounds of fh» greater extension given to insurance by the combination of private interests: the zeal, intelligence and economy which then bring to bear so much more strongly than Governments .can export io do; Dio inrustic? which would make the careful and prudent man the victim of "the negligent or guilty; the great-ex-