STATE FIRE INSURANCE.

New Zealand Times, Volume LXXVII, Issue 5563, 14 April 1905, Page 7

STATE FIRE INSURANCE.

VI EU’S OF COMPANY .MANAGERS. Tiio president of the Insurance Institute, Air 11. AI. Simpson, in his address last flight at the first mooting ol the session, dealt with the subject of insurance rates. Air Simpson defended the companies against the charge made in Parliament that their rales were excessive, and that hy a combination they gained improper advantage. “There can ho no doubt,” ho said, “that the contention of those who object to the methods of companies is without proper knowledge or appreciation of the difficulties in the way of arriving at a just estimate of degree of risk in each (see. II is interesting also to observe that the position taken up by Parliament is at variance .with insurance ethics, ft is usually accepted as an axiom that no one organisation conducting (iro insurance can stand absolutely alone and that no one experience is so .suiliciently exact or comprehensive as to ho reliable under all conditions. The altitude, therefore, was not only antagonists to the companies upon the question of remuneration, but was at variance with fclit! principle of agreement and combination which is looked upon hy the best authority as essential to the proper conduct of the business.” There wore thousands of promises to he insured,and no two of them identically alike; and no human mind or combination of intelligence was sufficiently acute to distinguish and estimate the exact degree r.f danger from lire. There must necessarily, therefore, bo difference of opinion oven amongst the most expert as to tho worth of each and every line. In free competition, with each risk falling to the lowest bid. every one must bo taken under value, for amongst varying estimates tho truth might fairly l>o looked for in tho mean of tho whole. “However much wo may differ in opinion,” said Air Simpson, “as to tho correctness of tho manner of arriving at fire insurance rates in New Zealand, tho circumstance that tho Legislature can bo roused to the pitcli of creating a department to contend with the private institutions which ordinarily carry an tho business of lire insurance, i.s a very serious matter both for those interested in tho companies and also for tho welfare of tho colony itself. On tho ono hand tho- capital of the shareholders and tho livelihood of the employee are at stake, and on tho other there is tho question of tho State embarking upon a measure of so Socialistic a tendency without first ascertaining beyond any reasonable doubt that Micir premises are sound and tho outcome reliable.” Ho emphasised the point, I hat it was necessary for insurance institutions to be strong, and have a sufficiency of premium to bear the ■strain of the contracts made year by year, and provide for tho risk of fire when it came. The history of fire insurance was more marked by disaster than by success; it was not therefore ■policy on the part of the assured to starve tho underwriter so that there ifhould bo nothing but weaklings to bear the stress of adverse circumstances. The necessity for this strength was rarely recognised. The public appeared to look with extreme jealousy upon the incouinulations made by tho largo fire offices, forgetting that they were tho .survival of tho many who had started upon their career. In some respects the .State Department was in a similar position to a non-tariff company, for it had proclaimed lower rates, and must of necessity depend for success upon a -loser discrimination with regard to its business. How far this would be attained, and as to whether the rejection •jf a considerable proportion of the business would he considered hy tho public as a proper attitude for a public institution of tho kind, were matters which history would yet have to tell us. In tho course of file discussion. Mr O. Al. Alontoiinro drew attention to tho .risks to which insurance business was subject, and said that the tariff of the ■companies had been arrived at after mature consideration the part of men experienced in tho work. It did not necessarily follow that because a man was a member of Parliament he ■was acquainted with insurance work. ■{Laughter.) There was nothing to prevent a loss of two millions if fire got into a certain Wellington block; and yet if tho companies built up a strong reserve to meet such a contingency, their action appeared to be regarded as deserving of condemnation. Air 0. D. Alorpoth mentioned the experience of Sweden, where there was a State Fire Insurance Department. When the fire occurred which destroyed the town of Aalsnnd, the whole of the department’s capital was swept away, and as it was not able to pay its claims., <t had to issue debentures bearing 5 per cent, interest. Air B. Dixon wanted to know if tho private companies were nob making their New Zealand business pay? Voices: No. AD Dixon; Then it appears that every English company or European company doing business in this colony draws upon its English office to pay its claims in Now Zealand. (A voire: If it is necessary.) Ho wanted to know whether it was reasonable to suppose that if tho Now Zealand business was not paying, tho companies would continue to do business in bins colony? If, as assorted. it was impossible for tho State department to carry on under existing conditions, why were the insurance people making such a fuss about it? (Laughter.) i Mr R. H. Simpson, speaking of tho destruction of the town in Sweden, pointed out that, the State Department of that country had made a grievous mistake in holding a monopoly. In jnontravenjjon of ordinary custom, this ono office took the whole, or tho great bulk of tho risk, instead of allowing it to bo distributed over several offices. Unlike life insurance, fire insurance had no fixed tariff of rates except by agreement. If any office broke this agreement, rates immediately wont down. He held that tho State had no business to come in and set a tariff which was not adequate to the risk. A hearty veto of thanks was given to tho president for Jus paper.