The N.Z. Times WEDNESDAY, APRIL 9, 1908. MARINE INSURANCE BUSINESS.

New Zealand Times, Volume XXX, Issue 6490, 9 April 1908, Page 4

The N.Z. Times

WEDNESDAY, APRIL 9, 1908. MARINE INSURANCE BUSINESS.

«m which n ißoosroudß xbx “ numM mnmn.’ ih.hu.bib UU,

Marine insurance is of the same monopolistic character as fixe insurance. The scope of its operations is world-wide, but the concentration of its energies is directed from London. The tariff and policy under which all apparently competing companies work i-i laid down there, consequently a “ free lance ” in this business does not exist. The marine insurance business is practically dominated by ten great companies, though a large mixed business of fire and marine is in the hands of tho other thirty odd companies, which overshadow and control the business of fire insurance. The ten marine insurance companies referred to are holders of funds, excluding their paid-up capitals, totalling £5,918,0X5. Interest receipts from those investments gave £223.020, while dividends paid to shareholders absorbed £214.561. The above figures are tabulated from statements of the ten leading marine offices for the year, ending 1907. Some other facts for the years 1906 and 1997 make interesting reading,; viz., the total income of the ten companies frenn premiums in 1906 was £3.703.079, and in 1907 £2,707,835. On tho huge turnover of marine premiums for 1906 a net less of £76,950 resulted.

Only four out of the ten great companies showed a profit from marine underwriting. The other six concerns made heavy losses.

It is yet too soon to compute the losses for 1907, but there is enough evidence to justify expectation of very much worse results. For the last six years the results have been disappointing to shareholders, for they only received dividends from the surplus funds invested, those funds being the savings from many fat years in the “long ago.” The outstanding feature is that the business was unprofitable as a whole. The main reasons for tho unprofitable outcome are to bo discerned in tho heavy losses made under the heading of war risks, and the fallingoff in hull insurances, owing to/ the large shipping companies carrying more of their own risks than formerly. Then there has been a oonsideraole contraction of international trade, as well as a fall in values of shipments. These features are amply made evident in the small increases of premiums for 1907—just a paltry £4BOO —in a revenue of nearly two and three-quarters millions sterling! Wo are not so mudh concerned about tho more or less fortunate shareholders in the ten great marine companies as wo are for the greater and more important body comprising those who perforce have to patronise the caterers for marine insurance cover. We notice that the Standard Company Was absorbed by the London and Lancashire Company, and that the Ocean Company’s business has been taken over by the North British. The Ocean was one of the companies which returned a profit in 1906. Further, it had a premium income of £162,186. These amalgamations will enable the remaining concerns to harden rates and make more one-sided contracts than in the past. They are not operating for the public benefit.

Wo have from this Dominion about £20,000,000 of exports and £17,500,000 of imports. Already the excosaivo rates of marine insurance have been commented on, so that the imminent increase which the above movements in marine insurance circles predicate are a matter of concern to us here. Increased insurance rates would be another factor tending to make the cost of living dearer to all. The developments of the present economic conditions are calling for new and better systems to meet current requirements in all classes of insurance, but particularly marine. The formulation of a scientific tariff as the outcome of actuarial investigations is urgently called for. There is no reason why a table of rates and classification of risks should not be brought forth of this character. This would settle, first of all, what was the true cost of marine insurance, and this being determined a legitimate profit could be added, so that shareholders and underwriters would receive a fair return for their capital, while insurers could depend on a stable rate instead of the many variations —mostly upwards—of past years. Marine insurance is a business which has been long-estab-lished. Its records are well kept. Therefore, the proposal for the actuarial adjustment of the fate tables is both feasible and practical.