DEPOSIT WANTED

New Zealand Times, Volume LIII, Issue 12538, 30 August 1926, Page 3

DEPOSIT WANTED

INSURANCE COMPANIES AFFECTED OPERATIONS OF LLOYD’S IN DOMINION AMENDMENT TO ACT SOUGHT It is not generally known tliat a group o t'Lloyd’s underwriters has commenced operations in New Zealand through a firm of brokers, and that in doing 60 they have caused concern in insurance circles. The postioin is a most curious one. Tlie famous name of Lloyd's, which has become almost a national institution, is a household word in matters of marine insurance. Now, however, they have extended their operations to all forms of insurance, this extension, it is stated, dating from the war years, when marine insurance received a severe blow, and in New Zealand they are cutting rates. While the other insurance companies naturally view this competition with disfavour, they are at present helpless. By statute every insurance company commencing operations in New Zealand is compelled to make a deposit of ,£50,000 as security for the meeting of claims which may be made against them. This Lloyd’s have not done, and this at present they cannot be compelled to do. NOT A COMPANY The reason for this is that Lloyd’s are not a company, but a collection of individuals who work in groups, and each take personal responsibility for any policy which they may issue. The Insurance Companies’ Deposits Act is the measure which governs the case, and by an amendment in 1922 all British insurance companies commencing business IJ J i5 ew Zealand after September 22nd of that year are compelled to make a deposit of «£50,000. Two years a"o the Attorney-General and the Public Trustee commenced an action against G. H. Scales, Ltd., who were making contracts oil behal fof Lloyd’s to compel them to make the deposit, but it was argued that Lloyd s were not a company within tnu meaning of the Act, and the action tailed. This was not regarded seriously ~e t lme * 6 *uce the operations of Lloyd s m 1924 were not of great moment; but now that the firm is seeking business actively in the Dominion, the insurance companies consider that the deposit should be made. PRIME MINISTER APPROACHED To this end the Prime Minister ha= been approached, and for the second time, last week, he granted an interyiew to representative sof the council of the UnderwrtieTs’ Association. If the deposit is to be made, slight amendment ot the Act will be necessary, and this has been asked for. The insertion of the words or persons" in the deposit clause, it is oensidered, would meet the case. The underwriters are the more anxious because cablegram to the Aue-tralian-States in which Lloyd’s are operating have revealed that deposits ha’?* been made by B. Cohen, on behalf of Lloyd s, m Western Australia and in South Australia. 1 With a firm of Lloyd's standiug it would appear something of a formant, to require a deposit. There is an impression that Lloyd's have never defaulted lhm, however, is erronerus, for in 1924 a Lloyd's underwriter defaulted for the sum of .£428,000 A -eP or A°, f ‘J 1 ® c ,? se ’ "; bich . . was » big ore, is to bo found in the "Australasian inustarnr’4an<i Bankin * ®ecord” for AugTWO MILLION POLICY The case was one where the Industrial Guarantee Corporation isured for two r-lrtim 3 ’ paying premiums amounting to AO),uw>. The policy was underwritten hy Harrison! a member of Lloyd’s, who was found to have been speculating in marine insurance on Gree ksteamers, and to be hopelessly insolvent. The corporation proceeded against Lloyd’s, stating that they had understood that a policy on-del-written by an individual underwriter of Lloydl s had behind it the whole funds of Lloyd s and not merely the liability of the individual underwriter. They based their case on a book called the btory of Lloyd s,” a reprint of a lecture delivered by the chairman of s - Lloyd s denied liability, Sir “i°bn Simon, for the defence, stating that if a part ycbose to have dealings With an underwriter when he knew that ft the committee of Lloyd’6 knew the true position of that underwriter it would not allow him to continue underwriting, the party could not hold the corporation liable if the underwriter defaulted. In evidence, Mr Pulbrook, one of Lloyds underwriters, admitted that the only security which an assured ob. fill 110.(1 at Lloyd s was the honesty and solvency of the individual underwriter. Mr Justice Bailhache, in giving his judgment for the defendants, said that in the book "The Story of Lloyd’s" there were certainly statements which could not be supported, and that if be were on 111© committee lie would seek to have the book withdrawn and recast. Harrison had known that lie could not meet bis obligations, and that if be had revealed bis position to the committee he would be prevented from underwriting. Por the protection of New Zealanders, then, tho council of underwriters desides Lloyd’6 to make a deposit here just as their rivals do.