Page 2 Advertisements Column 3

Oamaru Mail, Volume III, Issue 790, 23 October 1878, Page 2

LATE ADVERTISEMENTS. [advertisement.] THE GOVERNMENT LIFE INSURANCE DEPARTMENT. A reply to Mr. Short's pamphlet addressed "To Husbands, to Wives, and to Young People over seventeen." TO THE EDITOR OF THE OAMARU EVENING MAIL. SIR, —A pamphlet has recently been issued in Dunedin by Mr. Benjamin Short on the pre-eminent advantages of the Australian Mutual Provident Society over all kindred offices ; the Government Insurance Department being specially aimed at, though not mentioned, it being the only New Zealand Office doing life insurance business in this Colony. Believing that results are recorded and conclusions drawn which are inconsistent with facts, I beg to invite the attention of the public to a comparison of the advantages claimed so exclusively- for his office by Mr. Short with rho"-r- r .. ./the Government. While i.iiivu.-.. 0 ' io criticise other institutions, I conceive it to be my duty to protect the department of which I have charge in this district from the possibility of suffering loss of business by a display of profits to insurers in foreign societies, which I am convinced a careful analysis of the facts will And to controvert Mr. Short's astounding assertions, recourse will be had to documentary evidence furnished by himself and the institution he represents, as well as to that furnished by the official reports of the Government office. To his statements of the "astounding prosperity" of the Society and the "incredible amount of bonuses" he would lead the unwary to expect, it is only necessary to confront a few extracts from the Director's report to a special meeting of the Australian Mutual Provident Society on the "26th August, 1573. This meeting was called for the purpose of receiving the report of three English actuaries on the Society's mode of conducting its business and dividing its profits. Mr. Short's account of the origin of the office leaves the impression on the reader's mind that its promoters had no pecuniary interest in starting it, and that, as he says, " the scheme was a purely philanthropic one." That it was not so entirely disinterested an undertaking, however, is made evident by the appearance, in 1850, of a rule providing that "two thirds of the surplus shall be allotted in vested additions to the first 100 policies effected in the Society." At the first division of profits, in 1554, the surplus was divided, in accordance with the above rule, among only seventy-six policy-holders, the number of policies then in existence. These " philanthrojjists," therefore, reaped a splendid harvest from this one-sided mode of distributing profit in a "mutual" provident society. Examples founded on this very exceptional circumstance have been ever since paraded as specimens of bonuses, and the "too confiding insurer has, on receipt of his bonus, found it woefully short of what he had been led to believe, and in expectation of which' he had been led to insure in the Australian Mutual office. The demoralising effect produced by canvassing agents like Mr. Short holding out such extravagant inducements is amply proved by the last annual report of his office, by which it will be seen that the number of policies which fell through during the year amounted to 90(3 policies, insuring L335,54G. these 9<><s policy holders failed to find in tlie Australian Mutual Provident Society that mine of wealth which Mr. Short would have the public-believe is secured to every fortunate possessor' of a policy in its books. Let us now see what the actuaries referred to by Mr. Short's own Society have to say on this mode of dividing profits. Here' is their opinion, embodied in their special report to the directors in 1873 : Extract from Art. 17, page 147. " The referees are unanimously of opinion "that the present method of distribution, as "laid down in the 29th bye-law, does not " apportion the profits equitably among the "members. That the tendency of the exist- '' ing method is undoubtedly to favor the " members of longest standing in the Society " at the expense of those who have recently "joined—that the effect of this tendency " would be sooner or later to reduce the "new members' bonus to so low a rate that "very few members would join. That it '' possesses no sufficient advantages on any " ground to justify its retention; and they "decidedly advise the Society to abandon "the present method of distribution. The "referees in their separate opinions give "reasons for stating that the Society's "method of apportionment leads, as might "be expected, to great and increasing in- " equalities; that the present method of " distribution is in a very high degree inequitable as between members entering at " different periods ; that the plan may be, "and no doubt is, suitable for a company "about to be wound up, but unsuitable to " a going concern ; that it is not equitable, " because it is not intelligible ; that it is in- " consistent with the principles of a Mutual " Life Assurance Society; that the method " of distribution is inexpedient in the general " interests of the Society ; that the system "is not now adopted in any Assurance So- '' ciefcy in England or the United States ; and "that the method is objectionable on all "grounds. Mr. Short endeavors to make a point by telling us that a great gain accrues to his Society by its members being distributed all over the Colonies, and that his eggs, as he elegantly expresses it, not being all in one basket, if an epidemic broke out in one Colony, the majority living elsewhere, a heavy loss would not occur. But he omits to add that New Zealand, _ where only the Government Insurance Office exists, is far and away the healthiest of all the Colonies, free from malaria, and not likely to be visited with an epidemic. Mr. Short, therefore, argues against himself, because New Zealand insurers in his Company will suffer from the higher rate of mortality, and the risk of epidemics breaking out in semi-tropical countries where his Society exists, such as Queensland, New South Wales, South Australia, &c. On this point I beg to quote from Professor Pell's report to the Directors of the A.M.P. Society : "It has been since, however, proved by "analysis of the results of two census re- " turns, and of the annual reports of the "Registrar-General of New South Wales, "that the rates of mortality in this Colony "are greater than was supposed, and that, at " ages above forty-five, they are considerably "greater than the Cai-lisle rates (the rates " then used by the A.M.P. Society)." " We have no right therefore to assume "that the lower rate of mortality, which "has hitherto prevailed among the members " of the Society, will continue as their ages "advance, but should rather anticipate that "it will be greater than what has been " assumed as the basis of our calculations." Mr. Short again states that each Colony has a Board of Directors chosen from the members to manage their own affairs ; but he omits to inform us that the only Directors who are chosen by the policy-holders are the Sydney Directors, and that those in all the other Colonies—including New Zealand—are merely nominees of the Sydney Board. This, of course, gives the Sydney Board a great preponderance, and there is naturally a keen competition to get on the Directory there. So high, indeed, did the excitement run at