THE NEW INSURANCE RATES.

Otago Daily Times, Issue 13198, 3 February 1905, Page 2

THE NEW INSURANCE RATES.

(Br Odr 'Wellington Cobebspondbnt.)

The following telegram. from our Wellington correspondent, which should have reached us in time for publication in yesterday's issue, .Was, owing to carelessness on tho i>arfc of tho'Tclcgraph Department, not delivered to us until yesterday morning:—

Tho war of rates between the Government Fire Insurance Department and the companies doing business in New Zealand lias commenced in earnest;. I telegraphed yesterday indicating 'th£t, the tariff reductions determined:upon at the reocnt representative meeting of underwriters was a very substantial on©, but I. was. unable to ascer: tain the! details. The strange secretivencss that has characterised tho responsible officers of tho meeting is still in evidence. In a briof conversation I'had with the chaumau ho told me that lie could givo me no information whatever, His mouth was, ho said, sealed. From all I can hear I am afraid tho companies are standing in their own light in not taking the public into their confidence in this matter, especially as, in spito of tho ohairnian's roticenco, the information is graduully leaking out, matter. of fact,* I have seen a oircular marked 'Confidential," in which details of the now plan of campaign aro given.

The now tariff, that has been adopted will involvo a reduction in tho ruling rates as from January 4- last, tho date'upon whioh the Stato Fire Insurance Department commenced. business. It appears that, in the first pla«>, thcro is to be a very large reduction in one very important class of risk known as class "W," which includes dwellings, and also Covers churches and offices. In this class there is to bo a reduction of no less than 33 1-3 per cent., or one-third, and this will result in a considerable drop from the rates charged by tho Government Department. 'Three other classes have been speoially affected by the decision of the conference.; These are classes "X" (which includes manufactories), "Y" (retail shops), and "7," (hotels, warehouses, etc.). The premium rates for ordinary risks in those classes are to undergo a similar reduction than in the case of dwellings, the "cut 1 ' being only 10 per cent., which will bring tho 'rates to the level of thoso charged by the State office. At the samo time, all tho higher rates for special risks will undergo no reduction—at all events, for the present. The figures mentioned above (33 1-3 per ennt. and 10 per cent.) are stated in the circulars to the agents to be "the maximum reductions," wiiich indicates that in some cases the companies will see fit to charge rates in excess of the "cut" pric& decided upon. lii particular, it is cxpccted that the Committee of tho Underwriters' Association will, frpm time to time, as occasion demands, fix higher rates (though still lower than those hitherto prevailing) for policies which appear to have a special risk.

In order tliat tho olients of tho companies may not. suffer under any disadvantage as compared with those who took advantage of tho State's oheaper rates on January 4, it has been arranged to pay rebatos on all premiums from that date. "It is stated on good authority that the object of the new tariff will be to keep the "safe" business away from tho State Department, at tho same time leaving to it the more undesirable class of risks. How Mr Seddon is going to meet this serious opposition remains to ho seen. Probably he may endeavour to find a remedy in further legislation. It is known that the object of the companies is to smash tho State Department in New Zealand, so that a simitar venture may not be. attempted in any of the Australian States. With this object the powerful companies engaged will not mind losing considerably in New Zealand. The New Zealand Times, dealing with the situation, points out that the companies complain that their New Zealand business is not profitablo, and that last year was most disastrous to tho companies, being .the worst that has ever been experienced. "That being so," remarks tho Times, "it was hardly to bo expected that tho Underwriters' Conference, whioli has just concluded its sittings, would recommend a reduction in premiums, as it has resolved to do. A fairly constant ratio between Josses and insurance rates must bo maintained if the companies aro to remain solvent and meet their liabilities. It is pretty well understood that tho firo lossc6 in 1901 totalled close on! half a million sterling. ■The fact has been made public that during the first six months of tho-year the losses exceeded a quarter of a million. Tho fires in that period included that which destroyed a whole block in Palmeiisfcon North, on which the risks amounted to £10,000; a similar, fire at Gore, when the losses were £20,000; ono at Islington Freezing Works, in which tho companies lost £16,000; Kempthonie, Prosser, and Co.'s firo in Wellington, with losses amounting to £35,000; T. and S. Morrin and Co.'s fire at Auckland, the losses in which were £60,000; and the firo at Motnroa Freezing Works, on which the underwriters paid £10,000. Since July last the losses have included thoso at the Waitara Freezing Works, £14,000; Grand Hotel, Rotorua, £14,500; and Nelson Boys' College, £15,000. In all Australia during the past year there wore not 10 fires that caused , such heavy loss as those enumerated above. Tho average Ne'w Zealand losses, in the opinion of the Australasian Insurance and Banking Record, aro 'a good deal moro than the business will stand at present rates.' When we find, in face of this and immediately following upon a more than usually disastrous ycar,-t-liat a substantial reduction of rates has been agreed upon, .we may be pardoned' for questioning either the sincerity of the companies in the statements they make as to the unprofitable nature of their business, or the wisdom of t.heir policy in reducing premiums to a level that must, on their own showing, npproaoh the point, of'financial unsoundness. The only conclusion to bo arrived at-is that tho conference has resolved upon starting a ' war of rates,' with a viow to preventing the transfer of business to the State Firo Insurance Department. This is doubtless good policy from the standpoint of worldly wisdom, and re: suits may justify it. No one will, however, bo surprised if tho immediate outcome should bo the emergence of a necessity for tho companies foregoing dividends for a few years, and perhaps having to draw upon their reserves."

(Peb United Press Association.) CHRISTCHURCH, February 2. Local insurance 'representatives are reticent concerning tho reduction in rates for firo risks, but it is generally understood that an all-round reduction of onethird has been arranged. One local manager, interviewed, expressed the opinion that tho results would be a decrease in manager's salaried and carelessness on ■ the part of insurers, who would bo able to afford larger policies, and would become less anxious -when they know their properties were fully covered.