HARBOUR BOARD INSURANCES

Otago Daily Times, Issue 25797, 19 March 1945, Page 3

HARBOUR BOARD INSURANCES

LETTER TO AUDIT DEPARTMENT

The following is a copy of a letter which has been forwarded by the Oamaru Harbour Board to the Government Audit Department, Dunedin. It is signed by a member, Mr D. S. Bain, acting on authority granted to him at the last meeting of the board:— “ We have to advise that the board discussed your letter, and on the motion of Mr R. A. McDowell and Mr A. McLelland, it. was decided that' Mr D. S. Bain and the secretary should furnish you with all available information. To put the question in proper perspective, we append extracts from the Oamaru Mail (see also the board's minutes) of certain board decisions and discussions: —

"Extract No. 1, date September 1, 1931: ‘ The chairman (Mr R. K. Ireland) said that the firms who helped to bring boats to the port were the ones most worthy of consideration. It w«s resolved that the insurances with the Freezing Company be renewed and that the reinsurances be divided between the National Mortgage Company, Dalgety and Co., and Messrs Darling and McDowell.’ Mr McDowell was present at the board table when this decision was taken, and continued to sit as Government nominee until 1938, enjoying the insurance allotted his firm all the Extract No. 2, January 9, 1945: ‘Mr McDowell said his company ceased to have any interest in the Harbour Board insurance in September, 1943, six months before he was elected to the board. The election was in May, 1944. , “Extract No. 3: ‘Mr Glen said that Messrs Darling and McDowell did not handle the premiums, receiving only commission. Mr Cooper 1 said that that was not sufficient to disqualify.’ “ in an interview with an official of the Audit Department, Mr Bain was told that th° department's ruling was that the whole amount of premium and commission was the contract in insurance cases, allowing costs and profits as in any otnei business transaction. ;■ ■ . .-- " Iff a courteous interview in Mr McDowell’s office the information obtained was that a letter, dated December 14, 1943, detailing amounts due to his firm for commission for the financial year of the board ended September 30, 1944, was the last letter received from Dunedin about the board’s insurance; that Mr McDowell's office knew nothing of the rates of commission on various kinds of insurance, such as fire, accident, personal, etc.; that the Dunedin office of the PhceniX Company received the premiums and detailed commisison due to the reinsurers; also that the decision to go off the Harbour Board’s insurance was not made in Oamaru, but was decided at the head office at Wellington. Because of the fatalities that occurred in the board quarry on November 15, 1943. the Phcenix Company decided to drop out of the accident insurance, and the other insurance companies concerned took a larger share and decided' to withhold the more profitable fire insurance, etc., front 'them. This latter information was confirmed by inquiries at other offices. One firm received its commission for that year on September, 1944. In an interview, the manager of the Farmers' C.A. Insurance Association (board’s chief agents) advised that the Phoenix Company (-parting and McDowell, agents) were interested in the board’s insurance from October 1, 1943, to October 1, 1944, when the Phcenix Company discontinued the policies of the board. ' The four companies concerned got a fourth share each for the year October 1, 1943-October, 1, i 944. Darting and McDowell’s premiums would be: Fire £7 2s 3d, accident £4l 5s 4d, secretary accident 18s 6d, harbour master accident £1 3s Bd, members’ accident £4; a total of £54 9s lid.

“ Following the accident in the quarry on November 15, 1943, the Phoenix Company (Darling and McDowell, agenfe) would not after May, 1944, take up the public risk 'policy and ex'tra disaster risk, as it had lost £BO9 13s ,9d paid out' on December 12, 1944, in one of the compensation claims. Because of this attitude the other companies took up themselves the fire and other more profitable types of the various policies. “ There are manifest discrepancies in these reports of various interviews, but we feel it is the duty of the Audit De-partment,-and not the Harbour Board, to unravel these and decide the legal and other implications involved. Mr Bain said so at the board table before accepting nomination by a unanimous vote of the board. The board's financial year is from October Ito September 30. Your let er calls also for comments from Mr McDowell. Doubtless he will write direct to you.” «

When Ihe matter was referred to Messrs Darling and McDowell it was pointed out that the letter from the Phoenix Insurance Company stated that the accident insurance (premium £4l 5s -4d) lapsed in June, 1944, and as Mr McDowell was elected to the board in May, 1944, only one-twelfth of the amount was involved—namely, £3 8s 9d —which would bring the total amount to £IG 13s 2d, and not £54 9s lid, as stated in the above letter.