INSURANCE PROBLEM

Otago Daily Times, Issue 26841, 4 August 1948, Page 7

INSURANCE PROBLEM

PROGRESSIVE INFLATION STRONGER BACKING NEEDED FOR POLICIES P.A. AUCKLAND. Aug. 3. Not the least of the New Zealand Insurance Company’s anxieties was the progressive inflation in many of the currencies in which its policies were issued, said Mr F. A. Heliaby, chairman of the company, at the annual meeting. This inflation, apart from its sinister aspects, if allowed to run unchecked, created at once the problem of having to provide everincreasing backing for policies. The company's accounts bore evidence of world disorders consequent on industrial and racial divisions which afflicted almost without exception every community with which it was trading. These conditions greatly influenced underwriting, and the directors had experienced some anxiety in meeting the problems which were constantly engaging its attention. Much of the company's increased income lately had accrued from the inflated values of the properties, goods, and services covered by its policies throughout the world. - . The net premium income had risen by £1,228,000, or 39 per cent., to £4,390,001), as a direct consequence of the larger income in which were inherent greater potential liabilities. The reserve for unexpired risks had been increased from £1,865.000 to £2,517,500. Although expenses were higher by £65,600 at £888,200, the ratio to premium income had fallen from 26 per cent, to 20.23 per cent. In 1945-46 the percentage was 32.8. This drop was gratifying, though clearly due in part to the volume of the increased premiums. The underwriting profit, at £102,900, represented 2.35 per cent, of the premium income, against 5.75 per cent last year. The overall profit was due in larger measure than usual to the company s spread of business. In some territories it had done well, even though political and economic conditions were nowhere satisfactory. Unfavourable experiences in fields where its operations had usually shown satisfactory results had been in some measure neutralised by good results in other regions. Receipts from interest and rents showed an increase from £189,000 to £227,000, and the average net yield on the company a world-wide investments had risen fiom 2.9 per cent, to 3.27 per cent.