INSURANCE LAW

Poverty Bay Herald, Volume LX, Issue 18265, 7 December 1933, Page 7

INSURANCE LAW

PREMIUMS AND LOSSES AMENDMENTS PROPOSED REPORT ON PRIVATE BILL iiX.' V* (Parliamentary Reporter.) WELLINGTON, this day. Important alterations to the law affecting tiro insurance policies were recommended to the Government by the Statutes Revision Committee when it reported to the House on the bill introduced by Mr. A. M. Samuel (Ind., Thames). Tho measure sought to ensure that the total sum for which premiums had been paid should bo paid out by an insurance company in case of a total fire loss.

In expressing tho view that the bill should not be allowed to proceed, the committee rocommended that legislation should be introduced to provide (1) that every lire insurance policy over buildings, and every renewal notice, should bear printed prominently a notice that the insurance policy wag a contract of indemnity only, and that in tho event of lire no greater sum could be recovered than the amount of loss at tho date of the fire, and that in the event of the total loss of the buildings the insurance company would either reinstate the property destroyed, or pay their value at the date of destruction, the value to be determined by mutual agreement or by arbitration; and (2) that in tbe case of total loss of buildings by fire, where the full amount of the insurance stated in tho policy is not paid, there should be an equitable refund of tho excess amount of premiums paid. NEED FOB ALTERATION Mr. W. E. Barnard (Lab., Napier) said .there was no doubt that an amendment to the law regarding the settling of fire insurance claims was urgently desired. He hoped that the Government would take the rccommendatians seriously, and that it would bring down legislation along these lines next session. Contrary to common belief, insurance companies were not compelled to pay out the total amount of insurance in the case of, total loss, but he believed that it would bo a great mistake to alter the basis of the contract from one of indemnity only, to one of value. The public had not been sufficiently informed' concerning the nature of the cpntracts they entered into, but if the recommendations of the committee were adopted this would be rectified. Thorough agreement with the recommendations of the committee was expressed by Mr. Samuel, who said he recognised from the outset that his bill could not proceed, but he also recognised the necessity for some alteration in the present law to protect the vast majority of insurers who had been living under a sense of false security for so long. The vice-presi-dent of the Underwriters’ Association had appeared before the committee and had treated the bill in an arrogant manner. He had also characterised it as stupid, and had said that people who over-insured were either dishonest or stupid. On the other hand, the general manager of the State Fire Office had courteously expressed a definite opinion that there was room for an improvement in the -present legislation. OPEOPLE BEEN ROBBED” Mr. Samuel quoted a case where a cottage costing £175 had been destroyed. The insurer had been offered £3O in full settlement, but after his bill had been introduced the offer was raised to £92 Bs. He also quoted the case of the Cheviot Town _ Hall, as narrated to him by the Prime Minister. In this case the hall had been insured for some years for £3OOO. The committee found difficulty in keeping up the premiums, and asked tho insurance company what they would get in the event of the hall being destroyed. The insurance company said that the most that would be paid out would be £1500; yet that hall had been insured for £3OOO for years. “The bill as it was originally introduced would have done me,” said the Leader of the Opposition (Mr. M. J. Savage. Having paid a premium, he would want the cash he had paid for. The question of legal technicalities did not come into it, for legal argument had been going on for centuries, and all tbe time the people had been robbed. The best way to do insurance business would be for the State to do the lot. Mr. H. S. S. Kyle (Coal., Eiccarton): Tho Stato is in the business now. Mr. Savage: Yes, and it should be more in it. The principles of this bill are sound, and if this Parliament doesn’t make the necessary alterations another Parliament will do it. I will guarantee that. WOULD INCREASE PREMIUMS Mr. A. J. Stallworthy (Ind., Eden) said that he had no mental reservations in expressiqg the opinion that the insurance companies had collected millions of pounds for risks which were not covered according to the terms of the policies. Mr. C. Carr (Labor, Tirnaru) urged an immediate alteration in the law to make the present position equitable. Mr. W. P. Endoan (Coal., Parnell): It is a contract between two parties. Mr. W. J. Poison (Coal., Stratford): A contract between a lion and a rabbit. Mr. Endean contended that if an insurance policy was made into a contract, as opposed to an indemnity as.it was at present, it must heavily increase the cost of insurance. There was an obligation on property owners to value.their own properties and insure accordingly. If the law was altered- as desired in the bill, insurance premiums would need to be incensed because of the necessity for a constant inspection of properties to ascertain their value. Ho considered that the suggestion of the committee for marking policies with a clear statement that they were an indemnity contract was a wise provision. The chairman of the Statutes Levision Committee, Mr. W. J. Broadfoot, said that the introduction of the bill had served a good purpose in bringing under notice the defects in tho present system.