N.Z. FIRE INSURANCE DEPARTMENT.

Taranaki Herald, Volume LIV, Issue 130523, 27 January 1906, Page 2

N.Z. FIRE INSURANCE DEPARTMENT.

(London Timos Supplement, December 11th:)

Two events have just occurred which will require the careful consideration of the British 'and Colonial fird insurance companies now engaged in ' conflict with the New Zealand State Fire Insurance Depai^troent. The firtft of these is the triumphant return to power of Mr Seddon's party, which is pledged to the principle of maintaining an Insurance Department in competition with the companies operating in New Zealand ; the second is the completion of negotiations with meniibere of Lloyd's under which the State Insurance Department's reinsurances "have ibeen «.rraoig'cd for during 1906. This reinsurance agreeni'^nt is .-a renewal of the current year's contract with modifications which the New Zealand Government regards as f avtourable '; the Department • is, allowed to* retain lar- p geir lines at its own risk than in 1903, and this is considered as more tbjin counterbalancing.' " the r-ight granted to the •■-■reinsurei'S i>p>\ terminate • 'feh-e -agreement 'at 'sixi months' - jaotice. The aanount of] , business actually transacted by the State Department is small, a^d will probably always be small, b^t the mere existence of the Department as an active competitor

w|'th the insurance companies does, as aj matter of, fa'cfo. achieve the \ main

purpose of the. New Zealand Government in setting it up. That purpose

was to , introduce a competitor strong enough to cause the tariff rates existing 1 in 1904 to be materially reduced. Tore New Zealand Government would, therefore, achieve* its purpose even ifj ilj made no direct profit out of fire insurance — and even if it made a small loss— since the people of the colony would get the benefit arising fiom the lower insurance premiums. At present, the majority of the premium rates charged by the companies have been reduced — owing to the conflict between the companies and the Government Department—by 10 per cent, and in some classes by 33£ per cent. ; and such reductions . must inevitably be popular with the insurijig public of ■the colony. •In principle there is a groat deal to be said against a Government taking up such a;' business as fire insucanee 1 . It' is one thing for-, a Government' to cover or leave uninsured the risks on its, own propertyr— as the British Government does-^and another to insure the private property of the general public. But the New Zealiiaid 1 Government has for some years t3 'a/nsacted workmen's compensation aad life assurance in competition with companies, and now~that the Fire Insurance Department has been in« exiitence for a year it is <>f not much use to discuss the principle. The insiiram.ee companies now have to consider how far it ' is v worth white contmuing to fight the Department ontiie, lines followed in 1905— that is to] §ay, how far the fight can be carried' 4n withput alienating the sympathies 6i the public of New Zealand and elsewhere. So long as the Fir© Insurance Department is supported I>y ihz New Zealand Government— and 4ftec the late gmeral election in the colony the continuance of that supis certain, and so -long as remsuranoes can be arranged) for eith-Ir'-'-at Lloyd's ,or with Continental 'lo^ipanies, the opposing British an.l Colonial - companies cannot drive it Aut of existence. Nothing can, except a series of conflagrations which {vould exhaust its funds and the Government guarantees supporting it.

' 'We have endeavoured to look at

thia subject from every point of view. ITW'O 'do not in the leaslfc sympathise \vith the principle of State fire insur- 4 jance, but a as .a matter of expedierr

Ley it seeims to us that the time is | rapidly arriving when ; it will be'ne,,'cessary lor the great Briidsh fire omcea to -aibate or disregard local virulence and to reoognisq the State De- . payment a3 an honourable and law- | ful competitor 4 There is no reasofc

why they should not cut rates &g

a'inst iit— the public will never be slow to encourage rate-cutting!— and there

is no reatcxn "why they shdjjld assist it by taking its reinsurances. Bu<t

an absolute boycott-^t>he refusal to ■be associated with any risks on which the State Department' has a line— is a 'measure of dictation tp. the public which can never be successful in a democratic country like 'New Zealand has proved itself to be. It alienates sympathy at 'once. The fact's will have to. be recognised that the New Zealand' State Fire* 'lnsurance Depai'tonenib has achieved its main object in getting prefeniudn rates reduced, and that the chances of killing it are rapidly disappearing. There it is and there in all hutoan probability it -will' resmaaax. ; We see no reason, therefore^ great British offices^— whose managers, as a rule, take a imuch wider view than those olfficials whose liyes are passed in a small colony — should not ajdopt the saanfl attitude towards thte New Zealand State ' 'Department »,s they 'do towards non-tariff companies here or towards melmibers o $ Lloyd's. They

I may not like either of these competi-, tors, but they do no-ti us© against! thctoi any "methods except those of legitimate competition.