A BIT OF HISTORY.

Timaru Herald, Volume LXIV, Issue 3625, 23 August 1901, Page 4

A BIT OF HISTORY.

As the matter ©1 State fire insurance is attracting much attention just now, the fpl- | lowing extracts from a report, prepared by Mr Gray for the Christchurch City Coun- • cil in October, 1894, will be read with interest:—" The first proposal for carrying on the business of fire insurance, of which we have any knowledge, came in the shape of a scheme of municipal or State finance. I allude to- the proposals made to Count Gunther Ton Oldenburg, as set forth under the date of 1609. I have reason to believe that it was in this form that the business was actually commenced, and upon this supposition less surprise will be felt at the many attempts from time to time made to again reduce to this original basis of 1631. The Corporation of London did actually commence the business of fire insurance a3 a scheme of municipal finance, but after a very unsatisfactory experience, the project- came to an. end in 1696. The question of municipal insurance appears to have attracted attention in the State of Massachusetts in 1860. The Inland Commissioners say: "In view of the large profits of certain insurance companies, the question has been agitated whether the municipal governments of towns and cities cannot assume the functions of insurance with, profit to their revenues, and economy to the owners of property." They then review the history of State insurance, and arrive at the conclusion "that with companies large enough to be stable and numerous enough to afford the-public the benefit of considerable competition for business, we shall -probably obtain the best, and. on the whole, cheapest form of insurance." In 1865 the same Commissioners again return to the "subject, and offer the following observations :—"Government insurance, or insurance by towns and cities, has often been proposed and earnestly advocated by men not destitute of financial knowledge as likelv to make insurance more useful, both to the citizens an dthe Government, but after giving the subject the most careful study in our power, we cannot recommend any more direct connection of politW authority in any shape with ther-bnsiness of insurance. Bv some of the second-rate arbitrary - Governments of Europe fire insurance has been practised with great benefit to the revenue, but a high price to the insured. So far as it has been tried by free Governments on municipalities it" has been to their serious cost, and has turned out a failure. In the United States, in- 1873, several of the States exhibited a strong leanmg in f avonr of the experiment of State msnrance These -were Tirgina, Maine, and Massachusetts, and the subject was considerably discussed in the House of Kepresentatives, andhnaUy another report was asked for. The report made was a lengthy one, and had the effect of settling the matter against State insurance. It may be useful to point out by way of conclusion that State or municipal insurance is simply a scheme of mutual insurance, conducted by the public authorities without any special skill or fitness for the business, and, indeed, without much, scope for tie exercise of skill, for all the risks have to be insured, and hennce the important underwriting faculty of selection never comes into play. This is the chief cause of the failure of State insurance. The free city of Frankfort, including eight villages adjacent, fornW; an independent State in 1815, and in 1817 a scheme of State insurance was inaugurated. In 1869 the fire risks insured by the State were reinsured in the various competing companies; and so the Frankfort State scheme of insurance ended in disaser and debt. In 1729 a State fire insurance scheme was instituted in Saxony. The insurance of all buildings in it was rendered compulsory on the owners. The rate of premium was to be fixed by the insured. - The assessment of damage in case of fire was made by Government officials. The rate of premium averaged 3s Id per £IOO. The scheme is still in existence, and has been a failure from a financial point of view. A Commission, appointed by the Belgian Government -in 1845, reported that the Commissioners considered that the insurance of merchandise must be placed "out of the question of State enterprise for various reasons, amongst these the uncertainty of finding suitable agents under all circumstances to estimate the value; the difficulty of the mode of valuing in a large warehouse or factory; the constantly changing nature of their contents ; the depreciation in the value of articles depending on fashions; or ihe removal of articles after insurance, with the criminal purpose of setting fire to the bunding and its contents. • In all these cases it will be remembered the insurance was undertaken'by the State without any attempt at making a profit. We' are told that municipal or State insurance is a new idea, but it appears to be old and somewhat obsolete."