THE MYSTERIES OF THE GOVERNMENT LIFE INSURANCE DEPARTMENT.

Observer, Volume 2, Issue 34, 7 May 1881, Page 366

THE MYSTERIES OF THE GOVERNMENT LIFE INSURANCE DEPARTMENT.

No. 2.— Mr. D. M. Luckie, Commissioner. Mr. Luckie is personally one of the pleasantest and most genial of men, but as a Commissioner of Life Insurance he is a delusion — that is to say, he knoAvs no more of the actual business of life insurance than life insurance knoAvs of him. Our object in placing these papers before the public is not to hold up certain worthy and estimable gentlemen to ridicule, but to expose one of the most monstrous and shame-faced humbugs ever perpetrated by a political charlatan upon an innocent and confiding people. So far as Mr. Luckie is concerned, and considering the respect Aye have for him, Aye can only say, " Que diable fait il faire dans cette galere?" but as he is there, no amount of personal respect and esteem must prevent us from criticising the position in Avhich Aye find him, and his qualifications for holding that position. According to the report of a debate on the Government Insurance Department in the House of Representatives on July 30th of last year, a member stated in his speech that some important revelations concerning the department had been made before a committee of the House, and that one of them Avas the fact that Mr. Luckie '-had no actuarial qualifications, and had had no experience in the management of life assurance business prior to his appointment." Mr. Macandre.v, in replying to this, stated "that there Avas no necessity for that," as Mr. Luckie .vas an "intelligent enthusiast." This qualification for his post may or may not afford satisfaction to those insured, in the Government office. For our oavii part, Aye would rather have an " intelligent expert " at the head of any business or company, insurance or otherwise, in which Aye might be interested. An intelligent enthusiast at the head of a business of Avhich he actually and practically knows nothing whatever, Avould, we think, especially if a strong-minded and self-opinionated man, be rather apt to land the said business in chaos. All the Government Insurance Commissioners hitherto have been "intelligent enthusiasts" rather than " intelligent experts, " and the result of this is, as one might expect, chaotic confusion. This fact was most forcibly exposed tlu'ough the revelations alluded to above, for the same member stated * tlie books of the department were not kept on any fixed principle, and it appeared that the officers were not capable of producing a balancesheet up to within a very short time before that enquiry took place." The same member also stated '"that the persons who mismanaged the books were responsible for the tables. If the books were erroneously kept, what guarantee

Avas there for the accuracy of the tables upon which the Avhole thing depended ?" Noav, no amount of enthusiasm, let it be ever so intelligent, can make up for the extraordinary ignorance of insurance business disclosed by the light of these revelations. Major Atkinson, in the course of the debate, came to the rescue and endeavoured to explain aAvay this aAvful muddle by saying that the books Avere kept partly by the Treasury, and partly by the Insurance Department (he might have added, and partly also by the Audit Department) ; but this is just Avhere the red-tape and circumlocution comes in and clearly proves lioav impossible it is for a Government to attempt to carry out successfully an ordinary commercial business. Fancy Avhat the Avorld would say if the A.M.P. Society Avere accused of not having their books kept on any fixed principle, and not having officers avlio could produce a balance-sheet Avithin a given time, and if that Society .vere to reply, " There is no doubt your charges are perfectly true ; but the fact is, our accounts are kept partly by ourselves, partly by a highly respectable bank, and partly by a firm avlio live just round the corner ?" And yet this Avas precisely the ansAver given by the Government Insurance office Avhen taxed Avith the same thing. The Government Insurance Department have no po.yer to pay money ; the Treasury must pay it, and the Treasury have no power to pay money until the Audit Department have certified to the correctness of the accounts. It therefore folloAvs that the Treasury and Audit Departments (the former emblematical of red-tape, and the latter of circumlocution, and neither interested in the smallest degree in the success of the Insurance Department) have to keep the accounts of the Insurance Department. Mr. Luckie is a journalist by profession, and he Avent straight from the Editor's chair of a Wellington paper to the Commissioner's chair of the Government Insurance. He has had a long and varied experience as a journalist in the Colony. To a journalist " intelligent enthusiasm " is almost a sine qua -non, and Mr. Luckie's annual reports of the Government Insurance and the notices, etc., forwarded by him from time to time to policy holders, are illustrations of the enthusiastic leader- Avriter rather than of the sober matter of fact head of an insurance business. In his last annual report, for instance, he Avaxes quite eloquent over the social and moral adA T antages gained to the community at large through enjoying the inestimable blessing of a Government Insurance oifice. He " entertains the hope that the steady progress of life insurance Avill produce social advantages further-reaching in their influence than eA-en the beneficial groAvth of the provident forethought, of Avhich Avhich life assurance is both a cause and an effect." Hoav is that for high? He closes this remarkable State paper by alluding to the "comfortable" security afforded to policy-holders by the Government guarantee. This guarantee may be very comforting to the persons addressed, but it is calculated to create considerable discomfort in the minds of the tax-payers, avlio, in the event of any thing going Avrong in the financial part of the business, Avill haA'e to put their hands in tlieir pockets and make good the deficiency. For it must not be overlooked that this " comfortable " argument used by the Commissioners implies a possibility that the Government guarantee may have to be exercised. We observe by the same last annual report that during the year 2,071 ucav proposals Avere accepted, but against that number must be placed the lapses and surrenders during the same year. These foot up to the goodly total of 461. The Commissioner alloAvs that this number is unusually large, and attributes it " to the stagnation iv business and consequent scarcity of money Avhich marked the year." If he is correct in his surmise, other insurance offices should liave suffered in like manner, but, as it happens, they had nothing to complain of in this respect. We think the Commissioner is altogether wrong in his surmise, and if he could folloAV the fortunes of those Avho lapsed and surrendered from his office he Avould find that a very fair proportion of them have joined other offices. We have before us a "special notice to policy-holders " bearing the date Wellington, 16th October, 1880, and signed D. M. Luckie, Commissioner. We trust, for the credit, of all concerned, that the Commissioner is alone responsible for this — to say the least of it — extremely misleading notice. As the production of an "intelligent enthusiast" it is perfect; but as an actuarial comparison betAYeen the Australian Mutual Provident Society and the Government Insurance it is unfair, incorrect, and misleading. Take for instance the comparison draAvn on the business done by the A.M.P. Society betAveen 184S and 1858 — the first ten years of its existence — and the business done betAveen 1870 and 1880— the first ten years of the Government Insurance. What comparison can there be betAveen a society started in 1848 by three or four private individuals (Avhich, from the very nature of all the surrounding circumstances, must have taken long years before forcing itself on the confidence of the public), and an insurance business started by a vigorous and wealthy Colony like NeAV Zealand, Avith all the advantages of State guarantee as security, and the assistance of all the postmasters in the Colony as commission agents ? Take for instance also the misleading table showing the annual savings in ten years, presumably made by insuring Avith the Government, as against the A.M.P. The compiler of this precious table starts by leaving bonuses out of the question. This is playing "Hamlet " with the part of Hamlet left out Avith a vengeance. The compiler of the table carefully leaves out Hamlet in the A.M.P. play, but introduces a bastard sort of Hamlet into its oavii play. For instance, the figures brought to bear against the A.M.P. are carefully calculated, omitting all bonuses declared by that society, .vhilst the Government figures are calculated with the addition of what they call a cash bonus, paid in advance. Seeing that they commence the table Avith the statement that they intend to leave all bonuses out of the question, Avhat do they mean by basing their whole calculations upon this cash bonus of theirs ? According to this table, a man aged 25 insuring for £1000 with the Government as against the A.M.P. Society, will have saved in ten years (if he in-

vests his annual savings at 8 per cent.) a sum of £50 2s. Noav, as a matter of fact, a man of that age insuring foi- the same amount (£1000) Avith the A.M. P. Avill become entitled at the end of ten years to have an additional amount of £308 ss. added on to his policy, thereby making it £1308 55., or he may at once receive a cash bonus of £84 ls. Insuring at the age of 45, according to this same table, Avith the Government, secures a saving in ten years of £73 as against the A.M.P; Avhereas in the A.M.P., underthe same conditions, the individual would be entitled to a cash bonus of £126. So it is quite evident that the inference intended by the Government Commissioner to be drawn from this table is more enthusiastic than correct. There is one statement in this notice before us which is distinctly untrue, and attention is particulcrly directed to it by_an N. 8., thus: "N.B. —A policy must exist for fully five years in the A.M.P. Society before it becomes entitled to any bonus Avhate'ver." The A.M.P. Society, it is true, Avill not alloAV a policy-holder to draw a cash bonus under five years, but if a man has only been insured two years Avhen the division of profits takes place, the amount accruing to him is added on to the amount for Avhich he is insured. A statement of this sort is unpardonable, even although the writer be wildly enthusiastic over his oavii office.