REVIEW.

Wairarapa Daily Times, Volume 2, Issue 164, 20 May 1879, Page 2

REVIEW.

I Australian Mutual Provident Society,' *

Life Assurance Societies are comparatively modern institutions, They are the outcome of an appreciation of the sacred obligations incumbent upon overy man to provide as far as possible for those dependent upon him. This essential principle has developed into various forms: —payments at death, or after a number of years, or in annuities. The Australian Mutual Provident Society has contributed largely to the creation and development of a provident spirit in the Australasian colonics. People out here are as a rule speculative, and because of that they are reckless. Hence any organisation which induces pecuniary 'forethought and providence tends to the prosperity of the nation, and the prevention of pauperism, and from a patriotic view is therefore worthy of every encouragement. The book under review is by Professor M, A. Black, F.1.A,, Actuary to the Society, and is written to bring before the public the "progressive policy" of the Society referred to. From the introduction to the pamphlet, we learn that at recent annual meetings of the society, criticisms have been systematically made upon the expense of conducting the society; it has been questioned over and over again whether the aggressive policy adopted during the last 9 years of 'pushing' the society has not resulted in loss to the old members, whilst at the meeting of 187>S it was roundly assorted that the society was in a bad condition, as " it was an axiom laid down by actuaries that anything in the shape over 10 per cent. [i.e., of their premium income] is unsafe for assurance companies to spend in expenses of management." This latter assertion Professor Black contradicts, saying, " There is no foundation whatever for such a statement, and I can safely say that no actuary expressed such an opinion. The assertion has not even the semblance of truth." Li proving his case, lie goes into the question thoroughly, and fortifies his position with facts and figures which must convince the most sceptical of the economic and successful management of the society, and of its stability. 0 The pamphlet is divided into seven chapters, giving the desiicd iufoimation under the following heads 1. How much do the assured contribute for expenses of management I 2; What have boon the actuarial expressions of opinion on minimum and maximum rates of expenditure 1 3. Comparative expenditure between different societies —what are the causes that operate to its increase or decrease J 4. Are the expenses of the Mutual Provident high or low, as compared with assurance institutions in England, America, and Australia ! 5. Has the ratio of expenses to the premium income exhibited a continuously increasing or decreasing tendency! _ 0. Are the expenses incurred in acquiring new business excessive, or calculated the profits of the society? 7 Would it be to the advantage of the members who have already participated in the profits, if the society transacted a less amount of business annually, i.e., admitted fower members to share the profits 1 These questions arc answered in an able and carefully-written pamphlet of 87 pages bristling with a perfect array of comparative tables and figures. We are unable to review in detail the various propositions and aigumcnts of Professor Black, We therefore conclude this brief notice of ail excellent pamphlet with a few extracts of

interest, . In answering Question 3-Comparative expenditure between different sociefawliat are the causes that operate to its increase or decrease, —Professor Black says:

Such an office as tho Australian Mutual Provident may be characterised as a representative society—one that centres in itself tho bonus systems peculiar to several offices, and its members can avail themselves of the ono or tho other at pleasure. Declaring bonuses in tho first instanco as reversionary additions, policy holders may at any time exchange them for other and various forms of benefit; as, for instance, to pay successive premiums as they fall due, to reduce the premiums for the next 15 years, or to permanently reduce the annual premium payable through life until extinguished, after which future bonuses may be commuted into an annuity payable to the member. They have besides the privileges of varying their option at eveiy division of profits, of surrending tlioii bonus for cash at any time, of getting their polices kept in force as long as the surrender value of policy and bonuses is sufficient for the the payment of the premiums. And these are only instances of the liberal business regulations adopted by the Society. A society whose system of business embraces all tho solid improvements that liavo been introduced in perfecting the business of life assurance, and whoso members are afforded every convenience that a comprehensive system of life assurance has developed, cannot be conducted at as low a rate of expenditure as that of offices working on a narrow basis, and who afford no such accommodation to their members. It were unreasonable to suppose that they could, for exceptional circumstances necessitate exceptional expenditure. It is only _as between offices that are cognate, having had much in common with each other, and whose business has been similar, that comparisons should bo instituted. As a corollary from this it follows that an offico may be unique, not comparable with any other, and such in its pro-eminence is the Australian Mutual Provident Society,

After comparing the cost of working the Mutual with that of English Societies, our author proceeds That the Australian Mutual Provident

Society should within a period of 29 yews have an amount assured exceeding the average business of 73 English offices by 232 per cent., and a premium income exceeding theirs by 208 percent., is a result that must be eminently satisfactory to all

interested in its success, It evidences not only the popularity of the society throughout the Colonies, but a deep-seated and growing appreciation on the part of the Australian community of the exceptional advantages to be obtained from joining its membership. This is fully rcasiscd by all those who nnderstand the relative positions of life offices, and in a marked

manner by those who are alive to their own pecuniary interests. This largo, amount of business, acquired in so short a space of time, in face of the most active competition for business by Home and Colonial offices, is unsurpassed in the history of life assurance companies in England. The following extract is from the chapter dealing with the question,-Would it be to the advantage of the members who have already participated in the profits if the society transacted a less amount of now business annually, i.e., admitted fewer members to share the profits ? It is important to note that the continuous introduction of new lives m largo numbers into an office has the eftect so much to be desired of keeping down the average duration of the policies, and consequently the average age of the lives assured. It is of vital importance that an office should be preserved in a condition of this kind, although, singularly enough, this is a point upon which much misconception appears to exist. It is not unusual to hear the argument urged by persons partially conversant with the subject, that an offite, after having been in existence for 30 or 40 years, is more secure than one of shorter duration, and that the critical

period of its existence has not been passed until a generation, a period of about 33 years has elapsed. But the fact is, that the time during which an office has been in operation may have but little influence on its age, properly so called, for the average duration of the assurance risks is that which determines the real age of an office. In speaking of an old office, then, we should be understood to refer to one whose policies have on the average been in force for a considerabio time, and the lives assured in which arc consequently well advanced in years, Viewed in this light it will be evident that an office which has been in operation for more than a century may yet be a comparatively young office, and indeed there seems no reason to suppose that it will much older, in the sense in which we speak of the age of an office, than one which has only ken in operation for half that time, seeing that the entrants of a century ago will long since have given place to their successors.