STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1922.

Appendix to the Journals of the House of Representatives, 1923 Session I-II, H-06

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Session 11. 1923. NEW ZEALAND.

STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1922.

Presented to both Houses of the General Assembly pursuant to the Provisions of the State Fire Insurance Act, 1908.

State Fire Insurance Office, Wellington, 22nd March, 1923. I have the honour to submit the eighteenth Annual Report of the State Fire Insurance Office for the year ended 31st December, 1922, together with Revenue Account and Balance-sheet. The net premium income amounted to £142,592, as compared with £136,429 for 1921, the increase for the year being £6,163, which must be considered satisfactory in view of the heavy fall in values of buildings and stocks during the year, and the consequent reduced demand for insurance cover. The losses for the year show an increase of £7,965 over the previous year. An increase was anticipated, as during the period when high values operated the loss ratio fell to a remarkable degree ; on the other hand, the fall in values that has taken place since the boom has been accompanied by a great increase in the number of outbreaks of fire, and a substantial rise in the loss ratio of all offices doing business in the Dominion. The ratio of losses to premium income of the State Fire Office was in 1920 17-01 per cent., in 1921 27-95 per cent., and in 1922 32-32 per cent. It is quite apparent that a large proportion of outbreaks are of a preventable character. The ratio of working-expenses to premium income shows a satisfactory drop from 31-07 per cent, in 1921 to 28-86 per cent, in 1922, and continues to compare very favourably with the average expense ratio of all offices doing business in the Dominion. The net profit for the year amounted to £46,403, as compared with £39,325 for 1921. The total assets at the end of the year amounted to £447,605, as compared with £405,301 for 1921. During 1922 an amendment to the State Fire Insurance Act was passed authorizing the Board of the office to grant a rebate to the insured. The previous provisions for the payment of a bonus were not workable, and the amended legislation should enable a satisfactory settlement of this very important question to be made at an early date. The year from an insurance point of view has been marked by greatly increased competition, due partly to-a redaction in the amount of new business available and partly to the entry of several new offices into the competitive field. One result has been that reasonable caution in values has in many cases militated against the business of carefully conducted offices to the temporary advantage of less careful competitors. Another result has been the illegitimate use of the agency appointment system whereby unwarranted rebates have been paid to attract business. The practice has assumed somewhat serious proportions to the great disadvantage of those offices which sanction only legitimate agency appointments, and some effective method of dealing with this difficult question requires early consideration. The question of the investigation of the loss experience of fire offices is under consideration by the Government Statistician, who has power to ask for the necessary data. It could be said that the regrading of the rates of premium is no doubt necessary both from the point of view of the cost to the public and the equities as between the different classes of risk. J. H. Richardson, General Manager.

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Revenue Account of the State Fire Insurance Office for the Year ended 31st December, 1922. £ s. d. £ s. d. Premiums after deduction of reinsurances 142,591 16 8 Losses by fire (after deduction of reinsurOther receipts: Interest, commission, and ances) .. .. .. .. 40,090 15 2 rent .. .. .. .. 13,884 311 Appropriated to reserve for unearned premiums (in addition to £54,571 9s. already reserved) .. .. .. 2,465 5 8 Government taxes .. .. .. 20,369 9 4 Commission.. .. .. .. 9,767 5 5 Salaries 19,659 3 10 Contributions to Fire Boards under the Fire Brigades Act, 1908 .. .. 3,368 9 7 Expenses of management — £ s. d. Travelling-expenses .. 1,544 3 3 Printing, stationery, and advertising.. .. 1,761 9 0 Rent .. .. 1,362 18 11 Exchange .. .. 70 10 6 Postages, telegrams, oablegra ms, and sundry charges .. 2,672 5 8 y 7,411 7 4 Offices premises and equipment written off 941 4 6 Amount of fire-insurance funds at end of year .. .. .. .. 46,402 19 9 £156,476 0 7 £156,476 0 7 Balance-sheet of the State Fire Insurance Office on the 31st December, 1922. Liabilities. Assets. £ s. d. £ s. d. £ s. d. Government war-loan securities .. 138,324 12 0 Capital authorized by the Other Government securities .. .. 55,550 0 0 State Fire Insurance Local-authority securities .. .. 4,800 0 0 Act, 1908 .. .. 100,000 0 0 Fixed deposits and at short call .. 20,000 0 0 Less not raised .. 100,000 0 0 Mortgages on property .. .. 2,628 10 0 Nil. £ s. d. Reserve Fund .. .. .. 290,566 13 7 Land and buildings .. 138,465 1111 Investments Fluctuation Reserve Fund.. 10,000 0 0 Less mortgages taken Reserve for unearned premiums .. 57,036 14 8 over on Office prePremiums and other deposits .. .. 906 3 4 mises purchased .. 2,475 0 0 Outstanding fire losses .. .. 2,484 0 0 135,990 1111 Government taxes .. .. .. 20,369 9 4 Office equipment .. .. .. 1,107 8 1 Interest accrued but not due on mortgages 7 9 2 Outstanding premiums .. .. 7,736 3 4 ■Other amounts owing by the Office — Interest accrued but not due .. .. 2,454 18 10 Reinsurance premiums £ s. d. Rent accrued or due .. .. .. 112 19 10 due .. .. 11,590 2 4 Cash in Bank of New ZeaCommission .. .. 1,586 11 10 land at Wellington, or in £ s. d. Rent .. .. 18 11 4 transit to Wellington .. 77,920 17 7 Printing, stationery, and Imprest Account advertising .. 39 7 5 Balances — £ s. d. Postages and sundry Head Office 535 3 1 charges .. .. 597 5 3 Auckland .. 139 1 3 13,83118 2 Hamilton.. 10 811 Firu - insurance funds, as per Revenue New PlyAccount .. .. .. .. 46,402 19 9 month .. 94 1 9 I'almerston North .. 34 6 1 Christchurch 47 9 9 Dunedin .. 29 10 0 Invercargill 89 5 7 979 0 5 — 78,900 4 0 £447,605 8 0 £447,605 8 0 sth March, 1923. J. H. Richardson, General Manager. I hereby certify that the Revenue Account and Balance-sheet have been duly examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed thereby.—G. F. C. Campbell, Controller and Auditor-General.

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