ACCIDENT INSURANCE BRANCH OF THE STATE FIRE INSURANCE OFFICE. (ANNUAL REPORT ON THE) FOR THE YEAR ENDED 31st DECEMBER, 1932.

Appendix to the Journals of the House of Representatives, 1933 Session I, H-06a

H.—6a.

1933. NEW ZEALAND.

ACCIDENT INSURANCE BRANCH OF THE STATE FIRE INSURANCE OFFICE. (ANNUAL REPORT ON THE) FOR THE YEAR ENDED 31st DECEMBER, 1932.

Presented to both Houses of the General Assembly pursuant to Section 22 of the Government Accident Insurance Act, 1908.

State Fire Insurance Oifice, Wellington, 31st August, 1933. I have the honour to submit the thirty-second annual report of the Government Accident Insurance Office, for the year ended 31st December, 1932, together with the Revenue Account and Balance-sheet. The following comparison with the previous two years shows the position in brief: — 1930. 1931. 1932. Income — £ £ £ Premiums from all classes of accident insurance .. .. 104,934 102,061 87,068 Interest .. .. .. .. .. .. 14,860 16,316 15,654 Outgo— Free-year bonus on personal accident policies .. .. 307 337 279 Claims.. .. .. .. .. .. .. 61,040 82,561 63,760 Working-expenses (exclusive of income-tax) .. .. 19,121 18,745 17,707 Carried to reserve for unearned premiums .. 10,611 Income-tax .. .. .. .. .. .. 4,036 7,249 7,183 Loss on realization of securities .. .. .. .. 146 Per Cent. Per Cent. Per Cent. Ratio of claims (all classes of business) to premium income .. 58-17 80-89 73-23 Ratio of working-expenses (exclusive of income-tax) to premium income .. .. .. .. .. 18-22 1-8-37 - 20-34 Ratio of underwriting surplus to premium income .. .. 13-07 0-41 6-11 Surplus, apportioned as follows:— £ £ £ Reserve for bad debts .. .. .. .. .. .. 500 500 Investment Fluctuation Reserve .. .. .. .. 3,000 7,000 10,000 Payment to Treasury under Section 5, Finance Act, 1931 (No. 2) —10 per cent, reduction in salaries .. .. . . 881 1,174 Reserve Fund .. .. .. .. .. .. 21,531 1,105 2,199 £24,531 £9,486 £13,873 Reserves and funds as at 31st December .. .. £303,448 £312,054 £324,753 1. A considerable fall in premium income is recorded in the above figures consequent mainly on lack of employment and greatly reduced wage returns. Some of the loss of income, however, is due to the lapsing of unprofitable workers' compensation risks which were accepted by the Office solely to assist certain employers who had found it difficult, if not impossible, to obtain insurance protection elsewhere. These employers have now been able to make other arrangements satisfactory to them. 2. The claim ratio shows an improvement over the previous year. The office working expense ratio of 20 34 per cent, (excluding taxes), although higher than for the previous year, compares very favourably with the average of competing offices, which in 1931, the last year for which figures are available, was 34-13 per cent. The working expenses of the State Accident Office include the cost of settling relief workers' claims for compensation, during the last three months of the year, on behalf of the Unemployment Board. This voluntary service, which involves time and expert supervision and some actual expenditure, has so far been performed without cost to the Unemployment Board.

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3. The recent decision of the Privy Council admitting workers' compensation claims arising out of the Hawke's Bay earthquake of 1931 is of far-reaching importance. This is not so much because of the large sums which become payable in consequence of the disaster, but because of the liability which the Workers' Compensation Act now imposes definitely upon employers in the event of their workers being killed or injured as an indirect consequence of a severe earthquake in the future. The compensation payable in the event of an earthquake disaster of magnitude in a city such as Wellington might utterly ruin employers who carried their own risk, and certainly it would tax the resources of the strongest insurance offices. Pending receipt of the text of the judgment, the risk is being carried as part of the indemnity provided by ordinary workers' compensation policies, but the huge liability involved makes it doubtful whether present insurance facilities are sufficient permanently to provide protection for employers. Even if cover is obtainable, the assessment of a special extra flat rate which would be necessary presents the objection that it must be in any case a heavy additional burden on industry, particularly where the normal hazard is a low one. An extra rate must also be contentious, because, while no one can ignore the possibility of serious earthquakes in this country, their time and place are uncertain, and employers are hardly likely to view with equanimity a loading on premiums for a risk which cannot be estimated and to which all sections of the community are exposed, whether in employment or not. The alternative would be to amend the Workers' Compensation Act. J. H. Jerram, General Manager.

Revenue Account op the Accident Branch of the State Fire Insurance Office for the Year ended 31st December, 1932. £ s. d. £ s. d. Premiums after deduction of reinsurances .. 87,067 18 8 Free-year bonus on personal accident policies .. 279 5 8 £ s. d. Claims .. .. .. .. .. 63,760 7 0 Interest .. .. .. 15,734 8 6 Commission.. .. .. .. .. 4,196 9 5 Les»land and income tax .. 7,183 5 6 Salaries .. .. .. .. .. 10,337 15 10 8,551 3 0 Contribution to Public Service Superannuation Fund .. .. .. .. .. 160 0 0 Expenses of management .. .. .. 3,011 19 7 81,745 17 6 Payment to New Zealand Treasury under section 5, Finance Act, 1931 (No. 2) .. .. .. 1,174 0 0 Further appropriation to Investments Fluctuation Reserve .. .. .. .. .. 10,000 0 0 Reservo for bad debts .. .. .. 500 0 0 Amount of Accident Funds, 31st December, 1932 2,199 4 2 £95,619 1 8 £95,619 1 8 Balance-sheet of the Accident Branch of the State Fire Insurance Office as on the 31st December, 1932. Liabilities. £ s. d. Assets. £ s. d. Accident funds, as per Revenue Account .. 2,199 4 2 Government war-loan securities .. .. 94,500 0 0 Outstanding accident claims .. .. .. 43,990 0 0 Other Government securities .. .. .. 69,000 0 0 Government taxes .. .. .. .. 7,183 5 6 Local-authority securities .. .. .. 95,560 18 7 Commission.. .. .. 392 510 Rural Advances bonds .. .. .. 14,425 0 0 Premium and other deposits .. .. .. 265 010 , Property under agreement for sale and purchase .. 3,980 0 0 Sundry creditors .. .. .. .. 30 57 | Fixed deposits and at short call .. .. 40,000 0 0 Reinsurance premiums due .. .. .. 93 7 4 Interest accrued but not due .. .. .. 4,580 1 4 Officers' Fidelity Fund .. .. .. 500 0 0 i Interest overdue .. .. .. .. 199 0 0 Reserve for Unearned Premiums .. .. 47,220 13 10 Agents'balances .. .. .. 2,074 5 1 Investment Fluctuation Reserve .. .. 26,000 0 0 i Sundry debtors, including Motor-vehicles Insurance Bad Debts Reserve .. .. .. .. 1,000 0 0 (Third-party Risks) Act pool .. .. 47,728 3 3 Reserve Fund constituted under section 6of the Cash in hand on current account .. .. 4,660 6 6 Government Accident Insurance Amendment Act, 1924.. .. .. .. .. 247,833 11 8 ; £376.707 14 9 £376,707 14 9 J. H. Jerram, General Manager. 2nd June, 1933. C. B. Redward, Accountant. 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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