ACCIDENT INSURANCE BRANCH OF THE STATE FIRE INSURANCE OFFICE (ANNUAL REPORT ON THE) FOR THE YEAR ENDED 31st DECEMBER, 1938.

Appendix to the Journals of the House of Representatives, 1939 Session I, H-06a

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1939. NEW ZEALAND.

ACCIDENT INSURANCE BRANCH OF THE STATE FIRE INSURANCE OFFICE (ANNUAL REPORT ON THE) FOR THE YEAR ENDED 31st DECEMBER, 1938.

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

State Fire Insurance Office, Wellington, 31st March, 1939. I have the honour to submit the thirty-eighth annual report of the Government Accident Insurance Office for the year ended 31st December, 1938, together with the Revenue Account and Balance-sheet. The following comparison with the previous two years shows the position briefly : — 1936. 1037. 1938. Income— £ £ £ £ £ £ Premiums from all classes of accident insurance 113,649 147,719 202,279 Interest .. .. .. .. 15,111 15,837 18,082 Profit on realization of securities .. .. 1,012 132 486 129,772 — 163,688 220,847 Outgo — Free-year bonus on personal accident policies 286 269 327 Claims .. .. .. .. .. 76,471 99,502 140,806 Working-expenses (exclusive of income-tax) .. 23,156 30,118 32,994 Carried to reserve for unearned premiums .. 7,941 17,035 31,649 Income-tax .. .. .. .. 6,622 5,417 6,066 114,476 —152,341 — 211,842 Surplus, apportioned as follows :— Investment Fluctuation Reserve .. .. .. .. 9,000 Reinsurance Reserve .. . . .. 10,000 10,000 Reserve Fund .. .. .. .. 5,296 1,347 5 15,296 11,347 9,005 Total .. .. .. 129,772 163,688 220,847 Reserves and funds as at 31st December .. 403,697 432,080 472,734 Ratio of claims (all classes of business) to premium Per Cent. Per Cent. Per Cent. income .. .. .. .. ..67-29 67-36 69-61 Ratio of working-expenses (exclusive of incometax) to premium income .. .. .. 20-37 20-39 16-31 Ratio of underwriting surplus to premium income 5-1 0-54 *1-73 * Deficit. 1. In 1937 the total premium income and also the increase over the previous year constituted records for the Office. Both these records have been broken by the figures for 1938. The increase in premiums for the year was no less than £54,560. 2. The aggregate underwriting results show a deficit of 1-73 per cent., due to loss on the substantial revenue derived from insurance under the provisions of the Motor-vehicles Insurance (Third-party Risks) Act, 1928. Increases in premiums under the above Act have since been authorized by Order in Council. The benefit derivable from the new premiums, however, accrues only from the beginning of the new licensing year, viz., Ist June, 1939 ; thus unpayable results are likely to extend well into the current year. All other branches of accident business provided a margin of profit. The underwriting deficit is more than covered by interest from investments, and the year ended with a surpjus of £9,005 7s. 3. Following the decision of Government that the increased liabilities under the Workers' Compensation Amendment Act, 1936 —referred to in detail in my 1936 report—were, if possible, to be borne by the State Accident Branch without an increase in rates, the Office continues to underwrite

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liability rodZrH less than are generally charged by competitors. This added ,' y ! , previous narrow margin available in premiums for working-expenses much below LThl f U requirements and industry benefits thereby as though an actual reduction in rates tl Off' 'iWi ■ f y , e fetate Accl dent Office. While many employers recognize this by giving the Office all their business, others, unfortunately, approach the Office only when they are in difficult!J OCZT^ 11 unacce ptaWc to competitors seems to find its way to the State Accident Office. While the Office recognizes a special obligation to meet the requirements of employers, the burden dLdv t prop °'! 0 the r r ° hazardous and n °n-payable risks on its books places it lt a p3Tf Sew. ™™ e °"' iei " Who pidt antl 0h0 °" from lhe rpnnirs ? ot ° r - veU ? le ins <™e with its high accident frequency and the increased cost of ■! ea I y n J n,and f. U Pf. the judgment, experience, and tact of officers during yLar " llle Statc Accident Office initiated m 1935 and has since maintained a policy contract of insurance wore generous than is generally available elsewhere, and offers it at a lower premium The volume of business induced to the Office by these advantages continues to be very great. - wmg , fact that increased business was greater in the second half of the year than in the lust an increased percentage for unearned premium reserve has been provided in the accounts. W£la ? f Vul clauns > or 2 ' 347 more than m the previous year, under all accident headings was handled by the Office during 1938, including 51 " unidentified motorists " claims, and, in addition or the seventh successive year the Office dealt with the settlement of claims on the Employment Division of tho Labour Department free of administrative cost to that Department dJg ' hc -*** s ™ vioc hy office ™ of thB A ° cid ™ t »-* J. H. Jeream, General Manager.

Revenue Account op the Accident Branch of the State Fire Insurance Office for the Year ended 31st December, 1938. Premiums after deduction of reinsurances 10 0 Free-year bonus on personal accident policies .. Interest .. .. ..18 4r» Claims .. .. .. t 140,806 1 1 Less land and income tax .. 6>66 2 0 _ _ Salaries" 81011 .. ;; 16 t Profit on realization of securities ~ 7 12 '486 18 " * I>UbU ° Su P erMmuati< ® ' Expenses of management .. .. .. (j ; 920 ]4 3 Further appropriation to reserve for unearned premiums .. .. .. .. 31,649 6 3 r ~ .... - r 205,776 3 3 1 urther appropriation to Investment Fluctuation Reserve .. .. .. .. g 000 0 0 Amount of Accident Funds, 31st December, 1938 5 7 3 — l l' ~ SI 10 6 £214,781 10 6 Balance-sheet of the Accident Branch of the State Fire Insurance Office as on the 31st December, 1938. Liabilities. £ s. d 1 , Oull| l nnHi fUIldS ' P Pr? r eycm,e Account • • 57 3 Government securities .. '. 2 12 515 o*o uaisbanding accident claims .. 109 Rio n nt n „„i •*. u u Government taxes .. " e'fl? 2 ° -authority securities 214,480 18 11 Commission .. " n P Advances bonds .. .. 4,725 0 0 Premiums and other deposits 1 040 „ ™ P ,f.i y under agreement for sale and purchase 3,980 0 0 Sundry creditors . ? .. " " f " " 32,620 0 0 T> • n , '' ' • " interest accrued but not due . a i±n i« m fc™ e^ dUe 524 15 3 Agents' balances .. " " if 1 Officers Fidelity Fund 500 0 0 Sundry debtors, including Motor-vehic es Insur' Reserve for unearned premiums .. .. 105 508 19 9 »»«d' m H , Investment Fluctuation Reserve 50 000 0 0 PaTfnl P y- ? 1 Act P° ol •• •• 80,619 0 1 Reinsurance Reserve .. . . 40,000 0 0 0n ° U a °°° Unt " " 20,873 17 4 Bad Debts Reserve .. .. .. .. j 000 0 0 Reserve Fund constituted under section 6 of the Government Accident Insurance Amendment Act, 1924 .. .. .. 275,719 17 9 £584,817 0 1 J £584,817 0 1 14th Juno, 1939. j H j EERAM; Genera] Manager. L. H. Osborn, Deputy General Manager. ™»l«+£ her , eb^ certif J t j lat tho Revenue Account and Balance-sheet have been duly examined and compared with the

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