STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1940.

Appendix to the Journals of the House of Representatives, 1941 Session I, H-06

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1941. NEW ZEALAND.

STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1940.

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

State Fire Insurance Office, Wellington, 28th March, 1941. I have the honour to submit the thirty-sixth annual report of the State Fire Insurance Office, for the year ended 31st December, 1940, with the Eevenue Account and Balance-sheet. The following are the comparative figures for the last three years:— 1938. 1939. 1940. Income — £ £ £ £ £ £ Premiums .. .. .. .. 193,501 205,539 218,253 Other receipts, less land-tax .. .. 46,099 50,743 50,258 239,600 —256,282 268,511 Outgo— Bonus rebate to policyholders .. .. 37,747 37,201 41,922 Claims.. .. .. .. .. 30,839 39,443 31,617 Working-expenses (exclusive of income-tax and Fire Board contributions) .. .. 58,657 58.232 58,542 Fire Board contributions.. .. .. 10,492 11,365 12,124 Income-tax .. .. .. ..32,288 51,273 66,564 National and Social Security tax .. .. .. .. 19,783 Carried to reserve for unearned premiums .... .. 4,880 170,023 197,514 235,432: Surplus, apportioned as follows :— Written off Office premises .. .. 23,000 28,000 23,000 Reserve Fund .. .. .. .. 577 768 Bonus Rebate Reserve .. .. .. .. .. 10,079 Reinsurance Reserve .. .. ..30,000 20,000 Investments Fluctuation Reserve .. .. 16,000 10,000 -■ 69,577 58,768 33,079> Total .. .. .. 239,600 256,282 268,511 Reserves and funds at 31st December ..1,160,407 1,191,175 1,206,134 Per Cent. Per Cent. Per Cent. Ratio of claims to premium income .. ..15-94 19-19 14-49 Ratio of working-expenses (exclusive of incometax and Fire Board contributions) to premium income .. .. .. .. 30-32 28-33 26-82 Ratio of Fire Board contributions to premium income .. .. .. .. 5-42 5-53 5-55 Ratio of income-tax and National and Social Security tax to premium income 16-68 24-95 39-5&

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1. The increase in premium income amounting to £12,714 over the figures for the previous year will, I think, be regarded as very satisfactory. 2. The loss ratio is the lowest in the history of the Office. The net surplus accruing from the operations for the year after deduction of taxes is £33,079, underwriting profit contributing £17,348 {or 7-95 per cent, of premiums) and income from investments, &c, £15,731. 3. The total amount granted, in bonus rebates to policyholders is greater than in any previous year, and a further sum of £10,079 from the profits for the year has been carried to the Bonus Rebate Reserve Fund. As the maximum rate of bonus is reached the graduated system which now applies benefits each year an increasing number of policyholders. 4. The following is a recapitulation of some of the more outstanding services rendered by the Office since its establishment: — 1905 : Reductions of 33J per cent, on rates on dwellings and like risks and 10 per cent. on other classes of risks. Special higher ratings abolished. 1915 : Adoption of policy form which furnishes a complete copy of the contract signed by the insured. 1923 : Rebate system established, and 15 per cent, rebate declared to policyholders. Since 1923 the rate of rebate has varied from 10 per cent, to 12J per cent. 1931 : Extension of insurance to cover up to 10 per cent, thereof for furniture and effects of dwellings removed temporarily. 1933 : Additional special rebate from 1\ per cent, to 12J per cent, given on dwellings and farm risks. 1936 : (a) The rebate of 1923 and additional special rebate of 1933 made into a permanent ratereduction. (6) New system of graduated bonus rebates instituted, whereby policyholders of one year or more receive a rebate varying between 10 per cent, and 25 per cent, according to the length of time they have been insured with the Office, the maximum rebate being reached in three years. The above-mentioned services have resulted in savings to the insured public amounting to not less than £18,500,000 in the aggregate. These premium reductions have affected every class of risk, whether trade, farming, or residential. Within the largest class of risk —dwellings and the like—typical cases show that State Fire policyholders now pay 4s. per cent., ss. 3d. per cent., and ss. Bd. per cent., as compared with 10s. per cent., 13s. per cent., and 15s. per cent, paid for similar risks in 1904. 5. During the year the Office, jointly with the Accident Branch, assisted the war effort by an interest-free loan of £100,000 for the purposes of the War Expenses Account established under Part I of the War Expenses Act, 1939. 6. The activities of the Office were increased during the year under the provisions of the Marine Insurance (War Risks) Emergency Regulations 1940. The liabilities are carried by the Consolidated Fund, but the whole of the administration of the scheme for the compulsory insurance of Home-trade ships is undertaken by this Office, and is working smoothly. 7. During the year the requirements of war have depleted the staff of many trained and experienced officers. The work of the Office, with its increasing business and activities, thus throws added responsibility upon those who remain, but I am glad to report that with the assistance of temporary staff the standard of service to the public has been well maintained. I gratefully acknowledge the cheerful and competent service rendered by all officers during the year. J. H. Jbrram, General Manager.

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Revenue Account of the State Fire Insurance Office for the Year ended 31st December, 1940. £ 8. d, £ s. d. Premiums after deduction of reinsurances .. 218,253 9 0 Bonus rebate to policyholders .. .. 41,921 15 7 Other receipts— £ s. d. Losses by fire and earthquake (after deduction of Interest, commission, and rent 52,354 3 8 reinsurances) .. .. .. .. 31,616 16 9 Lews land and income tax Income-tax.. .. .. .. .. 40,413 12 5 £28,246 11s. Bd. and National and social security tax .. .. 11,406 2 9 national and social security Commission .. .. .. .. 11,102 3 3 tax £8,377 .. .. 36,623 11 8 Salaries .. .. .. .. .. 31,450 10 6 15,730 12 0 Contribution to Public Service Superannuation Fund .. .. .. .. .. 408 13 7 Contribution to Fire Boards under the Fire Brigades Act, 1908 .. .. .. 12,124 13 1 Expenses of management — £ s. d. Travelling-expenses .. .. 2,440 2 11 Printing, stationery, and advertising .. .. ~ 1,456 1 8 Rent .. .. .. 1,679 10 9 Exchange .. .. . . 51 2 6 Postages, telegrams, cablegrams, and sundrv charges .. 4,337 3 4 9, !t()4 7 2 Offioe equipment .. .. .. .. 736 15 2 Office premises : Depreciation .. .. 4,879 9 2 Reserve for unearned premiums .. .. 4,880 4 7 200,905 4 0 Bonus Rebate Reserve .. .. .. 10,078 17 0 Office premises: Written off .. .. .. 23,000 0 0 £233,984 1 0 £233,984 1 0 Balance-sheet of the State Fire Insurance Office on the 31st December, 1940. Liabilities. Assets. £ s. d. Capital authorized by. the State Fire £ £ s. d. Government securities .. .. .. 692,189 12 0 Insurance Act, 1908 .. .. 100,000 Local-authority securities .. .. .. 240,907 17 4 Less not raised .. .. .. 100,000 Rural Advances bonds .. .. .. 14,175 0 0 Nil Fixed deposits and at short call .. .. 130,000 0 0 Bad Debts Reserve .. .. .. .. 1,500 0 0 Land and buildings .. .. .. .. 209,748 12 7 Reserve Fund .. .. .. .. 747,928 16 4 Outstanding premiums .. .. .. 11,551 2 5 Investments Fluctuation Reserve Fund .. 85,000 0 0 Interest accrued but not due .. .. .. 10,545 7 8 Reserve for unearned premiums .. .. 109,126 14 6 Rent accrued or due .. .. .. 3,891 15 10 Bonus Rebate Reserve .. .. .. 122,578 17 0 Rent overdue .. .. .. .. 71 14 7 Reinsurance Reserve Fund .. .. .. 140,000 0 0 Cash in Reserve Bank of New Premium and other deposits .. .. .. 1,558 9 0 Zealand at Wellington, or in £ s. d. Outstanding fire and earthquake losses.. .. 3,509 0 0 transit to Wellington .. 75,905 19 5 Government taxes .. .. ... .. 126,055 6 9 Imprest Account balances: Head Sundry creditors . > .. .. .. 43,803 17 10 Office and branches .. .. 2,656 9 3 Other amounts owing by the Office— £ s. d. 78,562 8 8 Reinsurance premiums due .. 5,323 19 1 Commission .. .. 2,381 13 7 Printing, stationery, and advertising .. .. .. 29 0 8 Postages and sundry charges .. 2,847 16 4 10,582 9 8 £1,391,643 11 1 £1,391,643 11 1 J. H. Jerram, General Manager. 23rd June, 1941. L. H. Osborn, Deputy 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. — •C. G. Collins, Controller and Auditor-General.

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