[j. KIRKER.

18

I.—B.

of any tariffs up to that time in existence, probably in any part of the world-came intoforce.the burden of insurance taxation was shifted, and made to fall more equitably on the shoulders of insurers-that is to say, risks under the new tariff were rated more equitably and more m accordance with their own inherent danger than previously ; and while the result, as far as the companies were concerned, has been that the average rate is less now than it was eleven or twelve years ago, yet the rates for some sections of the public have been put up, while other sec ions have been relieved. An objection to the proposed State Fire Insurance Bill is this-and it applies particularly to New Zealand : there is no country outside South America where the moral hazard is so bad as in New Zealand. That is our experience, and that is the experience of all the insurance companies. To ihustratl.how serious that is, P I may mention that in Chili the la wof the land is ha wiena man's place catches fire he is sent to gaol until he can prove to the satisfaction ot the Judge that he did not set fire to it. Chili is said to be a second New Zealand. 4. The Chairman.] Does that apply whether a place is insured or not ?—No. 11 a man s place is not insured there is an end to it; but where there is insurance the law is that if a fire takes nlace a man is sent to gaol until he can prove to the Judge that he did not set it on fire Now, 1 have said that the moral hazard in New Zealand is very bad, and I am convinced that if we had State fire insurance here the losses would be even more serious than they are, because it » notorious that while individuals do not think it particularly wrong to "do the Government, the same kind of people would hesitate a good deal before they would do a wrong to a private individual or a private concern. A State Department could not be worked as cheaply as a public company, and risks would be taken by the Department through political pressure which should not be taken, and Sea would be paid under political pressure which ought not to be paid. These features are quite absent in the conduct of public companies The introduction o a State Fire Insurance Department in New Zealand would probably lead to the withdrawal of most, if not all, of the English companies doing business here. There are twenty-six companies doing business m New Zealand Out of that number only four are New Zealand companies. The other twenty-two have behind them including their reserve funds and accumulations of that kind, sixty-nine millions of money, hard cash, as security. In addition to that, most of the English companies are unlimited as regards the liability of the shareholders, which means many more millions of security to insurers because you must remember that men like Eothschild are largely interested, as shareholders in some of the English companies. To show that the New Zea and business has been unsatisfactory all through, I have only to draw your attention to the number of companies which have been doing business in New Zealand during the last twenty years, and who have retired from the field They number in all sixteen. Out of that number four are companies that were floated in New Zealand. The names of the companies are as follows : The Transatlantic Fire Insurance Company the Mutual Fire and Marine Insurance Company of New Zealand, started in Auckland on the mutual system-it lived for less than two years, selling out to another company ; the Hanseatic Fire Insurance Company of Hamburg; the Hamburg and Magdeburg Fire Insurance Company • the Fire Insurance Association (Limited) of London; the Australian Mercantile Union Insurance Company (Limited); the Batavia Sea and Fire Insurance Company Then, there was •the Equitable Insurance Association of New Zealand, fire and marine whose headquarters were in Dunedin ■ they did business in Australia and New Zealand—the bulk m New Zealand. They the shareholders lost their capital of between £50,000 and £60,000, and a sum of about £40,000 in addition. Then, the Mannheimer Insurance Company was another company that withdrew. Also the Fire Insurance Company of Hamburg; the Palatine Insurance Company; the Straits Fire Insurance Company : the Magdeburg Fire Insurance Company The North German Insurance Company withdrew from the whole of the North Island when the tariffs were introduced in 1895 because of the unprofitable nature of the North Island business. The North German still continues to do business in the South Island, though it has withdrawn from the North Then, there was the Union Fire and Marine Insurance Company of New Zealand. Not liking the outlook, they sold out to the Alliance Company. And the Colonial Fire and Marine Insurance Company of New Zealand sold out to the Commercial Onion Company. That makes sixteen companies which have withdrawn from New Zealand in the last twenty years. 5 Mr G J Smith.] Withdrawn, or been bought out ?—Twelve have withdrawn ; one New Zealand company has gone into liquidation at a cost of about £100,000 to the shareholders ; while fhree other local concfrns have sold out-one to the New Zealand Insurance Company and the other two to English companies. Now, there has been a good deal of agitation m the North Island about the increase of rates there, or the higher rates charged in comparison with those ruling in the South I have already mentioned about the bad moral hazard m New Zealand. lam not going to .name the localities or the provincial districts, but I am going to give you a little information as to one or two places. During the last five years in four country towns and the surrounding districts—and these districts are the most prosperous in the whole o the North island— our loss-ratio on dwellinghouses amounted to 22816 per cent. We received a net rate from the owners of those dwellinghouses of 13s. lid. per cent. ; while to come out square we ought to have received 31s 9d and that is without making any provision whatever for expenses. Ihose are country districts. There is one provincial district where, during the last five years, our loss-ratio on dwellinghouses throughout the whole of the provincial district has been over 100 per cent. You can draw your own deductions from those figures. Now, gentlemen, there may be something more that I may be able to tell you. Broadly, those are the mam facts that I have. If I can give you any more information I shall be pleased to do so in answer to questions. 6 Mr Atkinson | Your objection is to the State undertaking fire insurance, even in competition with the private companies ?-Yes ; I object for two reasons. I think m principle it is wrong; and I think it is absolutely impossible for the Department to be conducted except at a very serious loss to the Treasury.