LIFE INSURANCE METHODS.

Dominion, Volume 4, Issue 954, 22 October 1910, Page 10

LIFE INSURANCE METHODS.

•• ' '-•*•- "TCOTINES."'' .- '-v.;..;■■■■■•l ' '.Sir,—ln recent 'reports of debates in Parliament; in The Dominion on insurance methods and the "tontine system," .vra must now take as the sequel to' Mr. EoganV remarks in' Parliament on June 14 1909, on which 'The Dominion at once aisked him for fuller particulars. In .its article of Ootober 17 on "Life Insurance Methods,"- referring,-i.to Jilr. Eogan's. plea .that. ..people would, petition. Parliament, praying- for protection ..fromlthe...niethods adopted by some life insurance companies Of' offering some policy-holders less in satisfaction of. .'their claims than they paid ,in premiums, The Dominion's article, closed with the words.'of a resident secretary then interviewed that, just now, eCoriK worth repetition: "It-Sis., impossible •t(i;. admit orrefute' concerning life 'insurance policies without. .a knowledge of' the special circumstances of particular, pases. They are all. governed by • clearly-defined .actuarial principles differently ' applied ; according to circumstances. If a policy-holder receives less than he has paid in, it' does not follow that 1 he has been treated unjustly.' That depends upon the fruits of the case; and as we have not Mr. Hogan's facts we cannot express any opinion' either way." As- one of the. earliest canvassers in New" 'Zealand, 1884-18S8, ' for. tohtined■policies of life insurance,: and since that timo for other tontined.;raofles, and having heard much said of the pros and cons of the same, I must .say,, after reading through , the Hansard deport of the debate*! of September 8, 1910, headed A. A. Larsen ana W. T.. Larsen, pages 381 to 391,- that no credit is due to Mr. Hogan os-the Wanganui M.P. for the part taken in this matter. 'The letter,: page 382, from Mr. Larsen to himself, which said "that he understood from the agent that at death my heir would receive ,£SOO and all premiums, paid in, but if I outlived the fifteen years that they would pay over all profits-which, were calculated, to bo about .£IOOO, and I' would still" have 'a 'fully paid-up .policy for..- .£500." Mr. .Hogan, by reference to it,, treated sit as ; e'ne of his facts.' Mr.', Waser', ! . tho. Select Committee chairman, on phg'e' 389, said, "To pay,.for this, J622 ss.'ilod. a year, fOr fiftten' years, ; or about £331. It; was not crediblo that anyone oould have believed that such returns could be realised. ■ The ;very leaflet. that Mr. Larsen exhibited to tho Committee did not bear out that statement—not even one fourth of the amount. This showed that Mr. Larson's testimony as to what ho was to-get'at the. end. of .tho fifteen years was not reliable.. Neither the proposal or tho policy bore out anything of the kind j nor was there anything, to show that what he had now been offered did not .carry, out in every, particular that which the actual policy indicated." Mr. Fraser,'.pago 390, added:'"lt was impossible, for the to give to policyholders the profits that they could have given had the period in question been one 1 of prosperity. Probable profits were dependent upon conditions b'oyond the control of tho company itself, and must always" bo so." The Government could not'go on dry-nursing the people for ever. Persons would havo' to learn to look after themselves-somewhat in these matters. No action on the part of the Legislature would save men from their Own folly. Mr. Hogan, 'p. 382, jsaid.the history of tire' case was, briefly, "that in 1893 the petitioners'took out a. policy, and six mouths later they were approached by an agent of,. the company and'..advised to convert their polioies into, tontine policies." So; that in reality ,no further insurance was taken, -and the. agent interest financially would be small, so that what he did was chielly to benefit: his- clients is to mo quite plain, and does not deserve the stigma of being a "disreputable agent" cast by' Mr. Wilford, 'wliich Mr. Fraser, p. 389, complained of. I notice also that Mr. Wilford, p. 390, mis-states an extract from a letter quoted by Air. Poole at p., 385, of having to pay .£lO 2s. Id. a.year to draw at the end of twenty years about ,£3IS. Mr. 'Wilford'has it, to pay.-dES.I2s, Id. to-draw, about ,£3lB. This may v be. but a clerical error, but one so plain should have been, so to speak, "felt" in the proof-sheet by so cuto 1 a critic. . Mr. Hogan, p. 382, makes the pointed remark: "If tho Government Department'could work out actuarially what the.policies would.produce in fifteen years ..why could not the Colonial Mutual Office do the same, and not attempt to mislead

the insurers of 1893?" As there was no attempt to mislead proved, but just tho reverse, I will point out that the Government Department in ISS6 printed in largo type leaflets ami distributed thera freely: "That the tontine system was unsafe, and opposed to ordinary actuarial practice." "Tho victims aro appealing." "Do not be allured by American tontines," etc. In 1887 the Department \vas issuing tontino policies, and based thoir estimates, tlie.v openly said, on tho American results. In 1888 in th# Nnpier 'Evening News" a letter appeared "with the signature of P. W. Erankland, Actuary and Principal Officer, Government Insurance Department, 20th November, 1888, which closed t3ius: 'Even then a further allowanco should be made, for tho much more brilliant results, which experience bos' shown, can- bo secured by the tontine savings system, a description of insurance which tho Government lias recently inaugurated, but,which .the Mutual Provident does not offer to tho publico.'"' As a matter of history, tho Government No. 1 tontino that terminated on December 31, 1900, and tho distribution in 1901, was, as much or moro disappointment to its patrons as thoso of the private offices. Of course, it shows that boing subject to like-influences liko results are at certain times sure to result, and this no actuaries in the world can influence.. I intended making a few otber remarks on the different systems of insurance, but, must defer them a littlo longer, closing .this with tho admonition: "Don't bo allured by any, tontines."—l am, etc;, K WTGHTMAN.