CITY'S FIRE RISKS.

Dominion, Volume 6, Issue 1781, 20 June 1913, Page 6

CITY'S FIRE RISKS.

NEW CONCERN COMPETES. I' 'MENTION OF INSURANCE "RING." COUNCIL THR-ASHES IT OUT. A' protracted discussion as to whether tin city corporation insurance risk should bo given to a now and unknown company at cheaper rates than those now being paid, or to the company now holding it, occupied the City Council for nearly three hours last evening... The fire policy which the council holds from the Standard Insurance Company will expire shortly, and the company lately wrote to tho council asking that this policy be renewed,' but made no reference to'amended terms. Before any decision was arrived at, the council received a letter from Mr. V. Braund, acting as agent for Messrs. Sead, Cowing, and Craven, Ltd., a firm claiming to be backed by big insurance companies associated with Lloyd's, London, offering to take the council's risk of .£120,000 at 10 per cent, lower premiums, and to leave out of their policy certain clauses which the council considered objectionable. The Wellington underwriters entered a protest against this proposal being entertained by the council, and the in committee heard deputations representing both tho new firm nn3 the Wellington underwriters. The. deputations and the subsequent discussion proved to be a long business, and tho council did not come out of committee until 10.30 p.m. As appears from tho subsequent Teport of proceedings in open council, the council in committee decided not to accept the offer of the new firm, but to defer final settlement of tho question for three months, in order that inquiries might be made as to whether it would be advisable to place their big risk with the new company or with the local companies.

Opposed to Secrecy. Councillor M'Kcnzie moved that tho work done in committee be approved. Councillor Luckio seconded the motion. Councillor Fuller said ho hoped the council would not approve it. It was rather a pity, he thought, that tho business had been taken in committee, becauso the public would have been greatly interested to hear what the council had to say on this important question. A man had como forward offering, on behalf of a new firm, to take the council's insurance risk at cheaper rates and without objectionable conditions now imposed. It seemed to him that the rate of 10 per cent, on a risk of .£120,000 was too high; he ventured to say- that tho rate in London for such a risk would be something like 5 per cent. He regretted exceedingly that the council had gone into committee, and he hoped the work so done would not bo approved. Councillor Tregear said he had voted against the council going into committee because he did not see anything connected with fire insurance that the public of Wellington and New Zealand should not know about. A great deal more than was necessary had been said, especially by those in support of the ring, and certainly mere than would havo been said if every word had had to bo carefully weighed. j An Amendment.

Councillor A. H. Hindmareh also objected to the confirmation of the work done in committee. The council would not even adjourn discussion or «nsider the offer to give better terms at cheaper rates for insurance, but had decided out of hand in favour of the ring of companies here. There was practically only one insurance company operating hero, for he understood tho Standard Insurance Company acted as ageuts for all tho other companies in thia business. He was very sorry the council had mado no effort to break the ring. The council should: at least havo adjourned decision on the question Until' they had mado inquiries as to tho standing of the firm offering better terms. These gentlemen had not come to make fools, of the council or of themselves. They had come with a bona-fide offer, and the least tho council could have done was to give it consideration. It was quite beside the question to say that the new company had no funds in New Zealand, for if they had satisfied the council that theirs was a powerful company, backed up by Lloyds, the fact that they had no funds here was no argument against their proposal. If there were men. in the world-who prided themselves on-their business' reputation they were tho insurance men in London, and especially those connected with Lloyds. Tho motion carried had been that the matter bo put off for three months, and in tho meantime the corporation property would bo insured with the associated companies. Tho council would have to insure with them on the old torms, becauso the council, by its decision, had eliminated competition. It was not likely that Craven and Company would take the risk for three months. Probably their English backers would not take the business up for such a short time. They were told that a large number ot tho largest traders in New Zealand—and names woTe mentioned—had insured directly in London. No attempt had been mado to go into this matter. It would have been a very easy matter to ask the firms in Wellington and other part 9 of New Zealand the extent to which they insured in London, and the terms on which they secured their insurance. Tho associated companies would not abate tlieir terms, and when the matter came beforo tho council again they would bring tho same pressuro to bear that they had brought that night. Tho best-way to secure this business for the associated companies was to postpone it for three months. Tho associated companies knew that London people would not insure for three months. At the end of that time, if tho foreign company established itself, the associated companies would simply lower their terms for one year, to kill the company, or got them to come in. lie went on to deal with the drastic measures taken by tho associated companies to keep out competition. But when tho. oouncil had sccured an opposition offer it wa3 simply turned down. Tho least the council could havo done was to inquire into the company, aud the names of the people behind it. They could have communicated with the High Commissioner in London, and ho would have protected their interests. Ho moved as an amendment:

"That the Wellington City Council accept tho offer of Craven and Co. to obtain an insuranco policy over tho Wellington City Council properties, provided tho executive were satisfied with the and tho solvency of thoso behind it." More About the "Ring." • Councillor J. E. Fitzgerald seoonded tlio amendment. Ho was in favour of getting • rid ' of the objectionablc clauses in tho _ schedule held by tho associated companies. Tho firm making overtures to tho council were prepared to eliroinato the objectionable classes, also effect insurance at 10 per cent reduction which would alono bo a saving of .£OO per year to the council. Surely it was up to tho City Council to give tho new company a turn. Tho New Zealand Government had tried to break down monopolies that were a curso in ; this country for years, and yet tho City Council were refusing an opportunity of assisting the people of Wellington to get cheaper terms. They should welcome into New Zealand any firm prepared to brrnk a monopoly existing in Now Zealand to(lay. It was clearly stated, and the remark went unchallenged, that there was a ring existing in Wellington. At 11 p.m. it was decided to continuo tho discussion until 11.30. Continuing, Councillor Fitzgerald said a good deal had been said about the bona fides of the new company. He admitted that he knew nothing about them, but the •amendment fully safeguarded tho couni cil if it should be discovered that this firm was not satisfactory. It was nit very well for tho insurance companies to como forward and say, now that a competitor was in tho field, that they would reconsider tho terms on which they would tender. Tho new firm had at least dono the eity a good service in making tho companies realise that the business of tho corporation was worth going after. It was suggested that it would bo hard to come to tprms with a company not located in New Zealnnd, but ho did not think this would necessarily be :-*o, and further, tlio ring of companies were not very readable in their settlements. He bolievcd ! the discussion would do.eood in showin?

that there was on opening for a new company in Wellington prepared to do business on fair lines. It might result in tile breaking up of the ring. Councillor L. M'Kenzio said the duty of the Finance Committee, of which Councillors Fitzgerald and Hindmarsh wero both members, was to givo tho council a lead in opposing the averago clauses ill tho policy to which, exception was now beinc taken.

Councillor Fitzgerald: They laughed at us.

Councillor M'Kenzio said that tho local companies had to deposit with the Government ,£IO,OOO as a proof of ability to redeem obligations, but this company had rot offered to pay this amount to the Government. Thry had suggested paying «■ paltry ,£IOOO as guarantee. Councillor Hindmarsh said that this was not so. Councillor M'Kenzie was interrupted at this stage (11.1)0 p.m.) by a motion that the council adjourn. The motion was carried and the council rose.