FIRE INSURANCE

Dominion, Volume 13, Issue 300, 13 September 1920, Page 8

FIRE INSURANCE

KARMERS AND CO-OPERATION

SUCCESS OF MUTUAL ASSOCIATION SCHEMES

The' growth of tho mutual insurance gystem, providing a comprehensive cooperative fire insurance schenio for. farmers in outlying districts, wns referred to yesterday by a prominent Wellington business man, 'himself a land-owner in the Waikato district.

'/"The great advantage the farmer gains from this system," he said, "is that ho is really his own underwriter. He is able to have a say in the control of his company, and is assured of fair treatment. In mutual insurance companies, or associations, such as tiro.in existence in the Wellington, Taranaki, Hawke'a En v; and other provinces, the main point is that mutual association 'business can be built .up without any capital, as merelv a guarantee of 2 per cent, of the risk' taken has to be given by each insurer. Policies in such an association ere just as legal as those in any underwriters' company." ..,.,■ It'was explained that for the initiation of a scheme, one hundred insurers were required and these men formed tho nucleus of the company. By this means, farmers living practically in isolation were onabled to insure against fire, which undoubtedly meant a great deal to them. 'As it stood, the law regulating insurance, enabled farmers, by co-operation, to effect their own insurance without any other management than their own. In lio case did capital have to be subscribed, rnd there were no shares. .The premium rate was the capital, as a; guarantee, but the speaker asserted that it had never been found necessary to call on guarantors for payment. "Some.of the associations,-" it was said, "have built up large reserve funds-cut of the premiums. Each association is controlled by a directorate elected by the insurers, and there ere no vested interests." !' ". State Office's Assistance.

: Interesting- details of the early stages of. the farmers' mutual assurance companies were obtained yesterday. When the first schemes vera formulated, as a rate-reducing project, the underwriters generally refused to deal with a'.non.tariff . concern. However, this attitude was not taken up 1 by the State Fire Insurance Office, which Assisted the mutual associations by taking portion of the risks.. Without this help, the farmers companies would have been left in a difficult position, as they could not take over tho' whole risk without a possible danger of loss. It was with the object of obviating this that tho State Fire Office re-insured surplus amounts.. In' this way, the companies were able to continue operations at a lower rate than that charged by the underwriters. There was no doubt, added The Dominion's informant, that it was through the State Tire Office that the. mutual associations •were able 'to continue.