The Evening Star THURSDAY, NOVEMBER 2, 1876.

Evening Star, Issue 4270, 2 November 1876, Page 2

The Evening Star THURSDAY, NOVEMBER 2, 1876.

The Government Insurance Department has, since its formation, been marching on the high road to prosperity, and the progress which it made last year, as revealed by the annual report of the department, recently laid before the General Assembly, shows that it is likely to continue on the same track. The number of proposals received during the year was 1,986, intended to cover assurances to the extent of £717,341 ; but of these 501 were declined or L ft uncompleted, so that the actual number of policies i-su'd was the *otal sum, assured in - „ x -*4,509 n a had twelvemonths A '!v *"* ' ' y* 11! u an • Hie - ' lie p.*. m unis l.am t * j- dhsc amounted to £l9 901, C nioar 11 y* l i : £'i *O4 ocived tVr ,icu premiums umi'l; t;:». preceding \ ear,i which appalls, a first a’.g.it, to lie a diniiiiudoo ; put the contrast is really in favor if last

made up of single premiums to the amount 1 *2,635, and £17,265 of annual premiums, ' whereas the latter is composed of £7,619 of i single and £15,484 of annual premiums, omitting shillings and pence. The single premiums, for the most part, represent the purchase-money of annuities. The satisfactory nature of last year’s business is best seen by comparing it with the total business transacted by the department since it opened its doors. This is represented by the issue of policies, assuring £2,602,235, of which 1,007 policies have been discontinued by reason of death, surrenders, lapses, and so forth, leaving 6,406 existing policies, assuring £2,303,662. The claims upon the assur* ance fund during the year have been rather heavy, amounting to £21,550, caused by the death of 37 persons. The number of losses but slightly exceeds that for the previous year, but the amount is increased by upwards of 9,000, which Mr Woodward, the Deputy-Commissioner (who reports in the absence of the Chief Commissioner, whose office still remains unfilled), explains is dueto the circum-tance of three of the claims amounting to more than one-third of the whole £21,550. The liability which the Colony has in£23o3 fifw Be ° Q> &mounta *0 fu 62, while the present assets of t.| 0 d Jfo artm f Dt onl y represent a sum of u b,b t 3 ’ A comparison of these figures shews how difficult it is for the uninitiated to judge of the soundness of a life insurance business, and how easily they may he led astray, either in one direction or the other, by a casual inspection of the amount of re--erre fund, which assurance companies, \vnen they have a big one, are naturally prone to parade before the eyes of the public. Small, apparently, as are its assets, there is no question as to the stability of the department. In accordance with an Act of the General Assembly, a valuation was made at the end of the first ou nquenmum of the department’s existence, by two experienced London actuaries—Messrs Bailey and Pattison —who reported m exceedingly favorable terms upon the financial state of the department. Ihey were, however, of opinion that the rates of premium charged on the older ages were too low, and recommended the abolition of the industrial branch. Both hints have been taken. The tables are now being revised on the basis of " The Mortality Expenence of the Institute of Actuaries,” and it is intended, as a supplement to the quinquennial valuation, and as a further safeguard against financial error, to make au annual valuation by the department itself. \~®. industrial branch has already been abolished. The actuaries recommended this step to be taken on purely business grounds. The branch did not pay. Its receipts were trifling, and during the short time it was open a loss of £443 accrued; and since the Government Insutance Department, to be successful, must be conducted on precisely the sam . principles as to profit and loss as would be followed by a company, it was evidently unwise to continue the industrial branch any longer, unless, indeed, a prospect of ultimate profit presented itself, which did not appear to be the case. The branch was also objectionable on different grounds. It tended to interfere with the action of the Friendly Societies; or, at least, the members of those societies, as a body, seemed to think so ; and it would be a thousand pities to do aught to embarrass the free working of those admirable institutions, for after all, the main object to be kept in view when the Government diverges from the beaten track of its functions in order to provide a reliable means of life insurance for the community at large, but more especially the humbler classes, is to train the people in habits of thrift and providence, and, if they spontaneously display these qualities, ana chalk, out paths for themselves so much the better. The thought which prompted the establishment of the industrial branch of the department was an excellent one ; but the scheme in practice did not work well, and its pecuniary failure alone justified the managers of the department in retracing their steps. The department altoj- Beem ® to be managed with consider--6 lsore^on For the first year or two the expenses, as is not uncommonly the case when joint stock companies are started for insurance or other purposes, bore an undue proportion to the income; but fhey are now being got well in hand; for, whereas m the year ending June 30, 1872, the ratio of the expense* of management to the premium income was 37.4 per cent., it had sunk k per cent., notwithstanding that the entire coat of the quinquennial valuation, amounting to £705, was charged against the year’s receipts. Still, 16.3 per cent, leav s a wide margin for improvement, because it must be borne in mind that the department derives substantial advantages from its connection with the Government in the shape of office accommodation and so forth, which do not fall to the lot of accompany, so that the ratio of cost of management to income ought to be less than usual in the present instance. We hope, therefore, to see still further reductions under this heading. The Colony has an immense pecuniary stake in the matter, and the smaller the cost of management the greater the benefits, of course, which can he offered to the insurer, so that there is a double incentive to economy. The success of the department, so far, proves the wisdom of its istablishment; and when the number of policies which it has issued, the business done by private insurance associations, and the immense sum lying on deposit at the Post < iffice Savings Banks, are .considered, the inference suggests itself that the poorer classes oi ew Zealand are not quite the improvident set which they are frequently represented to be. It is undeniable that many of such persons do squander their money in a’ reckless manner ; but the facts just adduced are unanswerable proof that the principle of thrift is alive in our mid-t, and only needs a stimulus to call it forth into active exercise. The progress which the practice of life insurance is making m New Zealand is gratifying m the highest degree ; but prevalent as it is now, life insurance is yet in its infancy, for it does not seem unreasonable to hope that the time will shortly arrive when every married will insure his life, as a matter of course. If a man regularly put by the sum which he ; 8 required to pay as premium, and invested it, he would doubtless be able to leave as large a legacy, perhaps larger, to his family as he could do by effecting an insurance upon his life ; but the difficulty is that few men possess the moral persistence requisite to carry a design of this kind into effect; while a formal insurance possesses the supreme advantage, of securing the payment of a fixed sum whenever death may happen, thereby relieving the mind of the insurer, to that extent, of all fears lest by his untimely decease those near and clear to him should be plunged into want and woe.