The Feilding Star. SATURDAY, NOV. 15, 1890. Fire Insurance

Feilding Star, Volume XII, Issue 64, 15 November 1890, Page 2

The Feilding Star. SATURDAY, NOV. 15, 1890. Fire Insurance

Immediately after the late disastrous fire in Sydney, N.8.W., the various Insurance Companies affected made the discovery that the rates they had hitherto been charging were too small in proportion to the risks they were taking, and therefore it would be necessary for them to enlarge their premiums. So far as the companies are concerned such a course is no doubt absolutely ueoeasary, but the parties more immediately effect d — 'the insurers — do not appear to have been consulted at all. We have already expressed the opiniou that there are too many Insurance companies in existence, and this confession of weakness forced from them by the fire in Sydney confirms our views. One or two strong companies could undertake all the necessary risks, and be managed at a minimum of expense. Of course there is always the dread of the tyranny of monopoly, but any danger from that source could be obviated by legislation defining the rates to be charged. It is the cost of mauagemeut which eats up the re venue collected by the companies in premiums, not the fires. Therefore if there were only, say, two companies taking fire risks, instead of two huudred (more or less) and the rates charged ou a par with these which have been obtained within the past five years, in ten years there would be a reserve fund more than common surate to allow of every risk to be destroyed in one day, au event which is practically an impossibility The paralysis of the companies which have lost by the Sydney fire proves clearly enough either that they had accepted risks beyond their capacity to meet, or that their deductions from the laws governing averages had been taken from false premises. Possibly they had erred in regard to boih of these. The only immediate remedy to be adopted is the gradual absorption of the lesser companies by the greater, a. process which has already begun in regard to one or two companies doing business iv the colonies.