GOVERNMENT INSURANCE DEPARTMENT.

Globe, Volume XXIII, Issue 2292, 6 August 1881, Page 3

GOVERNMENT INSURANCE DEPARTMENT.

[_Bt Telegraph.]

PROS! A CORRESPONDENT OF THE "PRESS.”] WELLINGTON, August 5.

The report of Mr Godfrey Knight, Government actuary, on the Government insurance department, was presented to Parliament to-day i y the Colonial Treasurer. The following is a summary of its chief features. The report is dated Juno 20th last. It states that the funds of the insurance department had increased in ten years 318 per cent., and in five years 113 per cent. The expenses of management absorb about 15 per cent, of the income, being only half the coat of private offices of the same age, and less than some companies twenty years older. The large number of deaths arising, directly or indirectly, from intemperance, is alluded to. Many deaths have occurred from consumption and other diseases which ought to have boon detected at the time of the application for the policy, but in spite of all these drawbacks the office has done remarkably well. The largest number of policies are for £SOO, the next for .£2OO, then for £100; for £3OO and smaller sums there are 4919 policies ; for £IOO to £2OO, 6265 ; for £2OO to £SOO, 1263; for £3OOO, the maximum for which any tingle life is insured, there are only 22 policies. The department has been urged to increase this maximum to £4OOO, but has not deemed it advisable. The balancesheet shows a net surplus os June 30th, 1880, of £73,670. Of this sum it is recommended that £56,000 be distributed as bonus to policy holders, leaving £17,670 as a reserve fund to provide for unforseen contingencies and to equalise future bonuses. There are several different methods by which the division of profits may be made, but Mr Knight announces that based on the proportion of “ loading,” that is the difference between the “net” premium and the “office” premiums accumulated at interest. The other methods are condemned as unduly favoring older policy holders, and as being in more or less degree inequitable Ho recommends that all holders of life and endowment policies, who have paid two years’ full premiums and whose policies are still in force, should participate in the bonus about to be declared. He strongly deprecated the idea of stipulating, as some offices do, that policy holders shall not be entitled to any bonus until the policies are five years old, as this is liable to cause disappointment and dissatisfaction, which it is desirable to avoid. He advises that each share of the profits should bo converted into its reversionary equivalent, allowing this to be exchanged at any time for any of the other forms to be explained directly. As this privilege may be exercised prejudicially to the office, he recommends the calculation to be framed so as to neutralise possible adverse selection by using higher rates of interest in the computation than have been employed in the valuation. He proposes to allow policy holders the option of taking their bonus in a reversionary shape as an addition to the sum payable at death, this, however, to be at any time convertable into (1) a cash bonus, or (2) a permanent reduction of premiums, or (3) a temporary reduction of premiums. He argues that it would not be equitable to charge the whole cost of new business against the“loading” contributed by new policy holders, and advises a fair apportionment, but policy holders not in any case to participate in the profits until they had paid two years’ full premiums. In the case of new policy holders he would deduct one and a-half years’ “ loading ” from the accumulated loading contributed by such new insurers wh > have entered during the last qninquenium. Where a policy has been purchased by the payment of a single premium, or by a limited number of premiums, the calculation should be apportioned so as to equalise it over the whole duration of the policy, and then take in account only the loading so equalised. Thus, only a fair proportion of the loading, that belonging to the past period, would be taken into account, and each share would be equitably determined according to the actual contribution towards the profits. Mr Knight observes that a very low standard of valuation has been used by the department in making a reserve for liabilities. Had the 11 Carlisle ” instead of the “ H. M.” standard been adopted, it would have shown £IOO,OOO as available for distribution as bonus. Mr Knight knows of no office which has attained so high a standard of valuation in ten years, and very few old offices are able to make such strong reserves as he now recommends. He proposed that the Government shall consider the claims of the working class to be supplied with a system of insurance adapted to their requirements, and that the industrial branch be re-opened, that being needed more urgently by the poorer classes than the ordinary branch by wealthier people. Mr Knight indicates the following as the shape the division of profits would take under this scheme: —A policy of £IOO taken at the age of thirty and of five years’ duration would bo entitled to £4 13s reversionary bonus at death, or £1 2s 3d cash bonus, or to a reduction of premiums by 4s Hd for five years, or by Is 4d per annum for life; a £IOO policy taken at the age of thirty and of ten years’ duration, would receive £8 6s reversionary bonus, or £2 lls 8d cash bonus, or a reduction of premiums by lls 5d for five years, or by 3s 2d during life. In this way a £IOOO policy ten years old, and taken out at the age of thirty, would be entitled to a reversionary addition of £B3, or a cash bonus of £25 16s Bd, or a reduction of premium by £5 14s 2d for five years, or by £1 lls 8d for life. It must be also remembered that the lower premiums charged by the Government would be equal to a further bonus of £2OO if calculated in the usual way. Mr Knight concludes by expressing his gratification at the marked success achieved by Iho department.

VICTORIA INSURANCE COMPANY. The following is the "eoond annual report of the Victoria Inturance Cu' m P an y. Limited The directors of the Vicv ona Insurance Company, Limited, have again to .submit a favorable report for the year ended the 3vf*th °f June, 1881. A statement of accounts an .d balancesheet, duly certified by the auditors, is annexed. The amount standing to the credit of profit is .£03,001 19a 4d, out of which snm a dividend is now declared of 10a per share; the amount re. maining will be carried forward. Three directors will have to be elected to fill the vacancy caused by the lamented death of the late W. Hoffmann, Esq., and in the room of Henry Daidot, Esq., and the Hon. H. J. Wrixon, who retire by rotation. Messrs Henry Harlot, Thomas Smith, and the Hon. H. J. Wrixon offer themselves for election.! The dividend will be payable on and after to-morrow, at the head office, and at the agencies and branches in New South Wales, Queensland, South Australia, Tasmania, New Zealand, in London, and in Western Australia on receipt of advices. Henry Miller, Chairman. Joseph Collie, Secretary. Market street, Melbourne, 29th July, 1881. Balance-sheet of the Victoria Insurance Company, Limited, for the year ending 30th Juno, 1681:-

Henet Miller, Chairman. Joseph Collie. Secretary. Wo hereby certify that we have examined the above balance sheet, together with the books and securities of the Company, for the year ending 30th Jane, 1881, and have found the same correct. 5 W. Thompson 7 A d;t Wm. Small j ' Melbourne, 19th July, 1881.

Liabilities. To Subscribed capital... ... 000,000 0 0 ,, Reserve fand 50,000 0 0 ,, Sundry claims 7,636 8 10 ,, Profit and loss, balance aa under 63,001 19 4 .£1,120,638 8 2 Assets. By Uncalled capital ... £955,061 10 0 it Bills receivable ... £4,385 17 9 ,, Fixed d oposits ... 42,558 12 8 ,, Cash in Bank and on hand 20,716 14 3 67,661 4E8 ,, Cash at branches and agencies 12,711 10 6 ,, Amounts due to Company... 4,053 15 10 ,, Mortgages, landed properties and investments ... 80,253 2 4 „ Office furniture 889 4 10 £1,120,638 8 2 Profit and Loss Account. To reinsurances, discounts, and branch expenses £50,691 14 11 ,, Cost of management and charges 8,685 7 8 ,, Losses 55,448 19 0 „ Office furniture, 10 per cent. written off 93 16 1 ,, Balance carried forward ... 63,001 19 4 £177,920 17 0 By Balance at 30 th June, 1880 ... £71,092 13 10 Less dividend, July, 1880 44,935 10 0 £26,157 3 10 By fire and marine premiums 144,879 0 2 ,, Interest and rents 6,893 13 0 £177,929 17 0