WELLINGTON NEWSD

Hokitika Guardian, 18 August 1926, Page 1

WELLINGTON NEWSD

LLOYD’S UNDERWRITERS.

(Special to “ Guardian.”)

WELLINGTON, August 10 It will he news to tho general public that a group of Lloyd’s Underwriters has commenced operations in New Zealand through a firm of brokers, and it- will he interesting t-o see what action the Government intends to take concerning this group in regard to the deposit required from insurance companies under “The Insurance Com. pfcinies’ Deposits Act, 1921-22” and its amendment of 1922. That Act, by tho 1922 amendment, requires British companies commencing business in New Zealand after September 28, 1922, to deposit tho sum of £50,000 in cash in respect of fire insurance business and all other classes of insurance business, except life and marine. The object of exacting this deposit from insurance companies is to provide security for the insuring public that the companies will meet their claims in New Zealand. I’ll 1924 it was decided by the Supremo Court, in an action brought by the Public Trustee and the AttorneyGeneral against G. 11. Scales. Ltd., who were making contracts on behalf of Lloyd's Underwriters, tint as Lloyd’s was not a “company”’ within tho meaning of tho Act, they were not liable to make tho deposit. Up to the present, tho operations of

Lloyd’s in Now Zealand have not been of serious moment, but now that they nro actively engaged in seeking business it is surely incumbent on the Government to see that that the dame protection is afforded to tho insuring public in regard to Lloyd’s as is done in tho case of the insurance companies. This is all tho more necessary in view of tho fact that. Lloyd’s policies are not issued, as is often thought, by Lloyd’s as a corporation, hut are underwritten by the individual members of Lloyd’s The financial position of these members may bo sound, but it is not published, and consequently cannot bo ascertained. Further, tho policies signed by individual underwriters, are issued in England, and tho only practical why of enforcing-payment in the event of dispute would he to sue them there. It may be questioned as to whether a cash deposit by insurance companies is necessary for the protection of tho public in view of the ample, funds which practically all insurances cowIJanies possess, but if such bo the case,

how much more necessary is it that security should he provided for the public in connection with the contracts of individual underwriters of whoso financial stability nothing is known. It would seem to be highly inconsistent for wealthy insurance companies to ho compelled to put up security for payment of claims and for Lloyd’s Underwriters to no permitted to escape tho obligation. There is also the question of taxation to he considered. The insurance companies make large contributions annually to the revenue of the Dominion in the shape of income tax. Surely Lloyd’s will not be allowed to.escape paying income tax, especially as they will bo taking money out of the Dominion while giving practically no employment nor service here, whereas tho insurance companies do give employment to large numbers of the people of New Zealand, and render valuable service to the public in many directions. In the same connection there is the question of contribution to the cost of fire protection of the towns of N.ew Zealand. The insurance companies pay practically one-half of the expense of maintenance of all Eire Hoards in New Zealand, and Lloyd’s Underwriters should certainly be caller upon to contribute their share in respect of tho. tiro Insurance business which they transact. • Nn doubt the Government- is fully alive to the points 1 mentioned above, and it is only to he expected that they will take whatever steps are necessary to safeguard the interests of tho public.