NEW ZEALAND INSURANCE COM PANIES IN AMERICA.

Kumara Times, Issue 1093, 1 April 1880, Page 4

NEW ZEALAND INSURANCE COM PANIES IN AMERICA.

The San Francisco correspondent of the Otago Daily Times writes :

There is a Bill before the California Legislature which is of more than passing interest to New Zealand. I refer to the Senate Bill entitled " An Act to Regulate Fre, Marine, and inland insurance in this State,".introduced by Mr Johnson, of Sacramento, acting on behaif of certain local companies. And here let me say that the local companies are by no means agreed upon its policy. If enacted as introduced, it would close out the majority of American companies and drive away many foreign ones. It requires a special deposit of 500,000 dollars in the State before any foreign company could open business, and no company having a less capital paid up than 500,000 dollars could do business at all. This latter provision would not affect New Zealand offices, but the former certainly would. The provision as to capital, however, would be fatal to all but eight of the New York companies, despite their large assets, whioh afford an ample security, and would drive 36 Eastern offices doing business out of the State. It should be here noted as a peculiarity of American insurance companies that their nominal capital is small, the security being obtained by the distribution of risks. This principle is so well known in the insurance business that it is .not matter of surprise that the preference, as a rule, should be given to foreign over local companies. And the solvency of insurance companies is best guaranteed by the vide distribution of risks, their losses being paid out of premiums and not from capital. The magnitude of the insurance business in the United States, and the possibilities of its. unlimited extension, should be borne in mind by New Zealand companies. It appears to me to be the only available ground upon whioh they can build a stable, paying business, owing to local and British competition. This point was well taken by Mr Dorrin, president of the Fireman's Fund Insurance Company, in his argument against the bill before the. Senate Committee, when he>aid : " The public good demands for insurance capital the largest liberty of aotion consistent with safety. The company which receives lOOOdol. per annum from a thousand agencies, whether in California or Illinois, New York or Massachusetts, Nevada or Oregon, iB safer against disaster than if its revenue of a million dollars was drawn from a hundred agencies yielding an average of 10,000dol each. The former involves moderate lines, within the loss-paying ability of companies, while the latter indicates a heavy concentration in the larger agencies." This is precisely the point, and I think the history of New Zealand insurance demonstrates its truth. The fact that the losses of local companies here for the last decade exceeded iu the proportion of three to two the losses by foreign companies representing so much more capital, is proof in the same direction/ | desire especially to bring this point home to colonists holding insurance stock, because I think the pplicy of the New Zealand Company in reinsuring 2,000,000d01s of its country business in this State was unwise. It was a policy of concentration which took over 20,000d01s from their assets, and dissipated the advantages secured by previous enterprise and expenditure. Moreover, it threw discredit upon all New Zealand offices. ]j am aware that it was a con* seryatiye measure, but it must have been taken without due consideration of the true iprinciples of insurance, which are those of distribution of risks and not of concentration.

The business transacted by the Colonial offices here, against prejudice and ignorance and opposition, during the few month* of their existence, shows what Way be accomplised in the future. For example, the New Zealand Company in four years and nine months has received in premiums, 623,937d01, of which 472,499d015, was on fire, and 151,438d0l on marine risks. Oregon only contributed 77,020d0l of this total. Now this is a great showing, and this Company was only becoming really known when the order to concentrate it business was issued, It made a noble stand here, raising Colonial credit and making New Zealand known and respected everywhere and it is a pity anything should be done to weaken its influence. The reinsured risks proved to be uncommonly safe ones by the way. Then take the South British and Colonial Agency, for Ub short run of 1,5 months. The total receipts were 124 989dols, of which 95,650d0l were for'fixe risks. Is not this a great showing for 14 months' run of unknown Colonial offices in an American city, and what might not be done ; if, instead of shirking the work by concentration, or taking fright at the hostile legislation threatened in California, these companies took hold of the American Continent, and made their home risks secure by the immense area covered by them? The Standard like- '"«« makes a good exhibit, having taken 07,664d018 m its opening year. Here is a sum total of 806,590d01s received by the New Zealand Insurance Companies on this Slope during a very short period, which they would not have got but for opening here. This business is in its infancy, and should be prosecuted S BO x? he L . e B iß, ature will not pass the BUI in its objectionable Bhape, but will take reasonable security from foreign companies. Under the circumstances I thmk the directors and shareholders interested, Bhould resolve to strengthen their agencies and extend their business.