REVIEW.

Manawatu Herald, Volume I, Issue 73, 9 May 1879, Page 2

REVIEW.

Australian' MuWal Provident Society..* Lif o Assurance Societies are comparatively modern institutions, They are the outcome of an appreciation of the sacred obligations incumbent Upon every man to provide as far as possible for those" dependent upon him. This essefltial principle has developed iuto various forms ;— payments at death, or after a number of j'ears, or in annuities. The Australian Mutual Provident Society has contributed largely to the creation and development of a provident spirit in the Australasian colonios. People out here are as a rule speculative, and because of that they are reckless. Hence any organisation which iuduces peouniary forethought and providence tends to the prosperity of the uation.and the prevention of pauperism, and from * patriotic view is therefore worthy of every encouragement. The book under review is by Prof essor M. A. Black, F.1.A., Actuary to the Society, and is written to bring before the public the "progressive policy" of the Society referred to. From the introduction to the pamphlet, we learn that at recent annual meetings of the sofiiety, criticisms havo been systematically made upon the expense of conducting the society ; it has been questioned over and over again whether the aggressive policy adopted during the last 9 years of " pushing" the society has not resulted in loss to the old members, whilst at the meeting of 1878, it was roundly asserted that the society was in a bad conditiou, as " it was an axiom laid down by actuaries that anything in the shape of expenses over 10 per cent [i c., of their premium income] ia unsafe for assurance companies to spend in expenses of management." This latter assertion Professor Black contradicts, saying, "There is no foundation Whatever for such a statement, and I can safely say that do actuary expressed such an opinion. The assertion has not even the semblanca of trutlu" :Jn proving his case, he goes into the question thoroughly, ttiid fortifies his position with facts and figures "Which must convince the mjjst sceptical of the economic and successful management of the society, and of its stability. The pamphlet is divided into seven chapters, giving the desired information under the following heads : — 1. How much do the assured contribute for expenses of management ¥ ■ ; i ' 2. What havo been the actuarial expres* f^ S^fe l™?™ Om an * pvastuii^ " , "^-X 2 "" ?/*'" "7 h "T **?' ; operftte to Jtfi increase or decrease y „ IZ^TT/J^Z'tl "' ?f "I"** "> * mOmi of bus^ess annually, i.e. admitted fe^ r Ulembe " to share fche ? w These questions are answered in an able and oarefully-writteQ pamphlet of 87 pages. J™ 41 . 1 "* with a perfect array of Compaq tables and figures. We are unable to review iv detail the various propositions and arguments of Professor Black. We therefore conclude this brief notice of an excellent pnmimlefc witli a few extracts of

interest. ■la auswsi'ing Question 3, — •Couipwatita expenditure hetwuon diffareut eojiosie.* — wtiab are the caused th*t operate to Its increase or decrease, — Professor Black says : Such an office as the Australian Mutual Provident may be characterised as a representative society— one that centres in itself the bonus systems peculiar to several offices, and its members can avail themselves of the one or the other at pleasure. Declaring bonuses in the first',instance as reversionary additions, policy holders may at any time exchange them for other and various forms of benefit ; as, for instance, to pay successive premiums as they fall due, to reduce the premium for the next 5 years, or to permanently reduce tho annual premium payable through life until extinguished, after which future bonuses may be ooininuted into an annuity payable to the member. They have besides the privileges of varying their option at every division of profits, of surrendering their bonus for cash at any time, of getting their polioea kept in forco as long as the surrender value of policy and bonuses is sufficient for the payment of the premiums. And these are only instances of the liberal business regulations adopted by the Society. A society whose sj stem of business embraces all the solid improvements that have been introduced in perfecting the business of life assurance, and whose members are afforded every convenience that a comprehensive system of life assurance has developed, cannot be conducted at as low a rate of expenditure as that of offices working on a narrow basis, and who afford no snch accommodation to their members It were unreasonable to suppose that they could, for exceptional circumstances necessitate exceptional ex« penditure. It is only as between offices that are cognate, having had much in common with each other, and whose business has been similar, that comparisons should be instituted. As a corollary from this it follows that an office may be unique, not comparable with any other, and such in its pro-e'niuenee is the Australian Mutual Provident Society. After comparing tho cost of workin j the Mutual with that of English Societies, our author proceeds : — • That the Australian Mutual P.ovident Society should within a period of 29 years have an amount assured exceeding the average business of 73 English offices by 239 per cent, uod a premium income exceeding theirs by 26S per cent., is a result that must bo eminently satisfactory to all interested in its success. It evidences not only the popularity of the society throughout" the Colonies, but a deep-seated and growing appreciation on the part of the Australian community of the exceptional advantages to be obtained from joining its membership. This is fully realised by all those who understand the rolative positions of life offices, and in a marked manner by those who are alive to their own pecuniary interests. This large amount of business, acquired in so short a space of timo, in faoe of the most active competition for business by Home and Colonial offices, is unsurpassed in the history of life assurance companies in England. The following extract is from the oUapter dealing with the question, Would it bo to the advantage of the members who have

already participated in. the pronto, if the poeicly transacted a less amount of new business annually, i.e., admitted fewer members • share the profits ? — It is important to note that the continuous introduction of new in large numbers into an office has the effect to much

to be desired of keeping down the avemge « [ration of the policies, and consequently c average age of the lives assured. It is of tltal importance that an office should be preserved in. a condition of this kind, although, singularly enough, this is a point upon -which much misconception appears to exist. It is not unusual to hear the argument urged by persons partially conversant with the subject, that an office, after having been in existence for 30 or 40 years, is more secure than one of shorter duration, and that the critical period of ita existence haß not been passed until a generation, h period of about 33 years, has elapsed. But the faot is, that the time during which, an office has been in operation may have but little influence on its age, properly so palled, for the average duration of the assurance i 'ska is that whioh determines the real age of an office. In speaking of an old office, then, we should be understood to refer to one wb.086 policies have on the average been in force for a considerable time, and the lives assured in which are consequently well advanced in years. Viewed in this light it will be evident that an office which has been "n operation for more than a century may yet be a comparatively young office, and indeed there seems no reason to suppose that, it will be much older, in the sense in which we apeak of the age of an office, than one which has only bsen in operation for half that time, seeing that the entrants of a century ago will long since have given place to their successors.