TAXPAYERS' PROPERTY

NZ Truth, Issue 1201, 6 December 1928, Page 2

TAXPAYERS' PROPERTY

N.Z. Government State Fire and Accident Insurance Office THIS IS A FINE POSSESSION

(By "Fiat Lux.") Commencing business on January 4, 1905, on £2000 of capital "borrowed" from the treasury, and to finish up the twenty-third year of business with accumulated profits well m excess of half a million sterling; to have saved the insuring public over a million sterling since 1,923 through lowering the standard rates of premiums by annual rebates, is the proud record of the N.Z. Government State Fire and Accident Insurance Office.

AN examination of State Fire Office accounts over a number of years shows that the State Fire Office is a very ably-conducted institution, which presents its annual accounts m the orthodox commercial form. Provision is made against its earnings for every contingency upon what appears to be an adequate, and m fact a liberal scale; but more of this side of matters later when earnings and expenses are under discussion. j Dealing, with the question of whether or hot the Government should carry on business as fire and accident i underwriters m competition with its' taxpayers, this critic Is of the opinion that, as the experiment has proved. one hundred per cent, successful, both economically and. financially, this alone seems to be an adequate answer to the query. .. , I It is quite an understood thing that most . locally-owned insurance companies tell their- shareholders that i dlvidenda now arise, not from the New Zealand portion of the underwriting, i but from the overseas branches of such companies. This, no doubt, is the case, but one cannot help but wonder If this was also the case prior to the < establishment of the Stats office m 1905. ( | Inferentially, it would, appear it was not so m those far-off days, and It means then that arising out of the entry intb the New Zealand underWriting field of the State office, the local companies, have expanded their overseas connections sufficiently to pay

their dividends principally out of foreign earnings. \; Assuming the accuracy of these' deductions (v.-hich can be proved or disproved only by reference to each sepa-l-ate, company's statistical data) it Surely is . gratifying to. find that even though many of the local companies cannot make sufficient profits'. out of the New Zealand public they can at least do so out of overseas people. That the Stato office has innuencedreductions m. rates is Incontrovertible. Since it commenced operations m 1305 with a capital of minus £2000, .the Government Statistician states that rates for trade risks have been. reduced by 10 per cent, and those on dwellings, 'offices and similar risks by the huge [amount of 33 1/3 per cent. In addition to these tariff reductions', the State office instituted the annual rebate system m .1923, and under this the. insurers have received further concessions varying from 15 per cent, down to 10 per cent., but usiiaily at 12 % per cent. To fully appreciate Just what this saving amounts to, let us take the case of ah .investor owning a number of dwellings upon which m 1905 he paid £100 per annum m fire premiums. As a direct consequence of the operations of the State office, he will now pay only £54 6s. 83. per annum for the same cover, thus saving no less than £45 13s. 4d. At these very much lower rates, the State .office has not oniy paid its way, but has accumulated profits far m excess of half a million sterling. . It is .estimated that the total saving pffected by the insuring public from i the establishment of the State officeincluding reductions m tariff rates and bonus rebates— is well m excess of five millions sterling for the twenty-three years. In this connection it is iriterest- ' ing to. find that there are ho fewer than 43 insurance, obhee^ns, carrying on business m New Zealand, and , of these 22 arc Eh^lish, six Australian, two are American,. and thirteen are .local companies and mutual associations. The 43 concerns have ho fewer than 13.429 separate agencies m the Dominion, or an average of 312 agencies for each company, so • the competition for business must be exceedingly keen, working expenses very high. The latest insurance statistics coyer the 1926 year, and some very interesting: items are shown therein. ... For instance, the. gross amount of fire insurance m force at December 31, 1926, was £383% millions .sterling:, represented by 684,702 policies, whilst the premiums thereon amounted to slightly under £2,000,000. , During 1926 there were 5949 fires,

representing losses totalling: £1,127,140 or an average loss per fire of £189. This accounted for no less than £59 of every £100 of premiums received by the companies. The next item of interest regarding ! the State Fire Office is to trace its growth per medium of comparisons of its net premium income over a number of years; this method is the best and truest test of the measure of public support afforded to an insurance concern. . „. , ■..'.. Table showing the annual net premium income of the State Fire Insurance Office, 1914 to 1927 inclusive: Tear. Net Premium Income. £ | 1914 64,646 1915 71,166 . 1916 77,609 i 1917 85,321 1918 ... .. .. 90,077 1939 .. .. .. 100,764 I 1&20 124,538 1021 136,429 1922 142,592 1923 .. - .. .. 154,164 I 1924 '.. ..• .. 165,070 | 1925 .. ... .. 176,664 ! 1926 „ .. .. 197,471 1927 .. .. .. 207,610 ! Thus comparing the. figures for the beginning and end of the fourteen-year period set out above, the increase, which has been achieved steadily year by year, amounts to 321 per cent., I which must be acknowledged as a. wonder fill achievement m the faca of the strong opposition offered by the prd--1 prietary companies.

In 1923 the office declared a rebate to policy -holder's which took the form Of a 15 per cent, reduction on all premiums falling due between August 1, 1923, and July 31, 1924. For the following year; owing ..to a rise m the fire I loss ratio the bonus was reduced to 10 per cent., but ,for the years ended July, 1926, and July, 1927, the rebate has been stationary at 12^ per cent. Under the provisions of the Amending Act of 1922, the, office has granted rebates, but it must be' appreciated that the lead given bj' the State Office had of necessity to be , immediately followed by all insurance concerns m the Dominion. While the amounts rebated by the State Office do not make a yei v y large sum per annum, the Government Statistician estimates the total rebates allowed to insurers by the whole of the concerns of New, Zealand amount to approximately one and three-quarter millions for the five years. Regarding the matter of taxes — including income tax— it will probably come as a considerable surprise to many people to learn that the State Fire. Office pays nearly flye times as much m ."Government taxes as any other concern operating m New Zealand. I The State Fire Office was conceived | m a Spirit of helpfulness, born m debt arid educated m economy. It has passed its majority, sound, full-fledged and with a record of achievements of which every person connected with it has a right to feel very proud. The service the office has rendered to the community cannot be calculated m sterling. It belbngs to the taxpayers of the country and is a mighty fine possessidn. '