LIEF INSURANCE. AN (H)AWKWARD STORY.

Patea Mail, Volume IX, Issue 1077, 24 August 1883, Page 2

LIEF INSURANCE.

AN (H)AWKWARD STORY.

TO THE EDITOR. Sir, —The Australian Mutual Provident Society divided £235,185 for the 5 years ending in 1873 £504,382 do do do 1878 and £1,000,000 will be divided for the five 3'oars ending with the present year ; for, during the past five years, the profits of-the Society have been accumulating at the rate of more than £200,000 per annum.

After the present year the profits will be divided every year ; and the actuary (MrMonicoA. Black, F.1.A.) estimates that there will bo about a quarter of a million sterling for distribution among the members for the year 1884. But possibly your correspondent wishes to know whether the bonuses keep pace with the increasing number of those entitled to participate ; if so, the actuary shall answer. Ho says (on page 28 of the last Quinquennial Report)—“At the distribution in 1874 the sum of £236,185 was divided among 16,035 policies, averaging £423 each ; and assuming that all equally participated, the share to each would have been £l4 12s. In 1879 the surplus divided amounted to £504,382; and assuming the same average sum assured as before, the bonus to each policy would have boon £ls 3s, or £1 11s per policy more than at the previous investigation. If your correspondent is still hr doubt, the enclosed letter, which I received last month, may enlighten him. I ought to explain, perhaps, that knowing the writer of the letter to have been a member of the A.M.P. Society for some years, I asked him to tell me of his position with respect to the Society, and he sent me this letter : Hamilton, July 20, 1883. Mr Batten. Dear Sir, —My policy was issued in April, 1871, and at the division of profits in December, 1873, having then paid £2l premiums, and the policy being covered to April, 1874, my bonus additions amounted to £l3 10s ; at the division of profits in 1878, having paid £7 per annum, or £35 in all, my bonus additions amounted to £42 18s, equalling2o percent, more than I had paid in premiums, which to me is satisfactory. If I get as I ought to, at least £SO for the 1883 division, my policy of £3OO, in force since 1871, or 12 j years, will he worth nearly £4lO. j I am, Dear Sir, | Faithfully yours, | R. F. S S.

I will leave the letter at yonr office Mi Editor, so that anyone with a doubt aboni its genuineness may have an opportunity of judging for himself. j would now ask your corre«pnn 1 n' whether “he can assert with veracity that the bonuses of the Society are not iucroasing?” Referring to page 30 of the quinquennial report of 1879, to which your correspondent invites attention, 1 find the actuary says as follows : —“From the above table it will be seen that a member who assured under table A for £IOOO at the age of 55 years, has in the last 25 years received bonus additions amounting to £1133, being upwards of 113 per cent, of Unoriginal assurance. If these bonus additions wore now surrendered, the member would receive as their equivalent a cash payment of £B9l 10a od, or if they were applied to a reduction of premium, they would entirely extinguish all future premiums, and secure to the member in addition an annuity (that is an annual income) of £137 10s 4d for the remainder of his life and of course at the death of the member (he original assurance (£1000) would be paid, with future profits, to the family of the deceased member. I wonder when the department with its “By authority” will bo able to offer such advantages to its members as those described above? And now -as to your correspondent’s own policy :—Ho says, “ In 1869 I took out a policy in his Company (meaning the A. M.P. Society) for £SOO, and at the distribution of bonuses in 1874 I received £69 12s”; and further on he says—“Of course I have no complaint to make.” I should rather think he had not. The fact of £69 12s having been added to his policy in 5 years, is not easily set aside, or in colonial pbrasoolog}’, “ rubbed out.” One would think that if your correspondent had anything like gratitude in him he would not seek to bring the Society into disrepute, for it is an acknowledged rule to speak well of the bridge which carries you over.

I know two or three gentlemen in this neighbourhood with policies o£ £IOOO each in the department, and who have been in it as long as your correspondent has in the A. M.P. Society, but who have not received half as much each on their thousand pound policies as your correspondent has on his £SOO. The policy of your correspondent’s friend was probably taken out a year or two after tbe profits had been divided, so that at the next division of profits lie would get, say, 2£ years share ; but if he has had the good sense to hold on to his policy, lie will get the full five years profit additional at the end of the present year ; and then probably he will find that tbe abuse heaped upon your correspondent was premature. To make myself more fully understood I will cite a case in point. A gentleman of this town, a Banker, took out a policy in tbe A.M.P. Society in January, 1876, for £SOO, and pays £ll 10s per annum in premiums. At the division of profits in 1878 he had £23 10s added to his policy, (mind his premiums were only £23 for the two years). If be were disposed, to grurn-’ bio, like our friend above, he could say tiuly—l have been insured in the A.M.P. Society for £SOO, nearly 7 years, and all the bonus, I have had, has been £23 10s ; but he knows better than that.. The President and Vice-Presidents of tbe Institute of Actuaries spoke thus of the plan used in dividing the last profits :—lt substantially returns to each member a share.in. the profits, proportioned to his ctntrihution to the Surplus Fund of the Society. But the question in the minds of some persons is ; Arc these large bonuses likely to continue? 1 will let tbe actuary here speak again (the profound and’accomplished actuary, as the Americans call him) but this time through the chairman, Mr J. H. Goodlet. At the special meeting of the members in' Sj'dney, last November, the chairman said : “I am also in a position to compare the profit with (he five years ending in 1869 with that of the five years ending 31st December last ; and this exhibits the most striking results. The divisible profit for the five years ending in 1869 was £97,333, or say. at . the rate of* £20,000 per annum; while, for ■ the five years ending last December, it was £850,973, or at the rate of L 170,195 per annum : that is to say, the average annual profit of the last five years has increased 774 per cent, as compared with the annual profit of the five years ending in 1869. ’ For the three years ending in 1881 the annual profit has been as follows :

1879 ... ... ' ... L 174.632 1880 ... ... •... L 224.578 1881 ... ... ... L 207,365 And, doubtless, when the investigation for 1882 and 1883 is made the profits will be found to exceed even the above amounts. I could say a lot about our remarkably low expenses, 9.5 per bent only of the total receipts of the year, for management and commission, while tlie death rate is lower than that of any other Life office in the world. To my friends of the l< department” I would say, “ Go and do likewise,” but theywould reply (because I have heard thorn), “ We cannot do anything like that stated in the Hamilton letter, but if the public will, insure with: us we will show them (by authority) how they can save 10 per cent in ten years. Apologising for this trespass on your space,— l am, &c., J. W. Batten. Patca, Aug 23. TO THE EDITOR. Sir, —In your issue of last Wednesday, “ One of the Insuring Public ” states that a friend of his insured in the Australian Mutual Provident Society for LSOO, and for the quinquennial period ending 31st Dec, 1878 ho received a bonus of L3B 10s only I The statement certainly requires corroboration. I hold a policy in the same Society for the same amount, and for the same period as that above referred to, and my bonus was L 67 1 Os.—Yours, &c., H. F. Christie. [This correspondence can bo continued in our advertisement columns.—Ed]