Benefits Increased

Sun (Auckland), Volume II, Issue 480, 9 October 1928, Page 6

Benefits Increased

South Island Mutual Insurance

The mutual insurance scheme inaugurated by the South Island Motor Union has had a highly successful second year according to the annual report just issued. The average loss ratio and the average expense ratio compare very favourably with other companies.

North Island motorists will doubtless be interested in the results achieved, especially as the directors have, without extra charge, given members unlimited third party cover, and £I,OOO personal accident cover, while at the same time the premiums have been reduced. The report states: “The premium income, less returns and reinsurances, amounted to £10,236 5s 7d, as against £7,703 6s for the first fourteen months, while claims (less reinsurance recoveries) amounting to £2,616 0s 4d were paid during the period under review'. “The total funds in hand at June 30 were £8,980 14s 3d, which after placing £4,094 10s 3d to reserve for unexpired risks leaves a credit balance to carry forward of £3,586 4s, and taking into account the association’s small loss ratio for the past two years the reserve is probably more than adequate, but the directors deem it advisable to be well on the safe side in making proper provision for unexpired risks.

“Our loss ratio in proportion to the premium income over the last twelve months was 25,56 per cent, and this is ample evidence that the class of business secured by the association is sound, when it is compared with the average loss ratio by all the companies in New Zealand doing business which most resembles that of this association. The last Government Statistician’s report shows an average loss ratio of 54 per cent, by the companies for that year and 49.32 per cent, for the previous year. “For the past year our expense ratio covering all charges except claims was 31.8 per cent, of net premium income. This includes provision for incometax, but there is a doubt about the liability for this item (the matter is at present being taken up with the Commissioner) and, if it is found we do not have to pay, our expense ratio will be reduced to 26.6 per cent., as against 37.2 per cent, for the first year. The Government Statistician’s figures for last year show that the average expense ratio of the proprietary companies doing a similar class of business is 37.75 per cent. ADVANTAGES TO MEMBERS

“During the year it became abundantly evident (owing to our low loss ratio) that further policy benefits could safely be given, and it was decided to give without extra charge unlimited third party cover in place of the previous limit of £I,OOO, and also

to give without extra charge a liberal personal accident cover of £I,OOO in the event of death, £I,OOO in the event of permanent total disablement, and £SOO permanent partial disablement, together with £lO 10s medical expenses. “At the end of the year the figures disclosed such a healthy financial position that it was found that the premium rates could, with safety, be still further considerably reduced, and the directors have lost no time in putting this into effect. Our premium rates are now over 30 per cent, less than could be obtained anywhere in New Zealand before the association commenced operations. “Since the S.I.M.U. Mutual Insurance Association commenced business the proprietary companies have considerably reduced their premium rates and extended their policy benefits to come more into line with what this association is offering to members, and your directors are of opinion that in this way all motorists have benefited considerably by the existence of our association.