GOVERNMENT INSURANCE

Te Aroha News, Volume I, Issue 54, 14 June 1884, Page 7

GOVERNMENT INSURANCE

As many of our readers are interested in the Government. Insurance Department, and many of the newspapers have been writing rather wildly about its management and condition, and as many are exercised about Mr Thome's position, it is as well to put the matter clearly and remove the erroneous impressions floating !in men's minds. There are two facts to be held clearly in view. The security for the payment of the claims of the insured is good and sufficient beyond that of auy other office doing business in the colonies. Any of the private Insurance Offices will acknowledge tiiis. The second fact is that there can be only a very small bonus declared for the current five years. The bonus of an Insurance Company is created in this way. Let us suppose a man is insured in the Government Office to secure £100, payable at his death. He commences insuring when he is 55 years of j age, and pays an annual premium of £5. (The exact amount wuld be £4 19s 4d a-year, but the sum of £5 is taken to make the details clearer). Why, he is charged £5 a-year, and neither more uor less is from two reasons ; because a healthy man of 55 is expected I to live a certain number of years (between 16 and 17), and the results from the annual payments of £5 for the expected duration of a man's life would provide the £100 at his death, liut live Insurance Department, following the example of the private companies, do not care to take ri^ks that only provide the sums assured, and no more ; and they make the insurers pay more than they, strictly speaking, should pay, to provide against these unexpected dangers. If the man of 55 paid the Government all that he would be strictly culled upon to pay, his annual payments would be £4 instead of £5 ; but he is charged £5 to provide against extra risks and expenses of management. The extra £1 is called loading, nnd forms the chaige the Government makes to the insurer for management and risk. If the Government manage the department for 15s out of the £1 set apart for the purpose, 5s is returned in the form of j bonus ; if management costs 10s in the £J, the sum of 10s goes to bonus ; if it cost 20s, as it has done under the Luckie-Tliorne control, of course there can be no bonus. What happens in otner offices matters not to our present inquiry. Let us suppose that our friend ot 55 insured his life in IB7tf, he will see from the following details how much yearly the Government Insurance Department spent out of the £1 annually paid to it for management and bonus. Annual Annual. Cost of Management. Savings for Bonus, 8d s d 1879 15 4 4 8 1880 15 8 4 4 1881 14 10 5 2 1882 15 0 5 0 1883 19 G 0 6 It was iv I§B2 that Mr Tliorne took the paYt in the management which he has found so profitable and the policy holders so expensive. Oin friend of 55 lost, through Mr Tliorne, iv 1813, ,4s 6d, out ot the 5s bonus he would otherwise have received. Wuat the cost of luduagtiiiitiut may be for 1&64. there is as

yet no means of knowing, and some skill will be required to Unr avel the accounts when presented to' Parliament, as they will be skilfully prepared there is little doubt. — Labour.