STATE FIRE OFFICE

Taranaki Daily News, Volume LIV, Issue 33, 2 August 1911, Page 7

STATE FIRE OFFICE

BIG PROFITS LAST YEAR. LARGER .RESERVE FUND ADVOCATED. Last year was the most successful that the Sts?,tQ Fire Office has experienced. The net premium income amounted to £40,551. 1,5s 2d,, as against £33,281 14s 7d for ,the previous year, showing the very substantial increase of £7270 0s 7d, which, is the biggest expansion in business in any one year since 1906. The profits for the year, after appropriating to reserve £2908 0s 3d for unearned premiums, amounted to £8487 13s. TOie year commenced with a debit balance of £1441 9s 6d, which has been converted .into- a credit balance of £7Q4(i Ss 'rtd. The greatest profit made in any previous year was £2098 13s 7d. realised in 1909. FIRE LOSSES LOW.

The net losses for the year amounted to £18,1)13 18s 4<l, as against £18,534 12s for 1900", the ratio of losses to premium income' being 46.04 for 19.10 and ,15.69 for 1 1909. The losses for 19i0 inay be regarded as beintf Ixilow the average 'to be feXJieoted." The'office was fortunate in not being 1 involved in any large block tttoflagrasti'oftS, and losses in bush Ares' Were'^jibt l ' serious. The ratio of working expenses was 28.3 per cent., as against 80.5''pef Cent, for 1900, and 38 per cent, for "1908.'' The reduction of 2.2 per cent, represents a saving of nearly £9OO anVthfi'iMsiness of 1910 as comipaifsSirwith. '1909. .* >'• ' '''l-thinfc':.iti nibiy nww be safely said," writes/tlie'genprMimanager in bis report, "that the: Noticing expenses of the State Fire Officfe than those of any similar business' Carried' on in this Donation. Included in tthese expenses s an amount of £729 18S Id, representing contributions to fire boards. These contributions in some districts are a' very heavy charge on the premium income, absorbing from 2.73 to 20.02 per cent., and averaging' about 1 x / 2 per cent, of the total premium income from all the fire board districts.

SOME KATES INADEQUATE. The investments are now £20,000, as' compared .with £IO,OOO for 1909; and the reserve (for unearned premiums is £10,220 14s Id, as against £13,312 13s lOd for the previous year. The exceptionally good results of the past years operations cannot be looked upon as furnishing .evidence that the existing rates arc such as to insure a .reasonable margin of profit over a series of years. 1 Less favorable years are certain to occur.' The rates on some of the more hazardous cilasses of risks are, in my opinion; inadequate,'. . ' . , " The sum of £2OOO was raised when' thin oficc.eam'meiiced, operations in 1005, and upon this, sum interest has been paid annually. The office has, therefore, since its inception been entirely self-support-ing; <bnt; td .place it reasonably beyond the possibility. of, in future, having to call upon.'the Government for additional funds, it' is essential in my opinion, Um-tt a fairly 1 substantial-reserve fund should ibe built up to provide against large losses which are within the bounds of possibil- : ity in cases of serious conflagrations such as occurred in the cities of Christchurch and Wellington during the past few years. To facilitate the building uj> of such a reserve fund, I recommend am amendment of clause 42 of the State Fire Insurance Act providing for distribution of profits. In view of the very heavy reducton of rates —I'ang.ing up to 33. 1-3 per cent, on the greater portion of the fire premiums for the Dominion—which eventuated when the State offiee was established, and .which has been the means of saving to the people in fire premiums exceedingly large sums annually, the present position of the office cannot, I tliink, be regarded as other than satisfactory."