ACCIDENT INSURANCE BRANCH OF THE STATE FIRE INSURANCE OFFICE (ANNUAL REPORT ON THE) FOR THE YEAR ENDED 31st DECEMBER, 1931.

Appendix to the Journals of the House of Representatives, 1932 Session I-II, H-06a

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1932. NEW ZEALAND.

ACCIDENT INSURANCE BRANCH OF THE STATE FIRE INSURANCE OFFICE (ANNUAL REPORT ON THE) FOR THE YEAR ENDED 31st DECEMBER, 1931.

Presented to both Houses of the General Assembly -pursuant to Section 22 of the Government Accident Insurance Act, 1908.

State Fire Insurance Office, Wellington; 31st August, 1932. I have the honour to submit the thirty-first annual report of the Government Accident Insurance Office, for the year ended 31st December, 1931, together with the Revenue Account and Balance-sheet. The following comparison with the previous two years shows the position in brief :— Income— 19^ 1 - Premiums from all classes of accident insurance .. .. 81 353 104 934 102 061 „ Interest 13 ' ;3i2 M) ' B6o 16^316 Outgo— Free-year bonus on personal accident policies . . .. 166 307 337 Claims.. .. .. .. .. _ 49,853 61,040 82,56] Working-expenses (exclusive of income-tax) .. .. 18,340 19,121 18 74-5 Carried to reserve for unearned premiums .. .. .. 4,330 10 611 Income-tax .. .. .. .. 3,939 4,036 7,249 Loss on realization of securities .. .. .. .. .. j4q _~ ~ . ,„ , . Per Cent. Per Cent. Per Cent. Katio ot claims (all classes of business) to premium income .. 61-28 58-17 80-89 Ratio of working-expenses (exclusive of income-tax) to premium income .. .. .. .. .. 2 2-55 .18-22 18-37 Ratio of underwriting surplus to premium income .. . . 10-65 13-07 0-41 Surplus, apportioned as follows : — £ £ £ Reserve for bad debts .. .. .. .. .. _ _ Investment Fluctuation Reserve .. .. .. .. 3,000 3 000 7 000 Payment to Treasury under Section 5, Finance Act, 1931 (No. 2) —10 per cent, reduction in salaries .. . . .. ggj Reserve Fund .. .. .. 15j066 21 *53], 1,105 £18,066 £24,531 £9,486 Reserves and funds as at 31st December .. .. .. £268,306 £303,448 £312 054 The fall in premium income is a consequence of present economic conditions. The increase in losses, with a consequential reduction in underwriting profit to under \ per cent, of the premium income has been contributed to by losses resulting from the acceptance of workers' compensation risks from employers engaged in hazardous industries who have sought insurance protection from the State Office because their risks had been declined elsewhere. This assistance to industry, resulting as it does in an undue aggregation of specially hazardous risks, carries with it a moral obligation on the part of employers to insure with the Office their more acceptable risks also ; otherwise, owing to the narrow underwriting margin, the assistance which is now being given will require to be restricted. As has been mentioned in previous reports, workers' compensation experience is investigated by this Office at suitable intervals and adjusted on a scientific basis which preserves equity between different industries. An investigation of the experience of insurance companies and this Office was made during the year, and new rates, involving increases and decreases, were fixed to take effect early m 1932. The margin allowed in rates for working-expenses and profit is estimated not to exceed 30 per cent. The actual average working-expense ratio of all accident, offices for workers' compensation business alone is not known, but the actual average expense ratio of all offices for all classes of accident business is returned by the Government Statistician as 33-04 per cent, in 1930. The ratio of this Office for 1931 on a similar basis, including taxes, was 25-47 per cent.

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Motor-vehicles Insurance (Third-party Risks) Act, 1928. —Figures published by the Government Statistician show that for the first two years of the operation of the Act claims paid and estimated absorbed over 88-5 per cent, of premiums, leaving an exceptionally narrow margin for working-expenses and profit. This margin would be far too low were it not for the special system of administration which was initiated with the active co-operation of this Office. Considering the novel aspects of the legislation and the lack of any previous experience here or elsewhere, the rates fixed in the first instance proved to be singularly accurate, and only small adjustments, which do not increase premiums in the aggregate, have since been found to be necessary. The support given to this Office by motor-vehicle owners continues to be substantial. J. H. Jerram, General Manager.

Revenue Account of the Accident Branch op the State Fire Insurance Office for the Year ended 31st December, 1931. £ s. d. £ s. d. Premiums after deduction of reinsurances .. 102,061 15 1 Free-year bonus on personal accident policies .. 337 310 £ s. d. Claims .. .. .. .. .. 82,561 10 5 Interest .. .. .. 16,316 11 9 Commission.. .. .. .. .. 4,585 16 11 Less land and income tax .. 7,249 0 6 Salaries .. .. .. .. 10,920 0 0 9,067 11 3 Contribution to Public Service Superannuation Fund .. .. .. .. .. 210 0 0 Expenses of management .. .. .. 3,028 3 7 101,642 14 9 Payment to New Zealand Treasury under section 5, Finance Act, 1931 (No. 2) .. .. .. 881 0 0 Further appropriation to Investments Fluctuation Reserve .. .. .. .. .. 7,000 0 0 Reserve for bad debts .. .. .. 500 0 0 Amount of Accident Funds, 31st December, 1931.. 1,105 11 7 £111,129 6 4 £111,129 6 4 Balance-sheet of the Accident Branch of the State Fire Insurance Office as on the 31st December, 1931. Liabilities. £ s. d. Assets. £ s. d. Accident funds, as per Revenue Account .. 1,105 11 7 Government war-loan securities .. .. 94,500 0 0 Outstanding accident claims .. .. .. 39,674 0 0 Other Government securities .. .. .. 54,000 0 0 Government taxes .. .. .. .. 7,249 0 6 Local-authority securities .. .. .. 93,548 5 0 Commission.. .. .. .. .. 595 15 7 Rural Advances bonds .. .. .. 14,425 0 0 Premium and other deposits .. .. .. 363 7 2 Property under agreement for sale and purchase .. 3,980 0 0 Sundry creditors .. .. .. .. 33 13 9 Fixed deposits and at short call .. .. 40,000 0 0 Reinsurance premiums due .. .. .. 121 18 6 Interest accrued but not due .. .. .. 4,687 8 9 Officers' Fidelity Fund .. .. .. 500 0 0 Interest overdue .. .. .. .. 199 0 0 Reserve for unearned premiums .. .. 47,220 13 10 Agents'balances .. .. .. .. 6,259 8 2 Investment Fluctuation Reserve .. .. 16,000 0 0 Sundry debtors, including Motor-vehicles Insurance Bad Debts Reserve .. .. .. .. 500 0 0 (Third-party Risks) Act pool .. .. 38,619 14 4 Reserve Fund constituted under section 6of the Cash in hand on current account .. .. 9,873 4 9 Government Accident Insurance Amendment Act, 1924 .. .. .. .. .. 246,728 0 1 £360,092 1 0 £360,092 1 0 J. H. Jerram, General Manager. 2nd April, 1932. C. B. Redward, Accountant. I hereby certify that the Revenue Account and Balance-sheet have been duly examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed thereby. — G. F. C. Campbell, Controller and Auditor-General.

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