ja.—i^

10

It may be interesting to give the average amount of sickness per member experienced by each of these seven lodges during the two years immediately preceding the valuation.

In view of the fact that in the case of the Charles Bruce Lodge a surplus has been declared, although not divided, it becomes important to inquire into the occupations of the members, as occupation has been found to exercise a very great influence indeed on both the sickness and the mortality experienced by societies. Out of 129 members on the books of this lodge during the five years ended 31st December, 1877, there were 89 miners, 6 storekeepers, 5 publicans, 3 shoemakers, 2 carpenters, 2 carters, 2 clerks, 2 contractors, 2 engineers, 2 sawyers, 1 accountant, 1 blacksmith, 1 boatman, 1 broker, 1 coach-builder, 1 druggist, 1 hairdresser, 1 pattern-maker, 1 photographer, 1 plumber, 1 saddler, 1 sailor, 1 surveyor, 1 watchmaker. The large proportion of miners perhaps throws light on the small average duration of sickness experienced by the members of this lodge ; for among members following this occupation it is found that there is frequent experience of slight accidents incapacitating for work for a few days only. This is strikingly illustrated by the experience of another society, situated at the Thames, also composed chiefly of miners—namely, the Star of Hauraki Tent of the Independent Order of Eechabites. Other points of great importance are the recency of admission, or otherwise, of the members, and the proportion of persons on the books who are either suffering from sickness likely to be permanent or who have in the past experienced very heavy sickness, and whose expectation of life is therefore lower than the normal expectation for their several ages, while the amount of sickness per annum to be expected by them during the remainder of life is higher than the normal amount. These considerations have, in the opinion of Mr. Frankland, not yet met with the degree of attention they merit at the hands of actuaries. The influence of past sickness on the expectation of future sickness and mortality is, in his opinion, a field for research as vast and important as the influence of medical selection on mortality has proved to be. It is manifest that a life office, if it could at the time of a valuation ascertain the state of health of its policy-holders, would be able to form a more accurate estimate of its liabilities than it can do when it knows only their ages and the duration of their policies. This advantage, necessarily denied to a life office, is open to a friendly society, because it has official cognizance of the sickness experienced by its members in the past; and hence Mr. Frankland anticipates that in the future it will be possible to do much towards individualizing the liabilities of these societies, and that even now a beginning in this direction should be made. For example, if an undue proportion of members are found to be suffering from sickness likely to be permanent, he holds it to be imperative, especially in the case of a small society, to make an extra reserve in respect of such members— i.e., a reserve beyond that which the mere ages of the members would indicate. Mr. Leslie attributes the surplus in the case of the Loyal Charles Bruce Lodge " mainly to the fact that the sickness experienced (or, rather, paid for) has been very much less than was to be expected."* He also says that "as the number of secessions seems to have been considerable, a portion of the surplus maybe regarded as having arisen from this source." He does not recommend its appropriation in any way. In his lucid and able report he deals with this question in the following terms : "That the valuation shows a surplus is certainly matter for congratulation; but there are several circumstances which require to be brought under your notice before I make any proposal to deal with it. The principal are the following :1. As the number of members in the lodge is small, and as nearly all are below the age when heavy sufkness first appears, there is every probability that the experience will be subject to great fluctuations. 2. Seeing that sick benefits are assured for the whole of life, it is necessary to mention that even yet the data as to sickness at all ages over seventy are considered defective, and that had full sick-pay been reckoned in the valuation as payable throughout life, instead of a surplus a deficiency of £94 would have been shown. 3. While the truth of the principle of graduated rates of contributions and increasing rates of entrance-fees, according to age, has long been recognized and acted upon in the Auckland District, yet an examination of your present rates indicates that provision has not been made to meet the actual amount of difference in liability, and that the rates throughout, but especially at the older ages, are too low. 4. I find from your new district rules, registered in February of the present year, that for the future it has been decided to only charge an annual contribution of 6s. per member to the District Funeral Fund, also that the amount to be paid on the death of a member has been increased from £20 to £25. This increase in the liability will ultimately have to be borne by the lodges in the district should the Funeral Fund fall short; and, as this alteration has been made without (so far as lam aware) any actuarial investigation being made into the sufficiency or otherwise of the present assets, these facts cannot with safety be ignored, the value of the increase being £136. Keeping all these circumstances in view, and having regard to the sources from whence the present surplus has arisen, I am strongly of opinion that the whole of the surplus shown by the valuation should be reserved to meet the fluctuations necessarily

* He slates that the aggregate sickness paid for during the quinquennium was less than one-half the expectation, according to the tables. This is, of course, a circumstance of much better augury than a corresponding result in the case of a life insurance office, for there is no "suspended sickness" (barring certain zymotic diseases) to parallel "suspended mortality."

Per Mi imber. Per Sick _ ember. Name of Lodge. 1877. 1878. 1877. 1878. Iharlea Bruce Lodge dbert „ loldsborough „ rreymouth ,, lokitika „ loss „ Waimea „ Weeks. •40 •39 1-41 1-22 1-11 1-28 ■46 Weeks. •58 •21 3-02 1-38 1-20 1-46 1-56 Weeks. 361 2-50 4-05 11-36 7-81 5-90 1-87 Weeks. 4-43 6-14 7-45 10-50 7-97 536 3-65