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MINUTES OF EVIDENCE.

Tuesday, 23rd November, 1909. T. F. Martin examined. 1. The Chairman.] Your name?—Thomas Frederic Martin, barrister and solicitor. 2. Did you draft this Bill?— Yes, on the instructions of the Taranaki Farmers' Mutual Fire Insurance Association. 3. Perhaps you would shortly explain what the meaning of the Bill is?— The object of this Bill is to extend the principle of insurance as effected by mutual fire insurance associations to insurance against accidents. No doubt the Committee would wish to see that all proper safeguards are provided in any Bill giving power to any company or persons to effect accident insurance, and I propose briefly to explain those features of the Bill. In the first place, sir, there is an Act on the statute-book enabling accident insurance companies to carry on their business. That Act is " The Accident Insurance Companies Act, 1908." It will be seen by reference to the Bill, clause 15, that the provisions of this Accident Insurance Companies Act are incorporated in the present Bill. Therefore, whatever the Legislature has thought necessary to provide with respect to accident insurance companies in general is provided with regard to the Mutual Accident Insurance Bill now before the Committee. The Committee might wish to know what kind of companies or persons are allowed to effect accident insurance under the Act of 1908. I will read the definition of "company" in section 2 of that Act: "'Company' means any person or association, whether incorporated or otherwise, not being established under any Act relating to friendly societies, who issues or is liable under accident-insurance policies in New Zealand, and includes companies now established in or out of New Zealand, and includes also mutual associations as well as proprietary." The Committee will therefore see that this Act contemplates accident insurance by mutual associations), and the present Bill is, of course, to enable a mutual association to engage in accident insurance. Another safeguard which is provided—really by the Accident Insurance Companies Act itself—is that every company has to prepare annual statements, which are to be printed and deposited with the Minister, and further information is to be given if required, and these statements are to be laid before Parliament. There are penalties in default of this being done, and penalties for signing false statements. By the effect of clause 15 in the Bill provisions for similarly safeguarding the members and the public are incorporated in the present Bill, so that the Bill gives all the protection that the Legislature has already given in the case of accident insurance companies and of persons dealing with them. Clause 17 of the Bill reads as follows: " (1.) The Governor may make regulations prescribing the form and manner in which the association shall prepare, authenticate, and deposit annual statements of the condition of the property and affairs of the association, and of the fire and accident insurance business transacted by it. (2.) Such regulations shall have the same effect as if they were contained in this Act." The object of this clause is this : The Mutual Fire Insurance Act of 1908 also has a number of provisionsr—they are contained in sections 56, 57, and 58—requiring these annual returns to be made, and it was thought that the provisions might require harmonizing to meet the case of an association which not only engaged in fire-insurance business, but also in accident-insurance business. These provisions may not require harmonizing—they may work out all right j but, in case they do, the Governor has power to make regulations. Another safeguard in the Bill is that the present mutual fire insurance association cannot engage in accident insurance on the mere ipse dixit of the directors. Clause 3 of the Bill provides that a resolution must be passed at a special meeting of the members of the Fire Insurance Association convened as required by the Mutual Fire Insurance Act of 1908. Assuming that such a resolution has been passed, I will endeavour to point out how the Bill, if it became an Act, would operate. The personal who effect insurance against accident must be members of the Mutual Fire Insurance Association : that is clear in clause 2, which reads, " Any mutual fire insurance association incorporated under ' The Mutual Fire Insurance Act, 1908,' may undertake the insurance of its members with respect to all or any of the following classes of insurance," &c. If members will compare the classes of risks set out in clause 2 of the Bill with the definition of " accident insurance " given in the Accident Insurance Companies Act of 1908, it will be found that the risks are exactly the same, with some consequential amendments. Then, a member effecting an accident insurance with the association does so as an ordinary insurer. He simply pays his premium—he does not give premium notes. It follows therefore logically from this that he should not have a vote at the meetings of the association. The members of the association who are insured against fire have to give premium notes. Now, a premium note is a document which extends over three years, by which the member undertakes to make certain payments. Part of these payments is for a premium, which he pays as of course, but the other payments are to make up losses, and are made only in case he should be called upon. That is the principle of fire insurance on the premium-note system. So it will be seen that, as the fire-insurance members, by reason of their premium notes, are the persons who are liable to make up any losses, these persons, and these alone, should have votes at the meetings of the association. But an exception is made in this respect with regard to meetings to make by-laws affecting accident-insurance business. It is provided in clause 9of the Bill that the amount in which a member is insured against accident shall be taken into account for voting purposes at this meeting. That is only fair—that they should have a voice in the making of by-laws fixing