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1916. NEW ZEALAND.

STATE FIRE INSURANCE OFFICE: ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR, ENDED 31st DECEMBER, 1915.

Presented to both Houses of the General Assembly pursuant to the provisions of the Stale Fire Insurance Act, 190 H.

State Fire Insurance Office. Wellington. lOth April, 1910. I have the honour to present the eleventh annual report on the State Fire Insurance Office, together with Revenue Account and balance-sheet, for the year ended 31st December, 1915. The year under review established a record for the State Fire Insurance Office in successful underwriting —a record which will be not often surpassed in future years. The net profits exceeded those previously made in any year by 37 per cent. The loss ratio was 38-6 per cent, only of premium income, which is abnormally low. The net premium increase was considerably in advance of that of 1.914, notwithstanding an appreciable diminution in building operations and other adverse conditions due to the war. This to my mind is very conclusive evidence of the growing popularity of the Office with the insuring public. Some conception of the magnitude of the Office's operations may be had from the fact that the total cover issued for the year 1915 exceeded seventeen and three-quarter million pounds. The financial stability of the Office to-day is beyond question. Reserve funds totalling over £116,000 have been accumulated without any financial assistance from the Government beyond the guaranteeing of the first and only issue of £2,000 of debentures raised to enable the Office to commence operations, and which has long since been repaid out of accumulated funds. Had the State Fire Office accomplished nothing more it would have done well, hut its own financial success is quite a minor consideration when compared with the immense amount saved to the people of this Dominion in reduced rates —an amount totalling in eleven years considerably over £2,000,000. Whilst the cost of every necessary of life appears to have increased greatly during the past few years, the cost of fire insurance alone has decreased, due very materially, if not wholly, to the operations of the State Fire Office. The success of the Office during the past six years has led to favourable consideration being given to further reduction in fire-insurance rates in cities and towns where good water-pressure and efficient fire-fighting appliances have been installed. During the past two years rates have been reduced in the following cities and towns : Parts of Auckland, Wellington, and Christohurch Cities, and Gore Borough, and the whole Boroughs of Hastings, Palmerston North, Waitara, Aramoho, and Gonville. In addition to reductions in cities and towns a very substantial reduction has been made in the rates charged on dairy and cheese factories and creameries throughout the Dominion. On the other hand, a careful review of the tariff has led to some slight increases where the rates have appeared to be insufficient to cover the hazard, but these increases are not appreciable when compared with the reductions above referred to. The principal increase will be found in the reinstatement of the charge of 2s. 6d. to cover cost of rcinspection due to removal of goods to other premises, and for endorsements of policies due to removals or to transfers of interests. The charge now made will hardly cover the actual cost of the work, and I think is well justified. The growth of the reserve funds of the Office has been so rapid during the past few years that it would appear that the time is near when it will be possible to bring into operation those clauses of the State Fire Insurance Act providing for a distribution of surplus profits among the policyholders who have not made claims for losses during the period for which the bonus is allotted. The matter is one requiring very careful consideration in view of the large amount annually underwritten. Our accumulated funds, however, now total over four times the average annual loss for the past four years, which constitutes a very healthy financial position. To just what extent bonuses can be paid depends on future profits and the support accorded the Office by the insuring public which contributes to profitmaking. The past six years have been unusually successful, but it can hardly be hoped that the ratio of profits will continue so high in each successive year. The hazardous and fluctuating nature of the business is well demonstrated in the results of the business for the State of New South Wales for the year 1915. The published figures for the whole business of that State, with a premium income at least equal in amount to this country's, show the net loss to be £179,303, or over 20 per cent, for the year. New Zealand may at any time have to face a similar position. It must, however, be noted that the average working-expenses of the companies in New South Wales are 42-98 per cent, of premium income, as compared with this Office's working-expenses of 27-5 per cent.: therefore, with an equal loss ratio to that of New South Wales for 1915 our loss, instead of being 20-36 per cent., would be slightly under 5 per cent.