The Insurers' Union of New Zealand.

(Reprinted from the Southland Times, Invercargill, April, 1896.)

It is hardly necessary that I should apologise for offering you this paper on Fire Insurance. It is due to the Municipal Council, and the Municipal Fire Insurance League, who appointee me to represent them at the conference of the insurance protection associations of the principal towns in N.Z., held in Wellington, on 14th Feb., that I should report on what has been done, and what it is proposed to do, to obtain relief from the excessive premiums we have had to pay in the past to the insurance companies, and from their recent com hi nation to make those rates still higher. I take this manner of reporting in order that it may be done more fully and deliberately, and that any information I have to give may be equally available to both bodies, and through them to the public they represent.

At a meeting held in this ball the following resolution was carried, viz.:—"That in view of the excessive rates now levied by insurance companies for this town, the large general increase of rates in New Zealand, and the excessive proportion of the premiums received that is expended by the companies in other ways than in paying losses, it is desirable that some other mode of five insurance be adopted."

This fairly states our position with regard to insurance companies. We are prepared to pay each others losses by fire, and a reasonable cost of working the insurance machinery; but we are not satisfied that so large a proportion of the premiums we pay should be spent in administrative cost, and in payments to shareholders, as dividends, on the inflated value of their contributed capital. There has been no necessity through ordinary or extraordinary losses for the increase of rates forced on us by the companies. The London correspondent of the Otago Daily Times, under date Jan. 10, 1896, says: "A good impression has been produced in the city by the cable message restive to the excellent results shown by the New Zealand Insurance Company and by the handsome dividend declared." Still, in the face of this and similar results with the other companies, there has been such an increase of rates all round, that one commercial firm we know of controlling a considerable number and variety of risks, has experienced an ad vanee in rates of 90 per cent, and probably this will represent to a large extent the average increase. This statement of our case was recognised by the confervence and after discussing the proposal made at a public meeting in Dunedin, to promote insurance through two or three companies only, it was clearly seen that this would only play into the companies1 hands and give us no relief. Any two companies would take all the risks they could get, but would immediately reinsure with the other companies, securing a 10 per cent profit to themselves on the transaction. The formation of another company on a mutual basis was also discussed, but was rejected, as it was plainly shown that though page 2 a respectable capital to begin with would be subscribed at once, there was no certainty of success, as we should have to fight for business on the same expensive lines as the companies are working upon, and in the end fall into the ring, as other companies have done who first started on a colonial basis and with colonial sympathies. Another proposal was considered—viz., to make overtures and give a guarantee of business to a company not already doing business in New Zealand. The same difficulty presented itself here—heavy administrative costs, and big dividends to be paid out of our premiums, would make insurance no cheaper to us. Again, it was suggested to treat with the underwriters' association with a view to procuring lower rates; and the conference communicated with the associations then sitting in Wellington, offering to consider any communication they might make; but a "stand off" reply was the only result. This might have been expected, as with the provision the companies have to make for cost of administration (about 30 per cent on the total premiums received), and the further provision for dividends on the inflated value of their shares, and for carrying large amounts to reserve, they must continue to increase the premiums, so that they may pay dividends on the constantly increasing value of their shares, rather than give the insured relief by lower premiums.

The present position of some of the companies with reference to dividends paid on the increased value of their shares, and on the increased value of the aliares themselves, is shown in the following tables, and the list could lie very much extended. They are from a circular, as will be seen, issued to induce the public to subscribe to a new insurance company.