STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1935.

Appendix to the Journals of the House of Representatives, 1936 Session I, H-06

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1936. NEW ZEALAND.

STATE FIRE INSURANCE OFFICE. ANNUAL REPORT OF THE GENERAL MANAGER FOR THE YEAR ENDED 31st DECEMBER, 1935.

Presented to both Houses of the General Assembly pursuant to the Provisions of the State Fire Insurance Act, 1908.

State Fire Insurance Office, Wellington, Btli July, 1936. I have the honour to submit the thirty-first annual report of the State Fire Insurance Office, for the year ended 31st December, 1935, with the Revenue Account and Balance-sheet. The following are the comparative figures for the last three years : — 1933. 1934. 1935. Income — £ £ £ Premiums .. .. .. .. .. .. 201,351 200,581 199,898 Other receipts, less land-tax . . . . .. .. 42,906 43,750 39,303 Premium on conversion of securities . . .. .. . . 45 329 Outgo— Bonus rebate to policyholders .. .. .. .. 30,060 41,211 41,233 Claims .. .. .. .. .. 49,005 54,751 53,151 Working-expenses (exclusive of income-tax and Fire Board contributions) .. .. ~ ~ .. 51,340 53,073 53,779 Fire Board contributions.. .. .. .. 7,968 7,940 7,994 Income-tax .. .. ~ .. .. .. 33,912 34,929 23,641 Per Cent. Per Cent. Per Cent. Ratio of claims to premium income .. .. .. 24-34 27-3 26-59 Ratio of working-expenses (exclusive of income-tax and Fire Board contributions) to premium income .. .. 25-5 26-46 26-9 Ratio of Fire Board contributions to premium income .. 3-96 3-96 4-0 Ratio of income-tax to premium income .. .. .. 16-84 17-41 11*83 £ £ £ Carried to reserve for unearned .premiums Surplus, apportioned as follows : — Payment to Treasury under section 5, Finance Act, 1931 (No. 2) 3,484 871 Written ofl Office premises .. .. .. .. 29,700 26,000 27,000 Investment Fluctuation Reserve Fund .. .. .. 15,000 Reserve Fund .. .. .. .. .. .. 3,788 25,601 2,731 Bonus Rebate Reserve .. .. .. .. .. 20,000 .. 30,000 Total .. .. .. .. .. £71,972 £52,472 £59,731 Reserves and funds at 31st December .. .. .. .. £991,087 £1,016,688 £1,049,420 1. Despite extreme competition and an increasing restriction in the sources of insurance business open to the State Fire Office, due to the action of many mortgagees and solicitors requiring borrowers to insure elsewhere, the support given to the State Fire Office continues to be well maintained. While there has been a steady decline in the aggregate of premiums paid to all insurance offices for each year since the peak year of 1930 —the decrease between that year and 1934 being 14-7 per cent. —the percentage of premiums received by the State Fire Office has increased in the same period from 12-75 per cent, to 13-33 per cent, of the total. Comparative figures for 1935 are not yet available, but the indications aie that the relative advance in public support continues. 2. One aspect of competition which it may be permissible to touch upon in this report is that the value of the security behind the policy contract does not always receive proper consideration by the person who is about to insure ; yet security such as a State Fire policy affords is the fundamental purpose of insurance. It is perhaps not recognized as it should be that protective legislation at present does not prevent insurance institutions which may be financially weak from soliciting business on superficially attractive terms.

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3. The State Fire Office has now been established for thirty-one years, and has paid in claims the large, sum of £1.667,000. It was the first competitive State Fire Office in the world, and started with a borrowed capital of £2,000, long since repaid with interest. As an immediate consequence of its operations, rates were reduced by an average of 25 per cent., and since 1923 premiums have been further reduced through the declaration annually of State Fire rebates. The total saving to the people of the Dominion as a direct result of the competition of the State Fire Office is estimated at not less than £13,500,000. Throughout its history the State Fire Office has shown results, particularly as regards loss-ratio and expenses of management, which compare favourably with the very best achieved by its competitors. In the face of the keenest competition the State Fire Office has built up the largest ftre premium income in the Dominion, and is gradually accumulating substantial reserves, which are essential if the Office is to render its fullest service to the community in providing both fire and earthquake insurance at the lowest cost. 4. It is with much pleasure that I record a continuance of enthusiastic and loyal assistance from all members of the staff, whose service to the public maintains the reputation of the Office on a high level. J. H. Jebbam, General Manager. Revenue Account of the State Fire Insurance Office fob the Year ended 31st December, 1935. £ s. d. £ Premiums after deduction of reinsurances •• 199,898 7 2 Bonus rebate to policyholders .. .. 41,233 6 2 Premium on conversion of securities . . .. 328 12 4 Losses by fire and earthquake (after deduction of Other receipts— £ s. d. reinsurances) 53,151 0 4 Interest, commission, and rent 39,659 0 6 Income-tax.. . . .. .. • ■ ~, „ Less land-tax .. . . 356 2 6 Commission 8,479 19 6 39,302 18 0 Salaries .. .. •• •• 28,742 10 7 Contribution to Public Service Superannuation Fund .. .. .. .• • • 533 13 8 Contribution to Fire Boards under the Fire Brigades Act, 1908 .. .. -. 7,994 2 9 Expenses of management — £ s. d. Travelling-expenses .. 2,796 8 4 Printing, stationery, and advertising .. •• 1,453 18 7 Rent .. .. .. 1,440 3 3 Exchange .. .. 42 19 0 Postages, telegrams, cablegrams, and sundry charges 4,063 14 9 _ 9,797 3 11 Office equipment .. .. .. •• 3,015 13 I Office premises: Depreciation .. .. 3,210 0 0 179,798 11 6 Bonus Rebate Reserve .. .. .. 30,000 0 0 Office premises—Written off .. .. .. 27,000 0 0 Amount of fire-insurance funds at end of year .. 2,731 6 0 £239,529 17 6 £239,529 17 6 Balance-sheet of the State Fire Insurance Office on the 31st December, 1935. Liabilities. £ s. d. Assets. £ s. d. Capital authorized by the State Fire £ Government securities .. .. .. 540,807 8 2 Insurance Act, 1908 .. ..100,000 Local-authority securities .. .. .. 189,227 5 8 Less not raised .. .. •• 100,000 Rural Advances bonds .. .. 14,175 0 0 Nil Fixed deposits and at .short call .. .. 187.000 0 0 Bad Debts Reserve 1.500 0 0 Land and buildings 131,276 13 11 Reserve Fund .. .. .. 742,941 18 5 Outstanding premiums .. .. •• 10,499 ,i 9 Investments Fluctuation Reserve Fund .. 59,000 0 0 Interest accrued but not due .. .. .. 11,020 12 2 Reserve for Unearned Premiums .. .. 104,246 9 11 Rent accrued or due .. .. 3,076 8 8 Bonus Rebate Reserve .. .. 79,000 0 0 Rent overdue .. .. •• •• 26 8 7 Reinsurance Reserve Fund .. .. .. 60,000 0 0 Cash in Reserve Bank of New Premium and other deposits .. .. .. 922 1 7 Zealand at \\ ellington, or in £ s. d. Outstanding fire and earthquake losses.. .. 2,054 0 0 transit to Wellington .. ..51,533 1 0 Government taxes .. .. •• •• 48,641 1 6 Imprest Account balances: Head Sundry creditors !'. 25,353 11 6 Office and branches .. .. 305 13 7 Other amounts owing by the Office — £ s. d. 51, S3» Reinsurance premiums due .. 8, 265 1 3 Commission .. •• 1,414 12 4 Printing, stationery, and adver- 13 15 3 tising Postages and sundry charges .. 2,863 17 9 8 ' 12,557 6 7 Fire-insurance funds, as per Revenue Account .. 2,731 6 0 £1,138,947 15 6 1 - £1,138,947 15 6 J. H. Jerram, General Manager. 3rd July, 1936. L. H. Osborn, Deputy General Manager. 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. Approximate Cost of Paper.—Preparation, not given ; printing (1,804 copies), £3 15s.

By Authority: G. H. Loney, Government Printer, Wellington.—l 936.

Price 3d.]

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