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in 1874 a new Act was passed consolidating and extending the powers of the department, which Act remained in force until abolished by the Act of 1884 incorporating the department as an Association. Up to the end of 1884 the office was a department of the Civil Service, administered by a Commissioner possessing specific statutory powers, and acting under the Colonial Treasurer as the political head. Under regulations by the Governor in Council, the Commissioner made contracts for life insurance and annuities. These contracts were made on the report of the Chief Medical Officer, who examined all the papers and the reports of- the medical examiner, and advised the Commissioner as to the eligibility or otherwise of the life proposed for insurance. The papers were afterwards carefully examined by the Actuary and the Commissioner before decision. Practically this system of examination still exists under the Board, as only cases in which differences of opinion arise between the examining officers (the Chief Medical Officer, myself, the Actuary, and the Secretary) are referred to a Committee and, if necessary, subsequently to the Board, it being obviously impossible for the Board to examine individually from 90 to 120 cases per week. Prior to 1885 the office was subject to a pre-audit by the Audit Office, the Controller and Auditor-General being required to countersign all bank-orders for payments. Now the Board authorizes these payments, which are subject to a post-audit by the Audit office, an Inspector of Audit being specially appointed to check all accounts of this office and that of the Public Trustee, giving his whole time to the work of the two offices. Eegarding the mode of conducting the office—the work of which has grown greatly with its duration—l may say here that from its establishment the new business has almost entirely been obtained by means of agents, who devote their whole time to canvassing. Very little has come over the counter at any time, and less now comes than ever, as this office and seven other offices doing business in New Zealand have canvassing-agents in all parts of the colony. While on this subject of canvassing-agents, I venture to observe that opinions have been freely expressed that the Government office, trusting to the great advantages it offers in the way of premiums lower than those of any competing office, and the inviolable security of the State, should cease the system of canvassing-agents, and let the people come spontaneously to it for insurance. But our experience is totally opposed to this idea ; and the Actuary informs me (and both the Secretary and Inspector entirely agree with him, as I do myself) that were such a course adopted in the face of the keen competition and the steady misrepresentation and calumny to which this association is subjected by agents of rival offices, the business would run rapidly off the books, new business would fall away, surrenders and lapses would increase, and the institution would ere long be reduced to insignificant proportions. Mr. Frankland estimates that our total amount insured would most probably diminish under such a system by nearly half a million a year, while the new business would also be certain to seriously decrease. The method of providing for obtaining new business has been subject since 1873 to various tentative changes. In that year chief agents were appointed in the larger cities, with canvassingagents under them. The chief agents occupied their time mainly in canvassing, and the Postmasters in these cities attended to the collection of renewal premiums. In consequence of the great increase of business and the rapid growth of competition by branches of foreign offices, it was found necessary to place the whole business in the different divisions of the colony in the hands of chief agents, and hold them responsible for collection of renewal premiums and the limitation of lapses. These were allowed at one time a salary and a commission on the net increase—that is, on the difference between the new business obtained during the year and the business which emerged from all causes —lapses, surrenders, &c. Later on, in 1882, a Superintendent of Agents was appointed, with a salary of £450.and a commission on the new business of ss. per cent. The canvassing-agents were then paid 15s. per cent, on the new business they obtained. This arrangement was not found satisfactory ; the services of the superintendent were dispensed with early in 1884; the overriding commission was abolished, and the amount of it transferred as additional remuneration to the canvassing-agents themselves. The present Inspector of Agents was appointed at a salary without commission. He has general charge of all the agencies, inspects and reports on the different branch offices and their condition, and sees to the proper location and efficiency of the canvassingagents. One of the reasons for abolishing the Superintendent's overriding commission on new business was that under that system the person obtaining it was interested in the quantity of the new business merely, without due regard to its quality or permanence. The essential feature of the new arrangement is that the head of the outside staff is an official paid by salary only. The office has every reason to be satisfied with the result of this change. Eegarding the work of Postmasters as receivers of renewal premiums in the less important localities where no resident agent is stationed, that work was and still is paid for by a commission of If per cent, on the collections. This commission was for a time paid in a lump sum to the Postal Department. Dissatisfaction arose from this method of payment, which failed to give to Postmasters a sufficiently direct interest, and was believed by them to interfere with their promotion by way of postal salaries. These commissions are now, under the Board, paid directly to the Postmasters. In August last a new scale of commission to canvassing-agents was authorized by the Board, at the same time as the new rates of premiums were authorized by the Governor. Instead of being paid £1 per cent, on all new business completed by them, the remuneration of the canvassing-agents was changed to the following sliding-scale : On policies completed for £100 to £150, 15s. per cent.; for sums of £200 to £250, £1 per cent.; for sums of £300 to £1,450, £1 ss. per cent.; and for sums of £1,500 and over, £1 10s. per cent. This scale of payment was recommended to the Board after due consideration, and on computation and report by the Actuary and Secretary, and was adopted. It has been found satisfactory, and has not materially increased the total amount of commission paid as compared with the total amount of new business,