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Thursday, 17 June 1915

Senator SENIOR - The shareholders referred to in the clause would only be the members of proprietary companies.

Senator READY - There is no mutual principle in regard to the holder of a fire insurance policy. He is really dealing with a business company. I cannot see why a fire insurance company should be compelled to send a notice to every little policy-holder. It has been represented to me by some of the insurance offices concerned that clause 41 will be harassing to companies not Australian. I do not hold a brief for such companies. I think that Australian companies should get preference over foreign companies every time, but there is a little provision which ought to be looked into carefully to see if it will work well in practice. Subclause 4 of clause 4 reads as follows : -

Each original account, abstract, statement, or return, signed as required by this section, and at least six printed copies thereof, shall be lodged with the Commissioner within three months after the expiration of the financial year in the case of returns and statements required to he furnished annually under sections 35, 30, 37, 38, of this Act, and within six months after the date of the investigation in the case of the abstract and statement required under sections 30 and 40 of this Act.

That means that an English company within three months of the expiration of the financial year will have to send a return, giving the details as provided for in this Bill. I think we ought to allow at least three months after the annual meeting, for the companies do not always hold their annual meetings at the end of the financial year. They may hold these meetings a little later, but, according to this Bill, they will be required to furnish returns within three months after the expiration of the financial year, and within six months after the date of investigation in the case of the abstract and statement, they will be required again to bend returns in. I think that, in Committee, we might very well consider the advisability of altering the clause by inserting the words, " three months after the annual meeting," instead of the words, " three months after the expiration of the financial year." That would be fairer to the companies concerned.

Senator Guy - You would have to provide that their annual meetings should be held within a specified time, too.

Senator READY - Yes. Looking through the Bill, I find that clause 60 requires some attention. That clause states -

1.   The holder of a policy issued in the Commonwealth after the commencement of this Act by a company not formed within the Com,monwealth shall, notwithstanding anything in the policy to the contrary, be entitled to sue the company in respect of the policy in a Court of competent jurisdiction in a State or part of the Commonwealth.

2.   No stipulation in the policy, or in any agreement relating to the policy, which deprives or intends to deprive the policy-holder of the benefit of this section, shall have any force or effect.

I have had some experience of fire offices, and I know that some companies have agreements in their policies to refer matters in dispute to arbitration. That is a wise provision, and particularly wise so far as small policy-holders are concerned, for there are many policy-holders who are not in a position to go to law, because of the expense. Let me read sub-clause 2 again -

No stipulation in the policy, or any agreement relating to the policy which deprives or intends to deprive the policy-holder of the benefit of this section, shall have any force or effect.

When both parties are willing to go to arbitration, I think we ought to allow them to do so, and, if necessary, we ought to add a sub-clause to provide that nothing shall prevent any disputants in a claim from settling their dispute by arbitration. That would be a reasonable protection to the policy-holder, and if the Vice-President of the Executive Council thinks there is anything in the point, I would like to see the Bill amended in that direction.

Senator Lt Colonel Sir Albert Gould - There could not be a contract inserted in a policy to prevent anybody from going into a Court of competent jurisdiction.

Senator READY - - I am not concerned with what Court it may be. I am concerned with the fact that the small policyholder, when faced with law costs, will often take anything before he will resort "to the Court.

Senator Lt Colonel Sir Albert Gould - But this does not deprive him from going to arbitration.

Senator READY - 1 take the view, as a layman, that it does, but I shall be glad to submit the matter to the VicePresident of the Executive Council.

Senator de Largie - It will do no harm to have it mentioned, anyway.

Senator READY - If the VicePresident of the Executive Council says that the clause is clear, I will be satisfied.

Senator Guy - This clause only applies to companies formed outside the Commonwealth.

Senator READY - That is so; and I would point out that these are the companies I am referring to. A great many of the fire companies are outside the Commonwealth.

Senator de Largie - They are principally English companies.

Senator READY - That is so, and I do not want to see anything inserted in this Bill that will force a poor man into, a Court of Law. A provision of this nature should not be put into the Bill by a Democratic body such as the Senate is. Now there is another clause to which I desire to refer. I think Senator Guy touched on it, and also Senator Millen and Senator Senior. Clause 80 provides -

1.   All rates of premium in respect of fire insurance business shall he reasonable and just, and every such rate which is unreasonable or unjust is hereby prohibited.

2.   Every fire insurance company which charges or receives, in respect of any policy of lire insurance, any premium which is unreasonable or unjust shall be guilty of an offence.

Penalty: One hundred pounds.

Who is to determine that matter? I want to see in this Bill some provision which will deal with companies, and prevent them from combining to exploit the public; but, looking at this clause every way, I cannot see who is going to determine whether a rate is reasonable or unreasonable.

Senator Senior - What standard will you measure by?

Senator READY - That is the whole point. To whom are we to leave this matter ? Are we going to allow one Court to determine it in one instance, and another Court to reverse the decision? Is there to be no standard by which we can measure it? While I do not want to see the power of the clause whittled away, I want it made definite and clear who will determine what is a reasonable rate.

Senator de Largie - It is an actuarial question.

Senator READY - Yes, and it is also a legal question. As the clause stands at present, it is altogether too vague. There is another clause that I want to refer to. Clause 88 states -

1.   Every person who undertakes the duties of fire loss assessor shall, by notice, register his name and address with the Commissioner, and shall furnish to the Commissioner particulars of his qualifications to act as such assessor.

2.   Every company which employs any per son to act as a Arc loss assessor in respect of any claim, under a policy, for loss by Are for any amount exceeding Fifty pounds, and every person who so acts as a Are loss assessor, whose name and address lias not been registered with the Commissioner shall be guilty of an offence.

Penalty: Fifty pounds.

Here, is a proposal by which the assessors will have to register, and satisfy the Commissioner that they are competent to deal with claims. That looks right, as far as it goes; but I would point out that in many small country districts of Australia small fires occur, the damage ranging, say, from £50 to £150 or £200. In such cases, are the companies to send a registered assessor all the way out to the country to do this work ?

Senator Senior - At the insurer's expense.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Sir AlbertGould. - At whose expense?

Senator READY - At the insurer's expense, as my honorable friend has put it. All these charges have a habit of coming back on the policy-holder.

Senator Senior - But we are told this is a progressive Bill, and therefore you should not criticise it.

Senator READY - I am sure it is not considered so progressive that it cannot be altered in this respect. I know that in the case of many country fires the local agent is accepted by both parties as a reliable assessor. He lives there, he knows the conditions, and the value of everything in his particular district. Why not allow him to assess damages if he is accepted by both parties ? I know that in some cases the local policeman acts as assessor, and very often he is well qualified to undertake that task. It appears to me that the clause in its operation will be harassing to the companies; and, further, it might fall unduly on the policyholders. The Bill largely is one for Committee. Whatever its de* tractors may say, from "a business stand-point, I welcome it; and, as a shareholder myself in three mutual life assurance companies in Australia, I welcome it. It will make the law, I hope, clearer. It will make the law, in some respects, more definite; and it will be * start on the road of progress on which I feel sure this party, once it has put its hand to the plough, will long continue.

Senator Lt.-Colonel Sir ALBERTGOULD (New South Wales) [4.20].- I have comparatively little to say in criticism of this Bill. I recognise that, on broad general principles, it is very desirable that the law governing fire and life insurance should be of universal application in the Commonwealth, and that there should be no provisions of the law peculiar to any one State. I gather from the debate which has taken place that certain honorable senators are tinder some misapprehension as to the purpose of the Bill. I have read Senator Senior's very interesting address upon the second reading, and the honorable senator will pardon me for saying that a very great deal of it was scarcely applicable to the Bill now under the consideration of the Senate. It was applicable, however, to a principle of insurance legislation which we are not called upon to consider at the present time.

Senator de Largie - It was applicable to the subject of insurance.

Senator Lt Colonel Sir ALBERT GOULD - I do not wish it to be supposed that I criticise Senator Senior's address in any hostile way at all. I realize, however, that it is the purpose of the Bill now before us to recognise the position with which we are confronted to-day in dealing with the large number of fire and life insurance companies that are doing business throughout the Commonwealth. We have not yet taken up the question of. national insurance which was contemplated by Senator Senior. That is a question which must be dealt with sooner or later, and probably the sooner it is dealt with the better it will be for the community at large. I know that a great many men have given close attention to that question. I think it was mentioned in a Governor-General's Speech, some time ago, that a national system of insurance was one of the questions upon which the Government of the *day proposed to legislate. That system of insurance, however, stands quite apart from the matters we are called upon to deal with in this Bill. We are here asked to decide how existing fire and life insurance companies shall carry on their business, and the object 'is to bring all carrying on business in any of the States comprehensive Act. For one class of insurance a certain deposit is required in Victoria, whilst in New South Wales companies carrying on the same class of insurance are not called upon to make any deposit at all. Should there be a deposit in such cases? If we decide that there should, the provision ought certainly to be applicable to every insurance company carrying on that business in any part of Australia. So far as fire insurance is concerned, I take no exception to the amount of the deposit required under this Bill. A fire insurance policy may be looked to not only as a means of obtaining the value of property destroyed by fire to the extent covered by the policy, but as a mercantile commodity. If the owner of a house goes to a financial institution to raise money upon it, he is asked whether it is insured to the full extent of the advance which he requires. People lending money are very keen to see that the office issuing a policy upon the property offered them .as security for their advances is one which will be in a position to make the policy of value in the event of the necessity of realization.

Senator Guy - Mortgagees often insure a property at the expense of the mortgagor.

Senator Lt Colonel Sir ALBERT GOULD - Every honorable senator will agree that a man advancing money upon a property requires to be satisfied that the insurance policy upon it has been issued by a company that will be able to make it good. He will not be satisfied if the property is insured in a new office in a small way of business, but will look for a policy issued by an established fire insurance office that has disclosed the soundness of its position by its balance-sheets. I have no objection to established insurance companies being called upon to put up a reasonable deposit, but I should like to direct attention to the provision in this regard for companies newly established. In clause 21 it is provided that in the case of a new company desiring to carry on business the rates of deposit shall be -

(a)   if it desires to carry on life insurance business - Two thousand pounds;

(6)   if it desires to carry on any other kind of insurance business - Two thousand pounds; or

(o)   if it desires to carry on life insurance business and other insurance business - Four thousand pounds.

2.   The company shall thereafter deposit annually with the Treasurer money or approved securities, or both', to an amount equal to twenty-five per centum of the premium income of the company, or Ten thousand pounds, whichever sum is the smaller, until the depositreaches the following amounts: -

(a)   In the case of life insurance - One hundred thousand pounds; (&) in the case of any other insurance business - Twenty thousand pounds; and

(c)   in the case of life insurance business and other insurance business - One hundred and twenty thousand pounds.

If a small insurance company were started to-day, and this Bill came into force to-morrow, the company would be called upon, under clause 19, to make, within six months a deposit of £20,000; but if the company were started the day after the measure came into force it would, under clause 21, be called upon todeposit only £2,000 in the first instance, and then 25 per centum of its premium- income. I think that discretion might be given to the Commissioner to permit the registration of a new company upon. the payment of a comparatively small deposit in the first instance, requiring, as provided for in the Bill, the subsequent payment of 25 per cent, of the premium income until the deposit had reached a reasonable amount. The question has often arisen of the possibility of establishing fire and life insurance companies upon the purely mutual and co-operative basis. I am afraid that clause 20 of this Bill would have the effect of strangling a proposal of that kind at its very initiation. I speak with some knowledge and experience on this matter. I had an opportunity some time ago of listening to & very interesting and instructive address by His Excellency the Governor of Victoria, who has taken a great deal of interest in the co-operative movement in the Old Country. He mentioned that in his county in England it was desired to establish a co-operative fire insurance company, but those concerned were confronted with the difficulty that they were unable io give the public any assurance that their policies would be made good. Twenty, thirty, or 200 farmers might come together and be satisfied that a proposal for a mutual business would be all right, but the moment they went to any one to borrow money they were confronted with the difficulty that they had no subscribed capital. The result was that His Excellency, with others interested in the movement, undertook to provide debenture capital to the extent of £10,000 or £20,000, on which they were guaranteed interest at 5 per cent. They -did so with a desire to assist in the establishment of the co-operative business rather than with a desire for a remunerative investment of their capital. Any proposal to establish a co-operative insurance company here would be met with the same difficulty. Some one would have to advance capital by way of debentures, or .an arrangement would have to be made with an established company to carry the smaller mutual concern upon its shoulders until it could stand alone. Taking this into consideration, it would, I think, be well to reduce the deposit required from such companies to the smallest possible amount. Of course, the Commissioner would have to be satisfied before registering a company that one or two email fires would not destroy it. I admit that the matter is one of great difficulty, but we should look to the establishment, if possible, of insurance companies upon the mutual or co-operative principle. When ' we come to consider life insurance, we have before us an entirely different matter. A fire insurance policy last3 but for one year, and is realized upon if the property insured is destroyed by fire during the year, but in the case of a life insurance policy the man who takes it out continues it during the whole period for which it was taken in the first instance.

Senator Senior - Otherwise the policy lapses, and the person insured forfeits the premiums he has paid.

Senator Lt Colonel Sir ALBERT GOULD - That is not always so, because in these days the companies permit a policy to be kept in force so long as the premiums can be paid out of the surrender value. When the surrender value of the policy is exhausted by the payment of the premiums it must, of course, lapse. Under clause 19, a company doing life insurance business only is compelled to put up a deposit of £20,000. One of the most successful insurance offices, not only in Australia, but in the British Dominions, is the Australian Mutual Provident Society. That has been a purely mutual life insurance office from the commencement to the present time. There are no holders of debentures in that company to whom special sums are paid by way of interest upon capital advanced. A limited number of gentlemen who, more than fifty years ago, believed in the cooperative or mutual principle, established this company. From very small beginnings it has grown to the magnificent position it occupies to-day. I mention it because it is the oldest and strongest of the Australian life insurance companies. With the exception of one of two small companies, all the life insurance companies that have since been started in Australia, such as the National Mutual Insurance Company, a great company doing business in Victoria, and others have been started on the mutual principle. Every large office that we have to-day in Australia of colonial origin is a purely mutual office.

Senator Senior - It would be impossible to start a company like the Australian Mutual Provident Society under this Bill.

Senator Lt Colonel Sir ALBERT GOULD - Exactly. If we take some of the great American offices that are doing business here, we are told that they are mutual offices, and. distribute bonuses regularly, but in most cases they have an initial capital of £20,000, on which they are compelled to pay a certain rate of interest. The persons who contributed this capital are stockholders, who control the company. In the case of a purely mutual company, every policy-holder has a voice at the meetings of the company to decide the way in which its business shall be carried on. The history of insurance business in Australia has proved that the mutual principle is a safe and sound principle on which to work. There is not the same prospect of a realization upon' the face value of the policy in any given twelve months with regard to life offices, because the whole of the life business is done upon an actuarial basis. Although individual life is uncertain, the actuarial tables are so absolutely certain that it can be relied on that, within a few thousand pounds, a certain number of claims in each individual year will be made upon the funds of the company. The premiums are so regulated and weighted that there can be no difficulty or doubt as to the safety of the policy, once the company is on an established basis, although there is a certain amount of risk in the earlier stages. It may be asked why large premiums should be charged by purely mutual companies, but where these are in excess of the amount required for the conduct of the business and the keeping up of reserve funds, every penny is returned to the policy-holders themselves. There can therefore be no complaint that men are not getting full value for their money. If a man pays £10 for his policy, and only £7 is actuarially necessary, the other £3 is utilized to pay the expenses of the business and establish reserve funds to insure the stability of the company, the balance being returned in the shape of bonuses to the policy-holders.

Senator Senior__In the case of a weighted policy, the individual who is weighted alone pays it, but the rest of the policy-holders benefit by the weighting.

Senator Lt Colonel Sir ALBERT GOULD - The loading is always put upon the policy in order to meet expenses, provide for reserve funds, and meet contingencies, with the provision that everything not required for the purpose shall be returned to the policyholders in the shape of bonuses. Not only the individual, but all the other policy holders in the company, must be protected. My life might, according to actuarial tables, . be worth twenty-five years ; but a defect might reduce its value to twenty years. The policy would therefore be loaded; or I might, if I chose, take out a policy for a smaller sum, subject to the larger amount being paid if I attained a certain age. That is the disadvantage which must be suffered by a man who is not sound and healthy, but it is only fair and just to all the other policy-holders.

Senator Shannon - You would not care to be in a company under any other arrangement.

Senator ALBERT GOULD (NEW SOUTH WALES) - Certainly not. I should feel that I was not in a very safe position. We ought to reconsider in Committee whether life insurance companies should be required to put up any sum. If we demand a deposit of £20,000, not another purely mutual insurance office will be established in Australia. This may not matter very much, but people should certainly be allowed the opportunity to establish other mutual offices if they think fit. We should also be very careful as to the amount of money we require from a newly-established fire insurance company, or from any other fire insurance offices which are honestly and bond fide endeavouring to work, as far as they can, on a co-operative or mutual principle amongst those who insure with them. There are certain methods of getting over difficulties, but these are not always quite satisfactory, and may create a good deal of doubt in people's minds as to whether they are being worked fairly and justly. It should not be forgotten that in Australia nearly every fire office is what is called a tariff office. Certain tariffs are established; but Senator Ready urged that it was difficult to determine whether a particular tariff was fair and reasonable. They are fixed from time to time by insurance men, who take into consideration the risksunder particular policies and in particular localities. If a Melbourne business man wishes to effect a fire insurance policy ona property in Flinders-lane, he will pay a much heavier rate than if the property is in Lonsdale or Latrobe street, or evenin Bourke or Collins street. There are certain fire zones where the history of thelast forty or fifty years has shown that. the risks are much more pronounced. That is the way in which one must determine what is a fair and reasonable rate. Any honorable senator who visits an insurance office and sees their maps and books, will find that the city of Melbourne is divided into zones, some of which are regarded as more dangerous than others, the premiums being correspondingly higher.

Senator Ready - Is it not a fact that there is no competition among the bigger fire insurance companies in Australia? They mutually fix the rates themselves.

Senator Lt Colonel Sir ALBERT GOULD - There is competition. Senator BARKER - They stamp it out.

Senator Lt Colonel Sir ALBERT GOULD .- Theydo not. There is competition amongst the insurance offices.; but they do one thing which is of great benefit and value to the people, and which is done all over the world - they effect reinsurances amongst themselves. If an insurance office issued to the honorable senator a policy for £20,000 over his stock in business premises, they would not hold the whole risk themselves, although they would be primarily responsible to him for it. They would distribute it amongst other offices, who give and take. In this way the risk is distributed, it is made much more easy for the companies to meet their obligations when the time comes for repayment, and there is no possibility of an office being wiped out.

Senator Ready - Where, then, is the competition t

Senator Lt Colonel Sir ALBERT GOULD - Competition is created by the existence of one or two non-tariff offices which endeavour to do business; but the honorable senator will find that their premiums are not much lower than the others. Some of the big companies do not effect their re-insurances with the other offices here, but have agreements with offices in other parts of the world, who very often hold the great bulk of the insurance^.

Senator Ready - That is not competition. I have paid the same rates in different companies for years, and I have been in four or five.

Senator Lt Colonel Sir ALBERT GOULD - If the honorable senator could get the various fire insurance offices into direct competition with one another, he would soon have failure after failure, in stead of the whole of them conducting safely the business intrusted to them. Under the conditions of which he speaks, the honorable senator might approach one office, which would stipulate for a premium of 5s. or 10s. per cent., and another office, anxious to get the business, might offer to do it for 2s. 6d. instead of 5s., or for 7s. 6d. instead of 10s. If, then, a big blow came to that office, it might not be in a position to meet the whole of its engagements. That sort of competition degenerates too often into cut-throat competition, and it is much safer to have the one rate throughout the 'whole of the offices. The honorable senator would like to see the State monopolize the whole of the fire insurance business; but he must realize that certain rates would have to be fixed that would reasonably recoup the State for any loss it might make. Unless one great fund w,as created, and the State was not allowed to utilize the money for any other purpose, it would inevitably go into the Consolidated Revenue, or into some fund or other where it would not be readily accessible in the event of great destruction entailing heavy repayments.

Senator Barker - In the aggregate, the fire insurance companies make 80 per cent, out of their insurances. It would pay any State to take over that class of - business.

Senator ALBERT GOULD (NEW SOUTH WALES) -Sir ALBERTGOULD. - Can the honorable senator produce any balance-sheet showing where 80 per cent, profit has been made by an insurance company? Some time ago Mr. Justice Hood and Mr. Knibbs, who was very favorably quoted to-day by Senator Ready, were appointed a Royal Commission to investigate the question of insurance. With regard to tariff associations, they say in their report -

From the replies received from the representatives of the various companies in response to a query concerning the method by which fire insurance premiums payable in the Commonwealth were' determined, it appears that the major portion of the business is conducted on rates determined by tariff associations. These rates represent the combined experience of the offices connected with the association, which, in the absence of a complete scheme of classification and tabulation of risks and losses, such as that referred to in section 24 above, appears to furnish a fairly satisfactory method of determining a reasonable basis of operations.

An objection which is sometimes urged against such an association is that it tends to maintain rates at an unduly high level," and that if there were unrestricted competition amongst the offices the public would benefit.

That is the suggestion now made, by interjection -

Your Commissioners are of opinion that this view is largely erroneous, and that under the supervision of the Insurance Commissioner, guided by data collected in accordance with section 24 above, the possibility of injustice to the public arising from agreement amongst the companies as to rates of premium would be negligible.

Senator Senior - That is not borne out by their balance-sheets.

Senator Lt Colonel Sir ALBERT GOULD - The Commissioners, who not only brought to bear on the subject their own knowledge and reading, but examined very carefully the records of fifteen or twenty insurance offices, state -

In the event of the Commissioner becoming satisfied nt any time that such' agreement between the fire insurance companies was inimical to the interests of the public, your Commissioners are of opinion that powers should be conferred on him to cite the various companies before the High Court or the Supreme Court to show cause why their rates should not be reduced.

There is in the Bill a provision to give effect to the above recommendation ; but the Commissoners' report plainly shows that, in their opinion, after making a careful investigation of the whole subject, we are justified in believing that under present conditions we are upon the soundest and safest basis available.

Upon the subject of State and municipal fire insurance the report says -

Your commissioners have given considerable attention to the question of State and municipal fire insurance, and find themselves unable to recommend the adoption of cither class of insurance in any form. By the terms " State fire insurance " and " municipal fire insurance," may be meant one or other of two things, namely, cither -

(a)   the assumption by the State or by the municipality of the fire risks of its citizens on lines similar to those on which such risks are now taken by fire insurance companies; or,

(b)   the assumption by the State or muni cipality of the fire risks on its own property either with or without the creation of a special fire insurance fund.

Your commissioners are of opinion that trie lack of distribution of risks and the consequent heavy loss which might result from a single fire are such that any scheme prepared on this basis is essentially unsound in respect of the fundamental principles of fire insurance.

Senator Senior - One point is omitted there. The risks would not be concentrated, but would be very much distri buted, and consequently there would not exist a danger to the State.

Senator Lt Colonel Sir ALBERT GOULD - If the objection outlined by the Commission applies to the State as a whole, obviously it must apply to the individuals comprising the State. It merely serves to emphasise how undesirable it is to concentrate business in the hands of the Government.

Senator Barker - That contention is not sound logic. It means that the parts are better than the whole.

Senator Lt Colonel Sir ALBERT GOULD - The distribution of a risk amongst a hundred persons is manifestly better than is the centering of it in one individual.

Senator Barker - The volume of business is the same in any circumstances. It is not increased or decreased.

Senator Senior - My point is that under a system of national insurance the risks would be distributed over the whole of the Commonwealth.

Senator Lt Colonel Sir ALBERT GOULD - The honorable senator means that in case of fire every person in the Commonwealth would, to an extent, be an insurer. But the fact remains that all the funds would be in the hands of one body. The report goes on to say -

Your commissioners are strongly of opinion that the only sound method of fire insurance is that which is based upon very widelydistributed risks of relatively small amounts, and in their opinion such a method would be impossible under any practical system of either State or municipal fire insurance which did not involve co-operation with private insurance companies for the purpose of widely distributing the risks by re-insurance.....

As the result of inquiries made by the Prime Minister, at the instance of your commissioners, information has been received from the Premiers of the several States, which indicates that the general practice at present obtaining is for the Government in each case to carry its own fire risks, usually without the provision' of a special fire insurance fund, and this no doubt has influenced the Commonwealth Government in adopting the policy indicated. Nevertheless, for the reasons specified above, your commissioners consider that the practice is unwise: and that, even if it were possible to so arrange that Commonwealth and State Governments should contribute to a common fund to cover any losses that might arise by fire to the properties of any of them, the large amounts which would necessarily be concentrated in single risks are such as to render inapplicable the basic principle of averages unless extensive re-insurances were effected. . . . From these replies, it appears that in many cases the maximum amount carried alone on a single risk docs not exceed £5,000, and in 80iiib instances is much lower, while in no case was a higher amount than £15,000 mentioned as being so carried.

I would remind honorable senators of what happened many years ago when a great fire practically destroyed the city of Chicago. That conflagration resulted in the downfall of a large number of fire insurance companies, which had not distributed their risks, and which collapsed like the veriest house of cards. On that occasion the insured found themselves in exactly the same position as those persons who had never insured.

Senator de LARGIE - That is a good argument in favour of State fire insurance.

Senator Lt Colonel Sir ALBERT GOULD - I think otherwise. It would be a fatal mistake on our part to undertake the fire insurance risks of the whole community, even if it were possible for us to do so. We must recollect that there will always be some persons who would prefer to insure with private insurance companies which distribute their risks.

Senator Senior - I presume that the honorable senator is aware that in certain European countries the State insurance offices have actually wiped out the private insurance offices?

Senator de Largie - That is what has occurred in Italy.

Senator Lt Colonel Sir ALBERT GOULD - I think that the Government are acting wisely by providing in this Bill, which is a consolidating measure, for the solvency of private . insurance companies. So far as life insurance companies are concerned, we want to give a little more play to our people in their dealings with them. We do not want to encourage the establishment of insurance offices, which, in their conduct of business, would create a large number of additional offices of profit and also reduce the bonuses that would be payable to policy-holders under the mutual system. If it ' is desired to establish reserves they should be established from the premiums which are payable each vear. These reserves will then be visible to the people generally. There is a large number of small firms in the city which establish insurance funds within their own ambits. There is no doubt that the Bill will press rather heavily upon them.

Senator Senior - Under it they will exist no longer.

Senator Lt Colonel Sir ALBERT GOULD .- That may be so. On the other hand, they may find that it is more advantageous for them to deal with insurance companies which are doing business here at the present time. We know that before any company can underwrite an accident insurance in Victoria, it must establish its solvency to the satisfaction of the Government of this State.

Senator Turley - I think that provision is operative in every State. It certainly is in Queensland.

Senator Lt Colonel Sir ALBERT GOULD - I do not think it is operative in New South Wales. I desire to know whether under the operation of this Bill an insurance company will have to establish its solvency to the satisfaction of the State Government, in addition to putting up the sum of £20,000 ? We know that both fire and life insurance companies underwrite accident insurances.

Senator Senior - Accident insurance is not provided for in this Bill.

Senator Lt Colonel Sir ALBERT GOULD - But it is covered by the term "other insurance." Allusion has been made to a good many matters upon which I do not propose to touch. My object in rising was to speak only on the broad principles of the measure, leaving its details to be dealt with in Committee. If those details do not evoke a good deal of discussion in this chamber they certainly will do so in another place. It frequently happens that the public do not voice their opinions upon measures which originate in the Senate, until after those measures have gone to another branch of the Legislature, which is then bombarded with all sorts of objections to them. The result is that honorable senators are deprived of an early opportunity of expressing their opinions in respect of the views held by insurance experts. I hope that this Bill will emerge from Committee in a form which will commend it not only to honorable senators, but to the public, and also to the insurance companies. I have no doubt that those companies recognise that it contains very valuable provisions which must add to their stability, particularly in the case of fire insurance companies. I think that "n the event of branches of foreign insurance companies being established in Australia, provision should be inserted in the

Bill requiring them to have adequate funds within the Commonwealth to meet their obligations in connexion with underwriting either fire or life insurance, that it shall not be necessary for any person to follow their assets to. other Darts of the world in order to insure the payment of his just dues.

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