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Insurance - Royal Commission Report - Part II. - Fire Insurance


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THE PARLIAMENT OF THE COM}IONWEALTH OF AUSTRALiA.

INSURANCE-·

ROYAL COMMISSION REPORT.

PAR1_1 II.--FIRE INSURANCE.

Presented by Command ; ordered to be printed, 21st November, 1910.

[Cost of Papel·. J:>reparation, not 2,000 copies; approxim<>te cost of IJrinting- and £65 J

l'rinted and Published for the GOVERNMF.NT of the COMMONWEALTH of At;STRIIII by ]. !'t:MP, Government Printer for the State of Victoria. No. 66.-F.l4377.

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Hoyal Commission Report-!. Introduction 2. Mode of Investigation

3. Need for Fire Insurance Legislation 4. Existing Legislation .. 5. Government Supervision 6. Suggested Uniform Australian Act 7. Administration of Act 8. License to Transact Business

9. Registration .• "

10. Representatives of Companies 11. Depositsjwith Government 12. Periodical Rt"turns to be Lodged with Government 13. Inspection by Commissioner .. 14. Constituton and Location of Companies carrying on Business in Australia. .. 15. Reserve Funds 16. Reinstatements

17. Reinsurance 18. Nature of Fire Insurance Contract 19. " V a.lued " Policies 20. Loss Contributions by Several Companies

21. Average Clauses 22. Proof of Loss 23. "Arbitration

24. Standard Rates of Premium for Classified Risks 25. Losses Covered by Fire Policies 26· Variations in Insured Property 27. Assignment of Policies 28. State and Municipal Fire Insurance 29. Fire Prevention

30. Fire .Inquests 31. Incendiarism 32. Loss Assessors 33. Salvage

34. Insurable Interest 35. Ca.ncelment of Policy 36. Proposals and Policy Forms 37. Printed and Written Portions of Policy

38. Cover Note or Deposit Receipt 39. "Material Misdescription 40. Subrogation 41. Consequential Loss 42. Tariff Associations

Recommendations Appendix A.-Questions submitted to Officers of Fire Insurance Companies Appendix B.-Replies to Questions submitted to Officers of Fire Insurance Companies Appendix C.-Conditions and Stipulations indorsed on Fire Insurance policies issued in Australia

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CO)UJWN 1Y EA£1'11 OP AUSTRALIA.

EDWARD THE SEVENTH, by the Grace of God of the United Kingdom of Great Britain and Ireland, wul of the British Dominions beyond tha Seas, King, Defenier of the F\tilh, Emperor of India.

GREETING:

TO our Trusty and Well-Beloved

The Honorable JosEPH HENRY HooD, one of our Judges of the Supreme Court of our State of Victcria; and GEORGE HANDLEY KNIBBS, Esquire. Commonwealth Statistician.

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KNOW you that we do, by these our Letters Patent, appoint you to be .Commis$ioners to inquire into and report upon the law relnting to and the methods of operating Fire, Life, Industrial and other Insurance in Australin:

AND we appoint you the said JosEPH HENRY HooD to be the Chairman of the said Commissioners:

AND we direct that, for the purpose of taking evidence, one Commissioner shall be_ sufficient to const£tute a quomm, and may p;·oceed with the inquiry under these our Letters Patent :

AND we further direct that in. the event of the votes given on any ques#on at any meeting of the said Commissioners being equal, the Chairman shall have a second casting vote :

AND we req1tire you, with as little delay as possible, and before the thirtieth day of June, in the year One thousand nine hundred nnd nine, to report to our Governor-General in and over our said Commonwenlth the result of your inquiry into the mntter intrusted to you by these our Letters Patent :

IN TESTIMONY WHEREOF we have caused our Letters to be made pntent, and the Seal of our $aid Commonwealth to be thereunto affixed.

WITNESS our right t1-usty and right well•belot·ed Wn,LIAM HUMBLE, EARL OF DUDLEY, ·a member of our Most Honorable Privy Council, Knight Grand Cross of "'ur Most Distinguis'ke/1 Order of Saint Michael and Saint George, Knight Grand Cross of our Royal Victorian 'Order, our Governor· General and C01nmander•in-Chiej in and over our 9ommonwealth af Au8tralia, at Melbottrne, in the State crf Victoria and in the Commonwealth aforesaid, this fifteenth day of December, in the year of our Lord One thousand nine hundred and eight, and in the eighth year of our reign.

(Signed) DUDLEY.

By 11 is Excellency's Command, (Signed) E. L. BATCHELOR.

ENTERED on record by me in Regitter of Patents, No.3, page 198, this sixteenth day of Decembe1, One thou6and nine hund1·ed and eight.

(8ignP,d) ATLEE HUN·r.

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REPORT OF THE _ROYAL COMMISSION ON INSURANCE.

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PAR.T II.-FIRE INSURANCE.

To His Excellency the Right Honorable \¥rLLIAM HuMBI,E, EARL OF DuDLEY, Member of the Most Honorable Pri?_,y Council, Knight Grand Cross of the Most Distinguished Order of Saint Michael and Saint George,

Knight Grand Cross of the Royal Victorian Order, Governor-General and Commander-in-Chief in and over the Commonwealth of Australia:

MAY IT PLEASE YOUR EXCELLENCY-

1. INTRODUCTION.

vVe, your Commissioners, in continuation of our Report dated 15th March, 1910, relating to the subject of Life Assurance have now the honour to present for Your Excellency's acceptance the following report dealing with the law relating to, and methods of operating, Fire Insurance in Australia.

2. MODE OF INVESTIGATION. As already indicated in section 2, page 5, of their Report on Life Assurance, your Commissioners obtained from the Premiers of the several States, through the Prime 1\'1:inister, extensive information concerning the practice of the several

State Governments in the matter ,of Fire Insurance. Your Commissioners also submitted to the officers of companies transacting Fire Insurance business in the Commonwealth, a series .of questions. with a view to eliciting particulars con­ cerning their methods of operation. The response to this inquiry was prompt;

and, although, in some instances, the particulars furnished were meagre, the information obtained has been of great service to your Commissioners in enabling them to arrive at conclusions on the various matters which presented themselves £or their consideration. Your Commissioners have, in addition, examined the

proposal and policy forms which were submitted by the various companies in response to their request, and have given careful consideration to the various aspects .of the business. The response made to your Commissioners' appeal through the public press for evidence from persons who considered that the law or the methods in operation in Australia in connexion with Insurance were, in

the interests of the public, susceptible of improvement, was practically nil in so far as the business of Fire Insurance is concerned.

3. NEED FOR FIRE INSURANCE LEGISLATION.

In the report your Commissioners have set out in some detail

the reasons which led tliem to urO'e the desirability of special legislation in con­ nexion with Life Assurance In connexion with Fire Insurance the

nature of the business is such that there is not the same urgency for special legis-· lation that exists in the case of Life Assurance. The oontract is essentially a contract of indemnity, covering an ordinarv business risk, and not possess the fiduciary character which attaches to a Life Assurance pohcy. Further, the

period cov.ered by a Fire policy is a short one, and is usuallv: terminable at the will of either party in twelve months or less from its date of Issue. The fact. how­ ever; that Fire Insurance is essentially a traffic in contingencies; and that the due

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performance by the Fire Office of its part of t:tie contract may involve the payment of large sums of money, appears to your Commissioners to render· 1t desirable that offices carrying on such business in Australia should be subject to a certain mea­ sure of supervision, and that no person or company should be allowed to transact such business except after the issue of a license giving the necessary authority.

4. EXISTING LEGISLATION.

In the several States of Australia there is no special legislation relative to the business of Fire Insurance, and in the United Kingdom, until the passing of the AssuTance Cornpanies Act 1909, such legislation as related to Fire Insurance related to it in a secondary capacity, as associated with fire prevention, or as forming a branch of business carried on by a company which also transacted· Life Assurance business. Thus, under the Life Assurance Companies Acts 1870 to 1872, repealed by the Act of 1909, companies transacting other classes of insur­ ance business in addition to Life, were required to furnish a Revenue Account in respect of each such class, and a balance-sheet in respect of the whole business, distinguishing therein, amongst other things, the amount of fire fund, and the outstanding fire losses at the date to which the balance-sheet related. Similar Schedules are included in the Life Assurance Acts of the several Australian States, with the exception of New South Wales, but, owing to the fact that no Company now carrying on Life Assurance business in Australia has a fire branch, the provi­ sion is inoperative in so far as Australia is ooncerned.

5. GOVERNMENT SUPERVISION.

While holding the opinion that, as· far as possible, each Company should be allowed to develop its business along those lines which appear to it the most suitable, your Commissioners believe that a certain amount of Government super­ vision is desirable, and are of opinion that such should involve on the

part of the Company-(i.) The necessity for obtaining a license to transact business; (ii.) The appointment in the Commonwealth of a representative with plenary powers; (iii.) The lodging of a deposit with the Government; (iv.) The furnishing of periodiool returns to the Government.

6. SUGGESTED UNIFORJ\f AUSTRALIAN A€T. Your Commissioners are of opinion that, in providing for the matters men­ tioned in the preceding section, it would be in the interests both of the Common­ wealth and of the Companies, that the necessary legi-slation should be uniform throughout Australia, and consequently consider .that a Federal Act dealing with ·Fire lnsurance business would be preferable to separate State Acts. In thr::

English Assurance Companies Act 1909, provision is made not only for Life Assurance and Fire Insurance, but also for other branches of insurance business. In the opinion of your Commissioners, it would be inadvisable in the case of .A ns­ traha to combine the legislation relating to Life Assurance with that relating to any other branches of insurance business. Your Commissioners also consider that the suggested Federal Act relating to Fire Insurance business should relate to one class of business only. .

7. kDMINISTRATION OF ACT.

In Part I. of their Report dealing with Life Assurance (section 13, page 10), your Commissioners have suggested the appointment of a permanent Insur­ ance Commissioner, to whom should be intrusted the duty of administering the Federal Act relating to Life Assurance. Your Commissioners are of

opmwn that the administration of the suggested Fire Insurance Act should devolve upon the same officer, who should supervise the registration of Fire IJ?.su_rance the issue of licenses, the lodgmg of deposits, and the fur­ mshmg of periOdical returns,

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8. LICENSE TO TRANSACT BUSINESS. . Your consider that all companies carrying on the qusiness

of Fue Insurance m the C.ommonwealth, or proposing to carry on such business in the future should be required to obtain a license from th0 Insurance Commis­ sioner, and that any company carrying on such business for morethan six months after the date on which the suggested Act shall come into force without having obtained such alicense should be liable to a heavy penalty. In the event of any company failing to comply with the requirements of the Act, the Commissioner should be empowered to cancel the company's license, such cancellation should not take effect for t.he period of one calendar month, during which time the com­

pany be entitled to appeal to the High Court or the Supreme Court to

restrain the Commissioner, and in the event of such appeal, power should be given to the Courts to deal with the matter. A simila.r right of appeal should be allowed in the event of the Commissioner refusing to issue a license to any applicant company.

9. REGISTRATION.

Your Commissioners are of opinion that, before the issue of a license to any company to transact Fire Insurance business in Australia particulars con­ cerning the company should be ascertained by the Insurance Commissioner, and recorded in his (Office. These particulars should contain amongst other things-

(i.) A statement showing the authorized, subscribed, and paid up capital of the company. (ii.) A statement showing the classes of business in addition to Fire Insurance which the company either carries on, or proposes to

carry on.

(iii.) A statement of the Liabili.ties and Assets of the company in respect of the whole of the business transacted by it, as at the end-of its latest financial year. (iv.) A profit and lpss account for its latest financial year in respect of

the whole of the business transacted. (v.) A special profit and loss account in respect of its Fire Insurance business. (vi.) A copy of the document constituting the company. (vii.) A copy of the company's Articles of Association, By-laws, &c. (viii.) A statement showing the names of countries in which Fire In­

surance business is carried on. A list containing the names and addresses of the shareholders,

chief executive officers, auditors, solicitors, and bankers of the company. (x.) The name of a permanent resident in the Commonwealth authorized to represent the company on all matters coming

under the suggested Act. Such records should be open for public inspection at the office of the Insurance Commissioner on payment of a prescribed fee. 10. REPRESENTATIVES OF COMPANIES.

In many cases where foreign Fire Insurance Companies are carrying on business in Australia there is no single head .office for the Commonwealth, and no single individual acting as the Australian representative of the company. In such cases the principal office in each State, or in each of certain groups of States,

controls the business for that State, or gmup, and communicates directly with the heaa office of the company. Your Commissioners are of opinion that in all cases a permanent resident of the Commonwealth should be appointed as the Australian representative of the company. The name and address of this representative

should be registe.red with the Commissioner, and provision should be made for the registration of a new representative from time to time as occasion may require, but such registration should be so arranged that the company is never without a. registered representative in Australia.

This representative should have power to sue, and be sued, .on behalf of the . company, end all contracts or agreements made by him on behalf of the company should be binding- on the company.

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11. DEPOSITS vVITH GOVERNMENT . .In the English Assurance Companies Act .1909, already referred to, provi­ sion is made that any company intending to carry on Fire Insurance business in the United Kingdom must deposit, and keep deposited, a sum of £20,000 in

respect of such business, except in cases where a deposit of that amount has already been made by it in respect of some other class of assurance business which it carries on. This provision as to making a deposit does not apply to any com­ pany which had oommenced to carry on Fire Insurance business in the United

Kingdom before the pas'3ing of the Act (3rd December, 1909), nor does it apply to any purely mutual society mainly engaged in insuring its members against loss by fire. As regards the Comm,onwealth, your Commissioners are of opinion that, as a guarantee of good faith, _each company making application for a license to ca.rry on Fire Insurance business in Australia should be required to lodge ·with the Government of the Commonwealth a deposit of substantial amount, and to keep such amount SiO deposited as long as any Commonwealth Fire Insurance risks remain on its books. Your Commissioners are of opinion that the provision in the English Act exempting existing companies is inadvisable in the case of the Com­ monwealth, and consider that all companies should be required to make a deposit of $20,000 on terms similar to those specified in section 24 of your Commissioners'

Heport on Life Assurance (p. 13). The further exemption by the English Act of mutual societies undesirable, in so far as the Commonwealth is concerned, and might p,ossibly lead to the formation of ephemeral societies, which would only result in disappointment and loss to their members. In Australia, as pointed out in section 14 below, the transaction of Fire Insurance business on the mutual prin-ciple appears to be entirely unknown. ·

12. PERIODICAL RETURNS TO BE LODGED WITH GOVERNMENT.

As already mentioned in Section 4 above, the only returns at present re,quired by Statute to be lodged by companies in respect of their Fire Insurance business are those specified in the Life Assurance Companies Acts of the several States, as applicable to companies which combine Fire Insurance business with'that of Life Assurance. Under the neW' English Assurance Companies Act 1909, every Fire

Insurance Cpmpany carrying on/business in the United Kingdom is ·required to furnish annually a special revenue account in respect of its Fire Insurance busi­ ness,· but not distinguishing between business within, and business ·.out of the United Kingdom. It is also required to furnish-a general profit and loss account and a general balance-sheet oovering all classes of business which it carries on. The form for the balance-sheet however, makes provision for the specification of. the amount of Fire Insurance Fund, and for the amount of claims admitted or intimated, but not paid. Your Commissioners are of opinion that sim'ilar annual returns relative to Fire Insurance business should be made by all companies trans­

acting this class of busi:Qess in the Commonwealth, but that the revenue account should be so prepared as to distinguish between business within and that outside of the Commonwealth, and that an annual return showing the aggregate amount of unexpired risks on the company's books at the close . of its financial year should

also be furnished, distinguishing between risks within and . those outside of the In all cases also .a special of the company's assets and

liabilities w1thm the Commonwealth should be supplied annually.

13. INSPECTION BY COMMISSIONER.

Your Commissioners are ·of opinion that power should be given to the In­ Commissioner to inspect the books of account, and other records of any

Fue Insurance Company, or to authorize in writing some .other person to make such an inspection on his behalf. Any person so authorized should be required to make a declaration of secrecy concerning the information so obtained, except as the or his representative

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disclose all mformatwn acquired.

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14. CONSTITUTION AND LOCATION OF COMPANIES CARRYING ON - BUSINESS IN AUSTRALIA.

Of the forty-two companies transacting Fire Insurance business in Aud­ tralia, which responded tiO your request for information concern­

ing their business, and the methods of conducting it, twelve had their head offices in Australia, while of the remainder, twenty were domiciled in England, three in Scotland, four in New Zealand, two in Java, and one ·in Germany. Each of these companies is proprietary in constitution, and it appears from the statements

made to your Commissioners that a purely mutual Fire Insurance society is un­ known in Australia. The reason for this appears to be that, owing to the nature of its business a Fire Insurance Company requires from the outset an amount of capital not available in the case .of a mutual society. One of the witnesses, in dis­ cussing this question, stated that-

" The mutual system purely must, of necessity, either impose upon the members the obligation of contributing to the losses of the other mem­ bers, if the funds in hand should not be adequate to meet liabilities, or else the contract must be one not to pay the loss, but such proportion of the loss as the funds of the company would enable them to pay; and in modern times such a system could certainly not enjoy public confidence

for general insurance business." (See Reply No. 32 to question No. 7.) 15. RESERVE FUNDS. The principal funds of Fire Insurance Companies available to meet losses incurred are-

(i.) The company's paid-up capital provided by the contributions of shareholders, and the residual liability on the shares. (ii.) The General Reserve Fund, accumulated from time to time from the profits earned, and intended to meet special emergencies. (iii.) The Reserve for unexpired risks. Your Commissioners were informed that it is not usual to base the reserve for unexpired risks upon the amount at risk, but upon the premium income, which, apart from provision for commission, expenses, and profits, represents the estimated

value of the risk undertaken (the amount at risk multiplied by the estimated proba­ bility of the occurrence of the event insured against). From the replies received from queries put by your Commissioners to the various companies, it appears that the methods employed in estimating the

reserve required for unexpired risks varies somewhat, and that the amount so retained ranges from 31 to 50 per cent. of the premium income for the year. The statements made are not quite clear, but it appears that where so high a percent­ age as 50 is shown, the percentage is based on the net premium receipts, thelower

percentages being based on the gross premium receipts. The rationale of the method appears to be that premiums are assumed to be received uniformly throughout the year, and are in the main for policies of a year's duration. On such suppositions the average unexpired duration of the policies in force at any

moment -would be six months, and consequently the appropriate amount to be retained in respect of unexpired risks would be 50 per cent. of the net premium income, or if commission, expenses and provision for profits be assumed to amount t,o 20 per cent. of such gross premiums, it should be 40 per cent. of the gross pre­

mium income. If the provisions for commission, expenses and profit be assumed to amount to 33-k per cent. of the gross premium income, the appropriate sum ·to be retained for unexpired risks would b€ 33i- per cent. of the gross premium in­ come (a percentage quoted by several companies). As pointed out above, however,

the reserve for unexpired risks is only one of three funds available for the pay­ ment of Fire losses.

16. REINSTATEMENTS.

In all Fire Insurance policies a clause is inserted giving the company the option to reinstate or replace the property damaged or destroyed in lieu of paying over in cash the amount of the loss. The main object of the clause is apparently to cover cases in which the amount claimed appears exorbitant. or in which th'e cause of the fire appears suspicious. According to the evidence supplied to your

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Commissioners, it appears that the right of reinstatement is one of which companies -yery rarely avail themselves,. several of the stating that in

theu expenence there had not been a smgle case of remstatement, while others stated that there had not been more than one or two cases in a long series of years. (See replies to question 30 in Appendix B.) It is stated that small losses are ?ccasionally made good by reinstatement and repairs, effected at the request of the msured, or by mutual consent. It may be noted that in England, under the 83rd section of 14 Geo. III., c. 78, still in force, the company may in certain oases requhed "in order to deter and hinder ill-minded persons from

wilfully therrhouses or other buildings on fire, with a view of gaining to themselves msurance money, whereby the lives and fortunes o.f many families may be lost or endangered." . ·

V nder policy referred to above, company has the

of electmg to !emstate,· or of electmg to pay, but the Courts have held that, having made an electiOn, the company is absolutely bound to do that which it haa elected to, and in the absence of a condition to the contrary, was not entitled to change its mind on finding that the choice was more onerous than had been expected. Your Commissioners are of opinion that a reinstatement clause in the policy is in all cases a desirable provision, even though; the occasions on which it is desirable to employ it may be few. '

17. REINSURANCE.

Practically every Fire Insurance Company effects a certain amount of re­ insurances, placing with other companies the excess of any particular risk over what it is considered advisable to retain for the company's own account. The amount so retained varies with the nature and class of the risk undertaken, and for first-class risks ranges up to £15,000, although many of the compames state that their maximum is a much lower one. -(See Appendix B, replies to question 32.) Where the risk is not a first-class one, a smaller amount is retained. Two advantages which have been claimed for the principle of reinsurance are:-

(i.) That by distributing risks, it the soundness of the Fire

Insurance system. ·

(ii.) it benefits the insured by saving him trouble in arranging his msurances. In reply to a query by your Commissioners as to the principle followed in the selection of companies with which reinsurance is effected (question 33), various replies were received which may be suitably summarized in the terms of one of them (Reply No. 10), viz., "Security, good faith, reciprocity." In some cases, it was stated that preference was given to companies whose head office is . in the Commonwealth. The advantage, however, would seem to lie, other things

being equal, with the widest possible extension of the risk. Your Commissioners are of opinion that the reinsurance system is a necessity in Fire. Insurance busi­ ne::-s of any magnitude. It, however, necessarily establishes iniimate relations between the businesses of the various companies, -and hence there is a possibility of a combination amongst them to maintain rates at a higher level than would be the case if the business were more strictly on a competitive basis. It may fur­ ther be pointed out that such a combination, well organized, might effectively prevent the introduction of any competitor attempting to reduce rates. To limit the adverse :lncidence of these possibilities on the public, your Commissioners have suggested, in section 42 hereafter; that considerable powers _in with th_is .aspect of the question shuuld be placed in the hands of the Insurance Com­ missiOner.

18. NATURE OF FIRE INSURANCE CONTRACT. As many of the criticisms advanced by the insuring . public on relating to Fire Insurance appear to arise a misconceptio? ?f what the Fue Insurance Contract is really intended to provide, your CommiSSioners have con­ side_red it advisable to set out briefly the exact nature of that. .and the

limitations to which it is subject. Unlike a Life pohc.y, whiCh 1s a con­ tract to pay a specified sum on the occurrence of a spec;nfied or on The

occ'!lrrence of one or mqre of a specified group of a Fue Insura?ce

pohcy is a contract whereby ;one party undertakes to indemnzfy the other durmg

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a spe<:ified period for any loss incurred in respect of a specifieQ. property through fire, hghtning, or such other contingencies as may be specified, within limits by th_e of the policy, and the sum for which the insurance is

effected. It Is of Importance to note that the contract is a purely perq.onal one between the Insurance Company and the insured, and is, consequently, not at­ tached to the property as is sometimes inaccurately assumed. It is an undertaking make to a definite person losses of a specified nature which may be

h1m, the part played by the property in the transaction is that of

m defimng the nature of the loss to be indemnified, not as forming the

subJect of the insurance. ·

19. "VALUED" POLICIES.

. ou:t in the preceding section, a policy of Fire Insurance, as

Issued m Australia, Is purely a contract of indemnity. In some of the States of on the other legislation has at times been enacted containing a

prov1s10n for the payment, m the case of total loss, of the full amount of the policy, Irrespective of the amount of loss actually sustained. Such a provision evidently removes the policy from the category of contracts of indemnity, and a policy so drawn has been termed a "valued" policy. Against the issue of such policies the

following objections have been urged:-(i.) Insurance on this plan would compel companies to make a complete valuation of every property before undertaking the risk . . (ii.) Such valuations would require to be made again, from time to time,

so as to take due account of depreciation in value due to deteriorati.@n or other causes. (iii.) These valuations w:ould add very largely to the cost of insurance, and would increase premiums considerably.

(iv.) By allowing the insured in certain cases to make a profit out of a fire, the incentive to incendiarism would be increased. (v) This would greatly increase the danger through fire to human life and to property. These contentions appear to your Commissioners to possess great weight, and to be practically unanswerable, either on the ground of commercial expediency

or public policy. The only contention in favour of the issue of " valued " policies which has come under the notice of your Commissioners, is that the insured, hav­ ing paid premiums in respect of a given sum, is entitled, in the evenrt .of total loss, to receive that sum on the basis of which his premiums have been charged. Tliis contention, your Commissioners consider, is due to a misconception concern­

ing the nature of the contract of Fire Insurance. In reality, the sum mentioned in a Fire Insurance policy, is not a definite " sum assured," but expresses the maximum· liability of the company in respect of that policy. The actual amount of loss sustained by fire may be either greater or less than the sum mentioned in the policy, and, in the absence of an" average clause," the company, by its contract,

undertakes to make good any such bona .fide loss, whatever it may amount to, pro­ vided that it does not exceed that sum, in which case no more than the sum men­ tioned would be payable. It appears to your Commissioners, that there is no reasonable ground for requiring the issue of a "valued" policy, but, that, on the contrary, such issue would probably largely increase premium and would,

in certain cases, provide an incentive to incendiarism. The special bearing 0f the "average clause" will be discussed later.

20. LOSS CONTRIBUTIONS BY SEVERAL COMPANIES. Where several companies are interested in any loss by fire, the insured should evidently not be entitled to recover from all .of them more than the total amount o:f his loss, otherwise the principle of indemnity would be violated. In the absence of any special provision in the policies for " loss contribution," it

would be optional for the insured, in the event of a loss of less amount than the aggregate sum covered by a11 the policies; to recover from any one or. nwre of the companies, in preference to the others, those so recovered from havmg then the right to claim loss contribution from the other companies interested. In the

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policies issued by the companies transacting Fire Insurance business in the Com­ monwealth, however, it is usual to insert a clause providing that where there are other insurances relative to the same property, subsisting at the time of the fire, the company should not be liable for more than its ratable proportion of such loss ?r damage .. Your are of opinion that up to this point the provision

IS both eqmtable and convement, but the remainder of the cla11Se, as usually in­ serted, does not appear to be equally satisfactory. This provision is to the effect that the payment of any premium, or the issue of any policy receipt, or cover note, . shall be deemed conclusive evidence of the existence of other insurance, whether liability under such other insurance be disputed or not. · In the opinion of your Commissioners, the only insurances which should be taken into account for the purposes of " loss contribution" calculations, are those in respect of which the

to recover is duly established, since an apportionment of loss on the basis of

insurances would deprive the insured of a portion of the cover to which,

m the opwion of your Commissioners, he is justly entitled.

21. AVERAGE CLAUSES.

In certain cases, policies are issued subject to "average," and in all suc:h cases the insured is regarded as his own insurer for that portion of the total value of the property as at the time of the fire which was not covered by the insurances in force. Under such circumstances, the insured is subject to a Joss contribution proportionate to the amount uncovered. It is thus clear that, except in cases of insurances up to full value, or of total loss, the amount payable under an "average" .policy is always less than that payable under a similar policy not sub­ ject to the condition of average. From the evidence furnished to your Commis­ sioners (see replies to question 42), it appears that both classes of policies are issued in Australia, but that the "average" policies are, to a large extent, appli­ cable only to large mercantilt' and manufacturing risks, and to cases in which more than one risk is included in one policy, and that they are never applied to insurances on private dwellings and their contents. Ypur Commissioners under­ sta nd that, whilst in the United Kingdom and the United States, as in Australia, a large proportion of .the Fire Insurance business transacted is effected by means of non-average policies, the condition of average is almost invariably employed in the case of Fire Insur-ances effected on the Continent of Europe, and in the East. The condition of average is also always involved in a. Marine Insurance policy. Your Commissioners are of opinion that, although the non-average policy is that which is probably more desired by the insured, as furnishing the more extensive cover for a given sum specified, the condition of average is perfectly equitable in

principle, provided the insured clearly understands the nature of the limitation involved. To ensure this, it desirable that where a policy is issued, sub­ ject to average, attention should be drawn thereto by a distinctive n()tice, stamped or printed, across the face of the policy. in coloured ink, to the folJowing or similar effect :-"Subject to average, see Clause indorsed hereon," and that every policy rece1pt or cover note should be similarly marked. In addition to the condition of average, ·vvhich has been discussed above, and which has been designated the" pro ratd" condition, a further average condition is usually inserted in Fire Insur•:1nce policies issued in Australia. The tenor of this condition is usually as folJows :-" In all cases vvhere any other subsisting insurance or insurances, effected by the insured, or by any other person or persons, covering any of the property hereby insured either exclusively or together with any other property in and subject to the same risk only, shall be sub.iect to the insurance on such propertv

under this policy, shall be subiect to average in 1ike manner." This second condi .. · tion appears to your Commissioners to be !OPen to serious objection on the ground that it aims at automatically varying the terms of an existing contract entered into in good faith, without anv change having taken place in the circumstances of

+he case.of snch a nature as to warrant a variation. This condition may evidentlv have the effect of converting a non-average poEcv into an average policv. and possibly of seriously reducing the amount pavab]e under the policy. 'l'he obiect of. the condition appears to be that of obviating the nossibility of a prior insurer bemg obliged to contribute to a J 1oss on a higher basis than a suosequent insurer. !n such a method of contribution there appears to your Commissioners to be no mherent inequity provided that each company is contributing iu with

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the contract issued 'by it. Your Commissioners are of opinion that in the absence of <:ny change in the nature of the risk a policy issued as non-average should re­ mam so until the expiration of the term for which it was issued.

22. PROOF OF LOSS.

One of the conditions of a Fire Insurance policy is that notice in writing of the happening of any loss or damage 'must be given forthwith, and that a de­ tailed statement of claim in writing must be delivered to the company within a specified time (usually fifteen days), or such further time as the company may, in

writing, allow. Stipulation is also made that the insured must at all times, at his own expense, produce such books, vouchers, and other evidence, as may be reason­ ably required on behalf of the company. Your Commissioners h ave been given to understand that in many cases settlements are effected within a few days, while

in others, where the loss is a complicated one, the period elapsing between the date of fire and date of settlement, may be as long as six, or even nine, months . . Ordinarily, would appear that Insurance Companies are anxious for an early settlement, and, unless the loss is trifling, they usually place the assessment of the

loss in the hands of an expert fire loss assessor, who is not a member of the company's staff, hw.t is· paid by the company. Most of the companies furnishing replies were emphatic in the opinion that the stipulation requiring the production of books and vouchers by the insured did not operate in such a manner as to

seriously retard him in the preparation of his claim. (See also section 33, herein­ after, in regard to reasonable provision for statement of claim.)

23. ARBITRATION.

It is usual in a;ll Fire Insurance policies to make provisiOn that where differences, either of a general or of a specific nature; arise between the insured and the company, such differences should be referred to the decision of an arbi­ trator, or of two arbitrators, one selected by each of the parties, and an umpire appointed by the arbitrators. It is also usual to provide that it shall be a con­ dition precedent to any right of action upon the policy that such an award should

be obtained. In the case of policies issued by the companies transacting Fire Insurance business in the Commonwealth, the arbitration condition is usually restricted to differences "as to the amount of any loss or damage," and does not apply to any other differences that may arise. As regards the validity of such a condition it has been decided by the House of Lords, as a principle of law, that

parties cannot by contract oust the Courts of their jurisdiction, 1but that any . person might covenant that no right of action should accrue till a third person had decided on any difference that might arise between the parties to the cove­ nant. According, to the replies received by your Commissioners (see Replies to

question 56, in Appendix B), it appears that reference to arbitration is very rarely made in Australia.

24. STANDARD RATES OF PREMIUM FOR CLASSIFIED RISKS. Amongst the questions submitted by your Commissioners to the Fire Insurance Companies were three (see questions 25, 26, and 27! of A

and B), relating to the practicability of tabulating the .expenen?e of

Fire (}ompanies in sueh a as would a for

the computatiOn of standard rates of premmm for the vanous nsks, according to locality and nature of risk. Question,s were asked (see questions 58 and 59) concerning the nature of thP classificatiOn of nsks adopted the panies. The replies received indicate that in many cases a very exten.sive classl­

ficatio;n of risks is adopted, and that in some instances the IS

of crediting premiums and debiting losses to each of the cl::sses mto the business is thus . divided. The representatives o! the vanous compames were almost unanimously of opinion that such a tabulatiOn as th_ at suggested by your Commissioners would be quite impracticable, and usually as the reason. for . this opinion the complicated nature of Fire Insurance busmess, and the varJet_y' of risks with which that business is concerned, one witness stating that "in the

Fire Department there are about 1,000 primary classifications of risks, and each of these is subject in its turn to a large variety of additions or reductions, according

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to the internal qualifications of the risk or to its external surroundings.'' Not­ withstanding these adverse expressions of opinion your Commissioners are satis­ fied that the question of tabulating the experience of the various companies for tilie purpose of deducing ratios of loss to amount at risk is worthy of further and serious consideration. Your Commissioners recognise that a classification involv­ ing upwards of 1,000 heads would be impracticable for the purpose they have in view. One .. of the witnesses stated that ·his company divided its business into 5G classes, crediting the premiums received for each class and debiting the losses.

Your Commissioners are of opinion that if a classification of such an extent as this, or possibly less extensive, were drafted by the Insurance Commissioner, in consultation with representatives of the various companies, and an index of risks \'Vere prepared indicating the class to which each possible risk should be referred, a valuable basis would be obtained for determining the .rates of premium which might equitably be applied to the various classes of risk. It is not suggested that

rates so determined should be hard-and-fast rates, to be applicable to all risks grouped in a given class, but only that they should form the foundation on which the rates 1of practice could be constructed .. It is recognised also that the experience should relate to a series of years, so as to make due allowance for exceptional con­ tingencies. The tabulation required could easily be carried out continuously as part of the ordinary office routine, as appears to be done at present in the case quoted above. If the close of its financial year each company were required to furnish to the Commissioner a confidential return, showing for each class of business the average amount at risk, the amount of loss incurred, and the unex­ pired risks on the company's books at the close of the year, the_ requisite summaries could be prepared by the Commissioner at a small cost, and in such a manner as not to disclose the business of individual companies. In the preparation of such returns and summaries it would be essential to guard against error arising from duplication through re-insurances. Many ·of the. witnesses expressed an opinion that Fire Insurance differs so essentially from Life Assurance, that, although in the case of the latter business most valuable data can be obtained by the tabulation of the suitably classified experiences of offices, such a principle does not apply to Fire Insurance. It is olear to your Commissioners that such contention loses sight of the nevertheless obvious fact that all sound insurance, whether life, fire, or other, based upon prepaid contributions of stipulated amount, presupposes an estimate of the ratio of the probable amount of loss during a given period to the amount at risk durine- that period. In so far as there is an absence of such an estimate the transactiOn must necessarily be of a speculative, rather than of a sound business character. In actual practice it is evident that such an estimate is made in connexion with Fire Insurance (see Appendix B, question 20, reply No. 32), but it would appear that it is not made in as systematic a manner as . would be possible if the suggestion of your Commissioners was put into operation,

or as the public interest would seem to require.· In this connexion, it may be noted that in Life Assurance business the premium deduced from the tabulated statistics and the assumed rate of interest (technically known as the "net" pre­ mium), is· subsequently "loaded" to provide for possible variations in the rates of mortality and interest, and also to provide expenses and profits, and, in the case of under-average lives, to provide for inferior vitality. So "loaded," the· pre­ mium is what is known as the "office" premium, and is that actually charged to

the assured. Your Commissioners are of .,opinion that premiums, determined on the basis suggested by them, might be regarded as" net" premiums to be" loaded,'' eitlier positively or negatively, to meet the conditions of special cases. The adop­ tion of this system would furnish, ultimately, a reliable basis for the determination of premiums, viz., one corresponding to the proper measure of the risk covered by the insurance.

25. LOSSES COVERED BY FIRE POLICIES. The losses usually admitted by Fire Insurance Companies as being covered by the policy are those caused by­ ( a) Actual ignition;

(b) Lightning; (c) Explosion of gas for illuminating or domestic purposes; (d) Water used for extinguishing purposes; ,(e) Smoke or heat, the effect of actual ignition.

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. In _praGtically all the policies issued by companies transacting Fire In-surance business .in Australia, losses by lightning, whether resulting in actual ignition or not, appear to be covered, although the fact is not always stated in policy or its conditions. Loss arising from explosion of gas used for

mg or domestic purposes, is, however, usually included . in the policy conditions as an exception to the general rule, that loss occasioned by explosi,on is not covered unless expressly included. Losses caused by water used for extinguishing purposes, and losses arising from smoke or heat, the effect of actual ignition, also appear to be covered in all cases, although not usually specified in the policy. Special conditions are provided in all pohcies setting forth the classes of risks wJlich are- .

(a) Not covered under any circumstances. (b) Not coveredexcept under certain conditions. (c) Not covered unless expressly_ included. The risks not under any circumstances are usually the follow-

rug:- .

(i.) by theft in connexion with a fire. (ii.) Loss by property's own fermentation or natural heating. (iii.) Loss in the course of any heating or drying process which the pro­ perty is undergoing.

(iv;) Loss through burning by order of public authority. (v.) Loss through fall .. of building, or part there01f, except as result of fire. In the absence of a condition exempting loss by theft it is possible that such loss would, under the general interpretation of a Fire Insurance policy, be

treated by the Courts as being covered. Although the loss arising to property by its own fermentation or natural heating is exempted by the policy conditions, it is stated (see replies to question 63, in Appendix. B) that it is difficult to prove spontaneous combustion, and that as the onus of proof, in such a case, is on the

company, claims for loss or damage to haystacks are almost invariably paid. · In any event loss to adjacent property to which such a fire may extend is not exempt. The risks specified as not covered, except under certain conditions, are losses during (unless it can be proved by the insured that the loss was not occa-sioned thereby) or in consequence of :- ,

(i.) Subterranean fire. {ii.) Earthquake. (iii.) Hurricane. (iv.) Volcanic eruptions.

(v:) Other convulsions of nature. (vi.) Invasion. (vii.) Act of foreign enemy. (viii.) Riot.

(ix.) Civil commotion. (x.) Rebellion. ·

(xi.) Insurrection. (xii.) Military or usurped power. (xiii.) Martial law. The risks specified as not being covered unless expressly included are:­

(i.) GQOds held in trust or on commission. (ii.) Bullion or unset precious stones. (iii.) Any curiosity or work of art for an amount exceeding £20. (iv.) Manuscripts, plans, drawings or designs, patterns, models, or

moulds.

(v.) Securities, obligations, or documents of any kind, stamps, coined or paper money, cheques, books· of account, or other business hooks. (vi.) Coal against loss or damage occasioned by own spontaneous

combustion.

(viL) Explosives. . . . .

(viii.) Loss occasioned by' explosion, except by gas used for 1llummatmg or domestic purposes in a building which does not form part of an establishment in which gas is generated.

i6

As regards these various provisions for exemption, your Commissioners of opinion that no exception can be taken to them, provided, however, that the insured is aware of their existence .a.t the time of making the contract. To ensure this it appears desirable that the attention ,of the insured should be specially drawn to them when he is submitting his proposal for insurance, and that the onus of showing that this has been done should be on the company. It also appears desirable that the policy should contain, either on its face or in its fndorsed con­ ditions, a statement of the risks which it is designed to cover. If this be done, the policy could be so drawn as to ensure acknowledgment of conditions having been made known to the insured.

26. VARIATIONS IN INSURED PROPERTY. The form of Fire Insurance policy used in Australia usually contains con­ ditions relative to the effect produced by any alterations or remova·ls of the pro­ perty which is covered by the policy. 'l'he provision made is that unless, in the case specified, the insured obtains the sanction of the company to such altera­

tions or removals, the insurance will cease to attach as regards the property affected. The sanction of the company must be expressed by indorsement on the policy. It is understood that in such cases where such sanction is given it is usual·to charge a fixed registration fee of 2s. 6d.

The cases specified as requiring sanction are-(i.) Such alterations of the business or building as will increase the risk of loss or damage by fire; (ii.) Unoccupation of buildmg for 30 consecutive days; (iii.) Removal of property to a puilding other than that in which it is

stated in the policy to be insured; (iv.) The passing from the insured of interest in the property other!Vise than by a will or by operation of law. In the opinion of your Commissioners these provisions are reasonable safe­ guards of the interests of the Insurance Company, but they consider that the con­ dition should be so extended as to provide that where, in any of these cases, the sanction of the c:ompe.ny is withheld, the company should be entitled to retain only the customary short period rate for the time the policy has been in force. This would expressly extend to the insured a concession which is usually expressly provided for in the case of cancelment of insurance at the request of the insured. (See also section 35 hereafter.)

27. ASSIGNMENT OF POLICIES. The fact that a Fire Insurance policy is purely a contract of indemnity is further indicated by the provision almost invariably made in the policy conditions that if the interest in the property insured pass from the insured otherwis'e than by a will or by operation of law, the insurance ceases to atta;ch as regards the property affected unless before the occurrence of any loss or damage the sanction of the company has been signified by indorsement on the policy. This fact is

further accentuated by the contract being usually stated to be that of making good the loss or damage to the " insured, his or her or their heirs, executors, or adminis­ trators," without the addition of the word assigns. In this connexion it may be noted that in the case of some Fire Insurnnce policies issued in Australia the wording of the contract provides for making good the amount of the loss or damage to the "insured," no mention being made of any . successors in interest. In such.. a case, however, the rights of the insured, in the event of the death of the insured, vest in his personal representatives, although representatives are not specially mentioned. It has been that the

policy should in all cases contain a specific provision that the interest therein· shall . continue to the heirs, devisees, executors or administrators respectively to whom the right to the premises or property shall pass. The suggestion is one whiCh your Commissioners consider that it would be advisable to adopt, for the of rendering the contract as explicit as possible, and of thus enabling 'tho:ae

Interested to have a clear knowledge of their rights.

17

As regards the assignment of policies, it is clear that since the contract is a purely personal one between the company and the insured, in which the previous history of · the insured plays an important part, the company is quite justified in requiring that its .special sanction shall be obtained before any transfer of

property shall entitle the transferee to the insurance rights which the transferor previously had in regard to the property. In the event of the company sanctioning the assignment of a policy a registration fee of 2s. 6d. is charged, but no such charge is made in the case of a policy passing to heirs, executors, administrators, or other successors by opera­ tion of ,\aw. In reply to tt question submitted by your Commissioners (see

Appendix .B, question 71) as t o whether, in the event of tt fire occurring in a property subsequently to the date of its sale, a claim made on the vendor's policy vvould be admitted by the company, several of the representatives

stated that, although in the event of the vendor retaining no insurable interest in the property the company's liability under the policy would have ceased, in oortain special ex gratia payments would be made.

28. STATE A.ND MUNICIPAL FIRE INSURANCE. Your Commissioners have given considerable attention to the question of State and Municipal Fire Insurance, and find themselves unable to recommend the adopticl of either 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, viz., eitp.er-(a) the assumption by the State or by the Municipality of the fire risks of its citizens on lines similttr to those on such risks are now

taken by fire insurance companies ; or, (b) the assumption by the State or Municipality 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 t he class of business referred to under (a) above is unsuitable for State or 11unicipal enterprise, owing-(i.) to the large extent to which the personal element enters into the contract of Fire Insurance;

(ii.) to the unfavorable selection against the State or Municipality which would probably result Uom such tm enterprise carried on along­ side of private companies; (iii.) to the undesirability of establishing a State or Municipal monopoly

in this class of business;

, (iv.) to the relatively limited field presented to State or Municipality, and the consequent inability to adequately distribute risks ; (v.) to the necessity which would exist under such a scheme, uniless worked . in co-operation with private companies, of carrying on

single risks a much greater amount of insurance than is advisable, which necessity would arise from the absence of facilities for re-insurance. Such a position,hO.s arisen, your Commissioners understand, in connexion with State Fire Insurance in New

Zealand.

As regards (b) above, your Commissioners are of opinion that the lack of distribution of risk and the consequent heavy loss which might result from a single fi.re are such that any scheme prepared on this basis is essentially unsound in respect of the fundamental prin:Ciple Oif fire insurance. Even when, as is some­

times the case, a special fire insurance fund is created the position of affairs is improved little, if any, since the periodical contributions to this fund diminish t he immediate benefit to current revenue arisinP" f rom the cessat ion of payment of :fire insurance premiums, whilst the accumulated sum of the contributions will,

under the most favorable circumstances, be for many years an inadequate against the risk of very heavy loss arising at any moment. D

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Your Commissioners are strongly of opinion that the only sound method · of Eire Insurance is that which is based upon very widely distributed risks of relatively small amounts, and in their opinion such a method wou!ld,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 reinsurance. In this connexion, a file of papers dealing with the question of the insurance against fire of buildings and other property of the Commonwealth Government was submitted for the consideration of your Commissioners. These papers were forwarded by the Acting-Secretary of the Department of Home Affairs, who, in his covering minute, drew attention to the fact that two or three Federal Ministries had decided tl1at t4e Commonwealth should bear its own insurance risks, and that, in pursuance of these decisions, buildings, furniture, fittings, launches, &c., are not insured. In a further minute contained in these papers, the Acting­ Secretary for Home Affairs (referring to a possible loss by fire, for example, of the Melbourne Post Office) pointed out (22nd April, 1908) that it would be perhaps desirable to create an Insurance Fund, since "it would perhaps cause, some dis­ location of the finances to have the large sum necessary for the replacing of the building taken from one year's

As stated above, your Commissioners are distinctly of opinion that such a course of action as is involved in leaving these buildings and other property uninsured, is injudicious, and the creation of provision against loss,by means of an msurance fund could be defended only if the individual risks were of such

relatiyely small amount as to render reinsurance unnecessary. Where, however, single risks are concerned of such magnitude as those which are actually involved (for example, in the General Post Otrice in Melbourne, referred to, and that of Sydney), your Commissioners consider that the geographical distribution of the property of the Commonwealth is quite inadequate as a guarantee against serious loss by fire, even when supplemented by the contributions to an insurance fund.

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 reinsurances were effected. In this connexion it may be noted that in response to a question asked by your Commis­ sioners, replies were received setting forth the maximum amount of risk wpich the various companies will carry alone on a single property. (See Appendix ,B, questiOn 32.) From these replies it appears that in many cases the maximum amount carried alone on a single risk does not exceed £5,000, and in some instances is much lower, while in no case was a higher amount than £15,000 mentioned as beirig so carried.

29. FIRE PREVENTION.

Your Commissioners, in reply to inquiries made by them (see Appendix B, questions 87, et seq.) were informed that the practice of levying upon the Fire Insurance Companies a proportion of the cost of maintaining fire brigades, is one which is observed only in Australia and New Zealand, and, to aJimited in London. The opinions expressed in these replies concerning the desirabil_ity of Fire Insurance Companies being compelled to so contribute were not unammous. Five of the replies received were in favour of such a contribution, and 36 were more or less emphatically opposed to it, while one of replies was to the effect that" in theory Insurance Companies do not consider that they have anything to do with fire brigades and their cost, their business being to rate risks as they

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find them. In_practice, however, fire brigades enable companies to take larger and a gre.ater number of risks in a locality, and therefore it is fair that they should contribute to the cost, which should be compulsory, as otherwise some companies might refuse to contribute."

The main reasons advanced by those opposed to the Qontribution were as follows:- ·

(i.) Fire brigades are not deemed necessary in scattered districts, and their constitution is purely a municipal duty, arising from the aggregation of the community in such numbers as to constitute a necessity for. municipalities. · ·

(ii.) The existence of fire brigades is independent altogether of the question of existence 1of Fire Insurance Companies. (iii.) Fire brigades are a greater desideratum to the public where In­ surance Companies do not exist, because the public then have

no other means for protecting themselves from pecuniary loss in the event of an outbreak of fire. (iv.) :Fire brigades are a protective instrument to the property of the community on the same principle that police, boards of health,

or sanitary works are protective instruments to the good order, . life, and health of the community. (v.) It has never been proposed to compel Life, Marine, or Burglary Insurance Offices to contribute specially towards Health De­

partments, · Sanitary Works, Lighthouses, Harbor Improve- ments, or Police. .·· ·

(vi.) The effect of compulsory contribution is to make an undue propor­ tion of the cost of the brigades fall on the policy-holders of Fire Insurance Companies, and to correspondingly relieve that portion of the community which does not insure. It also makes

insurers against fire pay the cost even of life saving services. (vii.) In the absence of a fire brigade the Insurance Companies would not make any movement to start one, but would accommodate their charges, and limit their commitments, m accordance with

the ·condition of things which might prevail. . (viii.) Fire Insurance Companies do not offer protection from fire, they 1only sell indemnity against loss therefrom.

(ix.) It penalizes the owner whose property is insured, as he has to pay not only as a citizen of the State, but also under his premiums to the Insurance Companies. (x.) In the event of Fire · Insurance Companies being relieved of

brigade taxation, rates could be reduced in the cities and dis­ tricts served by In connexion with this discussion, it may be noted that one of the earliest London Fire Insurance Cmnpanies, "The Fire Office," which was started in 1680, had a brigade of its own, which was stated to be "versed and experienced in ex­

tinguishing and preventing of the fire." It would thus appear that in their original conceptions of Fire Insurance the founders of the business had in view fire protection, though probably only the protection of the properties covered by them.

The principal reason for imposing on Fire Insurance Companies a charge for the upkeep of fire brigades appears to be the recognition of the fact that o.n efficient fire brigade service, by reducing the fire waste, lessens the amount of loss payable by Fire Insurance Companies. This saving to.the companies appears to

be considered as furnishing an equitable ground for a levy in support of the organization which has been instrumental in bringing it about. If the Fire In-. surance policy were a contract 1of long duration not subject to any abatement, any improvement in .the direction of fire prevention -might, perhaps, be fairly con­

sidered as warranting a levy in respect of the business in force at the date on which such improvement was effected. In view, however, of the actual nature of the contract, and the facilities afforded by it for revision of rates, such a levy would appear to be without adequate justification. . Your Commissioners have

given the subject very careful consideration, and are of opinion that any such levy is inequitable, the effect which it produces is clearly that of requiring B 2

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the owner of insured property to contribute to the means for fire prevention in a higher proportion than the owner ,of uninsured property. A possible reply to this view of your Commissioners would be that Fire Insurance Companies do not re­ duce rates for improvem:ents in fire prevention, and that, in consequence, the diminution of fire waste means only increased profits to the company. Of the accuracy ,of any such reply your Commissioners have had no evidence, but, on the contrary, the information furnished by the various companies appears to indicate

that steps taken for fire prevention are given effect to in determining rates of premium. Thus, for example, in reply to questions 90 and 91 (see Appendix B) particulars were supplied concerning the reduction in premium rates arisingfrom the use of sprinklers and other appliances for fire prevention, and from the use of fire resisting materials in the erection of buildings.

30. FIRE INQUESTS.

In all the States of the Commonwealth, legislative provision is Il}.ade for the holding by a coroner, or by somo person acting in that capacity, of inquiriea concerning the cause ctnd . origin of fires. These provisions, however, are not uniform in the several States. In New South \Vales, when any property is damaged or destroyed by fire, an inquest is required to be held if the coroner of the district, or the appropriate Fire Brigade Board, considers it desirable. In Victoria, subject to the proviso hereinafter mentioned, it is within the jurisdic­ tion of every coroner and deputy coroner to inquire into the cause and origin of any fire whereby any building, ship, or merchandise, or any stack of corn, pulse, or hay, or any growing crop within his district is destroyed or damaged, provided that some person in respect of such inquisition pays the sum of £5 5s. to the coroner or to some receiver of revenue. In the absence of such a payment, no such jurisdiction exists. .

In Queensland, provision is made that when any property, real or personal, is destroyed or . damaged by fire, an inquiry into the cause and origin of the fire shaH be held upon requisition, in writing, by six . householders of the city town, or hamlet, in which, or nearest. to ·which, such fire took place, or if the coroner himself consider the case one for inquiry. In the absence of the coroner,

justices in petty sessions empowered to act. In South Australia, in enumerat­ ing the duties of the coroner, it is stated that every coroner shall have jurisdiction to inquire concerning the cause and origin of any fire ·whereby any building, ship, merchandise, or any stack of corn or hay, or any growing crop, pasture, or any other valuable effects are endangered, destroyed, or damaged. The necessity for holding an inquiry in any given case is left to the discretion of the coroner for the district. In Western Australia every coroner or person entitled to act as such has

jurisdiction to inquire into the cause and origin of any fire whereby the life of man or beast has been Lost or endangered, or whereby any building, ship. or mer­ chandise, or any stack of corn or hay, or any growing crop, or any trees, saplings, bushes, shrubs, pla.nts, stubble, or scrub, has been destroyed or damaged. In Tasmania, provision is ·made that where any property, real or pers.onal, is burnt or damaged by fire, under circumstances leading to the suspicion that the same has been unlawfully set on fire, any ooroner may hold an inquest for the pur­ pose of ascertaining the cause and origin of the fire. These various · although similar in their general tenor, have several marked differel,l,ces. Thus,

whilst in the eases of New South "Wales, Queensland, South Aus.trMia, and Western the opinion of the· or his d.eputy or is

warrant an inquiry, in Tasmania, such is expressly limited t,o; ca.ses in which incendiarism is suspected, while in VIctoria the payment of a fee of £5 5s.. is a ne.cessary·preliminary to any inquiry. :Further, in Queensland. the cases, in­ quired into are not restricted to those in which the coroner is oJ opinion that an inqujry is necessary, but include all those i11 conneiion with which six house­ holders in the vicinity of the fire have made the necessary req1:1isition in writing. The enumeration of the various classes of property affected differs ccmsiderably in the .. Provisions of the several States, and varies from "any property" in the case 01f South Wales to a lengthy of items in that of Western Aus­

tralia. The South Australian provisiOn to property "endangered," as well as to that " destroyed or damaged,'' while in "\Vestern. Australia refe:fence. is made to the loss or endangering of the li,fe of m'an or beast.

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In response to a question submitted to the representatives of the various companies (see Appendix B, question 92), your Commissioners have received re­ plies which indicate a great divetsity of opinion as to the necessity for exhaustive mquests in the case of fires. While the majority of the representatives considered such inquiries were desirable, some expressed the opinion that they v;ere unn€ces­ sary, and of but little value. Amqngst those in favour of such inquiries there

was also a considerable difference of opinion as to the extent to which the prin­ ciple should be applied, some maintaining that an inquiry should be held in all cases, while others considered that it should apply only to doubtful cases. After a careful consideration of the question, your Commissioners are of opinion-

(i.) .that it is desirable that the requisite steps should be taken to ensure, if possible, uniformity in the several States iri the statutory pro­ visions for inquiry into the cause and origin of fires which have endangered, damaged, or destroyed life or property; (ii.) that the Queensland provision entitling a specified number of

neighbouring householders to obtain by requisition an inquiry into the cause and origin of any fire should be included in such statu­ tory provisions; (iii.) that inquiry should bema:de into the cause of every extensive fire,

and also concerning every fire whether extensive or not, in con­ nexion with which the coroner or the police consider the circum- stances are suspicious; -

(iv.) that, as in the case of an inquiry concerning the cause of death, the expenses in connexion with fire inquests should be borne by the Crown. ·

31. INCENDIARISM.

In reply to questions put by your Commissioners to the representatives of the various companies concerning the evidence or indications of wilful destruc­ tion by fire for purposes of gain (see Appendix B, questions 93, 94:, and 95), it was stated that, although there are many cases in which the circumstances a,re

suspicious, conclusive proof is usually lacking, and consequently the policy moneys have had to be paid. Many of the representatives expressed an opinion that an extension of the principle of fire inquests would have the effect of checking incen­ diarism, and would thus benefit the public by leading to a reduction of premium

rates. ·

. Your Commissioners are of opinion that the suggestions made by them in the preceding section dealing with fire inquests would, if put in operati01n, have a beneficil{1l effect in the direction indicated.

32. LOSS ASSESSORS.

According to the evidence furnished to your Commissioners (see Appendix B, question 44), it appears that for losses of a small or trifling nature a recommendation by the company's local agent or by one of its own officers is acoepted as proof of loss, but that in all other cases the claim is placed for adjust·

ment in the hands of an expert fire loss assessor, who is not a member of the company's official staff, but is paid by the company. In view of the confidential and onerous nature of the duties which such persons are called upon to perform. it appears to your Commissioners that every person undertaking the duties of

:fire loss assessor should be required to register his name and address with the Insurance Commissioner, and that, prior to effecting such registration, it should be the duty of the Commissioner to obtain from the applicant for registration such partiqulars concerning his know lege and experience as will enable an estimate to be formed of his qualifications. In the event of the Commissioner considering

such qualifications insufficient, :no such registration should be effected, and it sliould be an offence for any company to employ in the adjustment of a claim above a specified amount any unregistered fire loss assessor. In the event of a refusal on the part of the Commissioner to register any fire loss assessor, it

should be competent for such assessor to proceed the Commissioner in the High Court or the Supreme Court to show cause why such registration should not be effected, and, in event of the Court disagreeing with the Commissioner's grounds for refusal, It should he competent the to order such registration to be effected.

22

33. SALVAGE.

Conditions relative to right of entry and fO salvage are included in practi­ cally all fire policies. In those issued in Australia the provision is usually to the following effect:-"On the happening of any loss or damage, the company may, so long as

the claim is not adjusted, without thereby incurring any liability-(i.) Enter and take and keep possession of the building or premises where the loss or damage has happened. (ii.) Take possession of, or require to be delivered to it, any property

of the insured in the building or on the premises at the time of the loss- or damage. (iii.) Examine, sort, arrange, or remove all or any of such property. (iv.) Sell or dispose of,. for account of whom it may concern, any salvage

or other property taken possession of or removed. In no case shall the compa,ny be obliged to undertake the sale or disposal of damaged goods, nor shall.the insured have the right to abandon to the company any property or undamaged, whether taken possession of by the company or not. Entry upon or taking possession by the company shall not be taken as recognition of abandonment by the insured."

A further condition provides that if the insured or any one acting on his behalf shall hinder or obstruct in doing any of the acts referred to above the policy shall be forfeited. These provisions appear to your Commis:8-inners to confer upon. the company greater powers and immunities in the case of a, fire than is strictly equitable. For example, under these provisions the right to retain possession of the building and premises remains with the company "so long as the claim is not adjusted," instead of, as in the form of policy sometimes used elsewhere, " for a reasonable time." Again, the provision for forfeiture in the. event of hindrance orr obstruction apuears to require qualifications so as to relate only to those which are ma.terial anc Probably no well-established company would attempt to enforce forfeiture for a trivial or accidental hindrance, but it appears desirable that in such a matter the rights of both parties to the contract should be clearly stated, as otherwise payments may be treated as ex gratia which should strictly be claimable as a matter of right. The penalty of forfeiture for obstruction may perhaps appoor excessive in any case, but your Commissioners are of opinion that where such obstruction or hindrance is wilful and material such a penalty is warranted, as, in the absence of some such provision, the concealment of fraud

would be facilitated. As regards the condition relative to entry and salvage, your Commissioners are of opini.on that jt should be so extended as to indicate 0learly the rights of the insured; such, for examole, as reasonable frucilities to prepare his statement of claim, and, where to carry on his business,

wliich in the event of total cessation might perhaps ·irremediably deteriorate. Tlie right of the insured to be present at any dealings with salvage should also be expressly recognised, and provision should be made for notifying him of any such dealings. The provision that the insured shall not under any circumstances have the right to abandon any property to the company appears equitable and in strict accord with the contract as usually stated on the face of the policy, which is to the effect that the company undertakes to pay, reinstate, or make good to the insured any loss or damage by fire to the property specified in the policy. This is clearly not an undertaking on the part of the company to dispose of any property

damaged or undamaged, but simply to indemnify the insured against the loss suffered by him. · · ' ·

34. INSURABLE INTEREST.

As noted in Appendix F, pages 158 and 159 of their report on Life ance, your Commissioners ascertained that the .Act Geo. III. dealing with thb principle of insurable interest (14 Geo. III., c. 48), commonly known as the "Gambling Act," is in force in New South Wales and Victoria, but they had no evidence of its existence in the other States of the Commonwealth. In the case of Life Assurance, since the !JOiicy is not a contract of indemnity, but an under­ takine- to pay a specified sum !on the occurrence of a specified oontingency, special

provision is requisite to pJ'event the "mischievous kind of gaming " mentioned in the preamble to the original Act referred to. tn the case. of Fire Insurance.

23

such a. special provision is unnecessary, since the nature of the policy

hmits Its operatiOns to cases in which such an interest must exist. If the fire does not cause loss to the insured, no indemnity is claimable, and if it does cause loss, thepro.of that Joss has in. connexion with the property specified in the

policy IS proof of msurable mterest m the property. In certain cases more than one perso:r: may have an insurable interest in respect or the same property, as, for example,. m the case of joint owners, mortgagor and mortgagee, lessor and lessee, etc., but each case the same principle applies, the extentof the insurable interest

of each msured being determined by ·the amount which he would lose if the property were destroyed. 'Vhere goods are held in trust or on commission, and the holder _is. responsible for their safe custody, an insurable interest also exists. In the policies Issued in Australia it is specially stated in the conditions that

otherwise expressly stated in the policy, the insurance does not cover goods

held m trust, or on commission."

35. CANCELMENT OF POLICY. The Fire policies issued in Australia usually contain a. provision whereby the pohcy may at any time during its currency be terminated at the option of either party to the contract. If terminated at the request of the insured,

the company will retain the customary short-period rate for the time the policy been in force, while, if terminated at the option of the company, the company

IS liable to repay on demand a ratable proportion of the premium for the unexpired term from the date of cancelment. In this case, as in many others, such a con­ dition is open to no objection on the grounds of equity, provided that the parties to the contract are equally aware of its existence, and its probable effects. In

many cases, however, it is probable that the insured is unaware of the provision through neglect to carefully read the conditions of the policy. In the opinion of your Commissioners it is undesirable that, in the absence of a distinct breach of the conditions of the contract, a Fire Insurance policy should be terminable other­ wise than by expiration of the period for which it was effected, except with the

consent of both parties. ·

36. PROPOSALS AND POLICY FORMS. The Fire Insurance policies issued by the various companies carrying on business in Australia are practically uniform as regards the conditions indorsed thereon, and are similar to each other, though not identical, in regard to the printed portion of the face of the policy. A copy of the conditions and stipula­ tions indorsed on Fire Insurance policies issued in Australia is given here­

after in Appendix C. ..While recognising the advantages to the public arising from this uniformity, your Commissioners do not consider that it would be advis­ able to provide by Statute a standard form of policy, since changes which it might be desirable to effect from time to time in the policy, or its conditions, WIOuld neces­

sitate an amendment of the law, which might not be very readily brought about. The same objection would not apply to a regulation under Statute. Your Com­ missioners are, however, of opinion that all policy f?ri?-s and conditions should be submitted for the appr.oval of the and all proposal

forms, cover notes, or deposit rece1pts, should similarly submitted, and .that any company carrying on business on a form whiCh not been so submitted should be guilty of an offence. The Insurance should have pc:wer

to veto or amend such forms, subje9t to the company s nght to appeal agamst his ruling to the High Court or the Supreme Court.

37. PRINTED AND WRITTEN PORTIONS OF POLICY. In addition to the printed portion of a Fire Insurance policy comprising usuallv the skeleton of the contract and the conditions under which it is issued, other portions are usually typed or written. These usuallv con­

sist of the names of the parties to the contract, the nature and ]ocatwn of th.e pro­ perty, the insured, the amount t.he premium, the _date;s which the

msurance IS to run and the date on w h1eh the contract V\•as SJgned. \'.There, how­ ever, the of the ca.se are special it may be necessarv to jnsert addi­

tional written· or typed conditi.ons. In the e:ent. of such additional conditions l::ieing inconsistent with those prmted on the policy, It has been held that the former

1259

24

must prevail as expressing more precisely the meaning of the parties, but that, if possible, an interpretation should be adopted which will reconcile both. In ac­ cordance with the suggested provision contained in section 36 above, before any new condition could be added to a policy form approved by the Insurance Commis­ sioner, it would be necessary that his further approval should be obtained.· De-­ finitive additions to the policy, such as those enumerated above, wouid, of course, not require such approval.

COVER NOTE OR DEPOSIT RECEIPT.

Yvhen a proposal for Fire Insurance has been received by the company, and a premium, or a portion thereof, by way of deposit has been paid by the proponent, it is usual for the company to issue forthwith a receipt, which is known as a" cover note," or." deposit receipt," and which usually sets forth that a policy will be

issued later subject to the terms and conditions of the company's policies. This cover note, within the limits of the time specified thereon, fulfils all the functions of a policy until such time as the policy itself is issued, or the insurance is declined . . \l[here the time specified in the cover note has elapsed before the issue of the

policy, a fresh cover note should be obtained, as othenvise the property would be uninsured during the interval between the lapse of l,he cover note and the issue of the policy. In the event of a fire occurring during such an interval, it is perhaps improbable that a company would decline to pay. Your Commissioners, however. consider th[.l,t it is undesirable that the matter should be left to the generosity of the company, and are of opinion that all cover notes should run for a period not Iess than tl1at for the _amount paid to the company represents premium in respect of the sum spemfied m the proposal.

39. MATER! AL MISDESCRIPTION. One of the oonditions contained in all Fire Insurance policies is that which provides for the avoidance, either total or partial, of a policy in connexion with which there. has been any. material misdescription, misrepresentation of any'";.::

terial fact, or omission to state any such fact. In the policies issued in Austrcv"it!J the terms of the condition are to the effect that material misdescription, misrepre­ sentation, or omiSSIOn in respect of any property shall relieve the company of liability under the policy in respent of that property. In the condition of similar nature sometimes included in policies issued elsewhere the terms are so general as to amount to a provision that misdescription, misrepresentation, or omission in respect of any of the property covered by the policy will invalidate the whole policy.

\Vhile recogmsing fully that it is essential in any Fire Insurance contract that the insurer and the insured should, as nea.rly as practicable, be placed on an equal footing as regards knowledge of the nature of the risk involved, your Com­ missioners consider that the terms of the condition referred to are unduly onerous, and are of opinion that the penalty of avoidance should only be enforceable where the misdescription was fraudulent, or, if non-fraudulent, was of such a nature as to have induced the company to effect a policy where, with full knowledge of the facts. the insurance would have been declined. Even in such a case, your

Commissioners consider that in the absence of fraud, full justice would be done by annullmg the liability of the company in respect of that property in connexion with which such misaescription hadbeen made. · Where the property is insurable, and the misdescription, etc., has been innocently made, it to your Commissioners that the equities of the would be met by reducing the sum assured in the ratio of the premium whiCh should have been paid to that '.vhich actually was paid.

In this connexion your Commissioners are of opinion that all statements made by the insured, and embodied either expressly or by implication in the policy contract, should be regarded as representations made to the best of the belief of the insured, not as warranties.

40. SUBROGATION.

. One of the conditions contained in the Fire Insurance policy is that which provides that the insnred shall, at the expense of the comnany do, and concur in doing, and _permjt to be done, everything to enable the company to en­ force any nghts to which the company would become entitled or subrogated upon

I

I

i

1261

25

good any loss covered by the policy. This condition is based upon the

prm?Iple that where an injured person has distinct remedies against different recovers from one of the parties the whole amount involved, that

party IS entitled to recover from the other parties in the name of the injured per· son.. This principle i_s. one vv,hich to your Commissioners to be .quite

and the conditiOn referred to Is practically an agreement on the part

of the msured to afford every f3:cility for putting the principle into operati,on at the expense theco:n:pany. It IS clear that the principle of subrogation limits the to whwh the is. entitled. to renounce any legal rights or remedies'

may _have agamst tlurd parties, and that in the event of any such re­

takmg the comp::tHy would be entitled to take it into account in

Its sett_lement of claim. It does not appear to your Commissioners that any valid except10n can be taken to this, since the insured is entitled to recover from the company to the full ex_tent to which his loss is covered by the policy, but having so recovered must leave It to the company to say whether any rights or remedies

agamstj,hird parties should or should not be renounced.

41. LOSS.

The ordinary Fire Insurrmce policy is a contract to indemnify against loss of capital arising through fire, and the measure of the loss may be said to be repre­ sented ?Y the cost of replacing the damaged property in the condition in which It was Immediately before the OCC1Jrrence of the fire. In 19,ddition to this direct

loss of capital there is frequently an indirect consequential loss, such for example as the loss of rent or profits during the time the damage is being reinstated. Such loss would not be covered by the ordinary fire policy unless specially inQluded. In the proposal forms of some of the fire insurance companies doing business in

Australia provision is made for insurance of rent, and one of the conditions common to all such policies is that throughout the conditions "the stipulations. provisions, and requirements applicable to loss on property shall also be deemed to apply in case of any insurance on rent." The rate charged for the insurance of rent is stated to be usuoJly the same as that charged for the insurance of the builaing.

Until recently, the insurance in respect of loss of profits consequent upon loss or damage by fire was not undertaken by English companies, but. policies· covering such risks are now issued in certain cases. The policy covermg such risks is .usually separate from the ordmary fire policy, and the amount payable

thereunder is, in different instances, variously based upon-· (i,) a fixed percentage of that recoverable under the policy insuring against direct loss ; (ii.) the time the property is idle in consequence of the fire; or, (iii.) a percentage on the decrease in monthly .turnover as compared with

the corresponding month 0f the precedmg year. In all cases of insurance consequential loss, the right to recover is governed by the principles which govern the right to recover under a policy insuring against direct loss.

42. TARIFF ASSOCIATIONS.

From the replies received from the representat.ives the various in response to a query concerning the bJ: which Fire Insurance. premm;ms payable in the Commonwealth "\Yere determmed: It appears .that the. portion of the business is conducted on rates cletermmed by a:ssomati.ons. (See Appendix B, question 20.) These rates tbe combmed i!Xpenence of the offices connected with the association, whwh, m the absence of a complete

of classification and ta.bulation of risks :md losses, such as that referred to m section 24 above. appears to furnish a fairly satisfactory method of determining a reasonable basis Of Ol)el"tJJtions. . . . .

An obiection which is sometimes urged agamst such an. associatiOn IS that it tends to rates an unduly high level, and that Jf there were.

stricted competition amongst the offices the publjc wou1d benefit,

26

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 =?4 above, the possibility of injustice to the puolic arising from agreement amongst the Companies as to rates of premium would be negligible. In the event of the Commissioner becoming satisfied at 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 Bigh Court or the Supreme Court to show cause why their rates should not be reduced.

RECOMMENDATIONS.

Your Commissioners recommend-1. That for the control of the fire insurance business of the Commonwealth it is desirable that a Federal law should be enacted dealing with the subject of fire insurance only.

2. That the administration of the Act should be intrusted to the Common­ wealth Insurance Commissioner whose appointment your Commissioners recom­ mend in their report on life assurance. 3. That all companies carrying on, or proposing to carry on, the business of fire insurance in the Commonwealth should be required to effect a registration with the Insurance Commissioner.

4. That every such company should be required to obtain from the Com­ missioner a license to carry on such business and that any infringement of this provision should be subject to e.. he;1vy penalty. 5. That every such company should be required to appoint a permanent resident of the Commonwealth to act as its Australian representative, with plenary powers.

6. That every such company should be required to-lodge with the Com­ monwealth Government approved securities to the value of £20,000. 7. That every such company should be required to furnish an annual venue account and balance-sheet in respect of its fire insurance business, dis­ tinguishing between and Commonwealth and ·extra-Commonwealth items. . 8. That a further return should be supplied annually showing as at the

close of the company's financial year the amount of unexpired risks Olf the com­ pany's books and distinguishing between business within and that outside of the Commonwealth. ·

9. That the Commissioner sho'uld have power to inspect the books of account or other records of any licensed fire insurance company, or to authorize in writing some other person to make such an inspection on his behalf. .. 10. That the retention by companies of the reinstatement condition in their policies .is desir'!lble as a possible check on exorbitant claims. . .

11. That the principle of reinsurance is essential to successful fire m­ surance, and should not be discouraged. 12. That the issue of "valued " policies, that is, policies undertaking to pay a specified sum irrespective. of the amount of loss actually sustained, is un­ desirable, and contrary to the principle of indemnity on which this branch of insurance business is· based.

13. That for the purposes of "loss contribution" by several companies the only policies taken into account should be those which are actually effectual at the time of the fire. 14. That where a policy is issued subject to average, attention should .be called thereto by a distinctive notice stamped or printed on the face of the pohcy in coloured ink. __

15. That in the absence of any change in the nature of the risk a policy issued as non-average· should remain so until the expiration of the term for which it wa.s issued. 16. That arrangements should be made by the Insurance Commissioner for securing the classification and tabulation of the experience of the various com­ panies transacting fire insurance business in Australia, in respect of amounts at risk, and losses incurred.

_,._, ... - -

27

17. the rates deduced from these data for a series of years should be made the basis for the computation of standard rates of premiums for the several classes. 18. every fire policy should contain either on its face or in its in­

dorsed conditiOns a statement of the risks which it is designed to cover. 19. Tha.t where a company withholds its sanction to any alterations or re­ movals of the msure?- prope,rty the company should be entitled to retain only the customary short penod rate for the time the policy was in force.

20. That it is undesirable that the business of fire insurance should at present be undertaken as a State or Municipal function. '

2L That Government or Municipal property Jiable to damage by fire· shou!d be pr?tected. by means of fire insurances, especially where such property consists of smgle nsks of considerable value. ·

22. That owing to the inequitable character of the levy on fire insu:ro.nce __ for the maintenance of fire brigades, steps should be taken to secure

the discontmuance of such levy ·

23. That steps should be taken to ensure, if possible·, uniformity in the several States in the statutory provisions for inquiry into the cause and origin of fires which have endangered, damaged, or destroyed life or property. 24. That under these provisions a specified number o1 f neighbouring house­

should be e11.titled to obtain by requisition an ·inquiry into the cause and

ongm of any fire. .

25. That inquiry should be made into the cause of every extensive fire, and also concerning every fire whether extensive or not, in connexion with which the coroner or the police consider the circumstances are suspicious. 26. That, a.s in the case of an inquiry concerning the cause of death, the expenses in connexion with fire inquests should be borne by the Crown.

27. That every person undertaking the duties of fire loss assessor should be required to register his name address with the Insurance Commissioner, and to furnish the Commissioner with particulars ooncerning his qualifications to act as assessor. · · ··· 1

28. That it should be an offence for any company to employ in the adjust­ ment of a claim above a specified amount an unregistered fire loss assessor. 29. That, in the condition relating to entry and salvage, provision should be made that trivi-al or accidental hindrance should not entail forfeiture of policy rights, and that reason;;tble facilities should be allowed the insured to prepare his statement of claim, and, where practicable, to carry on his business.

30. , That in the absence of a distinct breach of the conditions of the con­ tract, a fire insurance should not be terminable otherwise than by expiration of the period for which it was effected, except with the consent of both parties. 31. That all policv forms and conditions as well as all proposal forms,

cover ndtes or deposit receipts should be submitted for the approval of the In­ surance Commissioner. 32. That any Company carrying on business on a form which has not been so submitted should be guilty of an offence. . .

33. a11 cover notes issued bv a fire msurance company pendmg the fina.l acceptance o:r refusal of a proposed insurance should run for a period .not than that for which the amount paid to the company represents premmm m respect of the sum specified in the proposal. . .

34. That where a property is a:qd the for a pohcy

thereon a misdescription, misrepresentatiOn or omission has been the policy should not be void, but the sum assured shou!d be reduced m ratio of the premium which should have been paid to that whiCh was pa1d. 3"5. That all statements made by the insured and embodied erther expressly

or by implication in the nolicv contract should be regard.ed as representations made to the best of the belief of the insured, not as warranties.

We have the honour to be, Your Excellency's most obedient servant.s,

Chas. H, ¥1ickens, Secretary, " The Rialto," Co11ins-street, Melbourne. 15th October, 1910.

J. H. HOOD. G. H. KNIBBS.

1263

APPENDIX A.

QUESTIONS SUBMITtED TO OFFICERS OF FIRE 'INSURANCE COMPANIES.

I.---COVERING LETTER. COMMONWEALTH OF AUSTRALIA. ROY i\.L COMMISSION ON INSURANCE.

SIR,

Commonwealth Statistical Offices, The Rialto, Collins Street, Melbourne, zrst D ecember, r9o8.

I have the honour to inform you that His

Majesty, through His Excellency the Governor­ General, and on the advice of the Federal Govern­ ment, has been pleased to appoint 1\t!r. Justice

Hood and Mr. G. H. Knibbs a Commission " to inquire into and report upon the Law relating to and the methods of operating Fire, Life, Indus­ trial, and other Insurance in Australia.''

With a view to saving witnesses time and expense, and otherwise facilitating the inquiry, and with a view also to enabling all replies to be made with due deliberation, the Commissioners have addressed to you a number of questions, hereto appended, to

be replied to in your capacity as

The Commissioners will be obliged therefore if you will be good enough to answer these questions, seriatim, on one of the Inquiry Forms forwarded herewith (in duplicate), and return the document so as to reach the Commissioners at the above address,• on or before zoth January, 1909. To facilitate

verification, it is desired that you should sign each page. In replying to the questions set out, will you

please write your answers in the briefest possible manner in the proper place on the Inquiry Form. Should you desire to amplify in an_y way such brief reply, please do so in a of notes at the end,

bearing the same number as the question to which the reply refers.· It is expected by the Commissioners that you will be prepared at the proper time, if deemed nece:'sary, to confirm your replies on oath.

Section.

I.

II.

III. IV. v .

VI.

I have the honour to be,

Sir,

Your obedient Servant,

Secretary to the Commission.

H.-QUESTIONS. SYNOPSIS.

Company represented Constitution and Location cf Company Bt:siness of Company Insurances in Force Assets Reserve Funds .,.

Question No. I

2-7 8-ro I I-12

13-16 I7-lt'

Section.

VII. Income VIII. Premiums IX. Claims X. Reinstatement

XI. Re-insurance XII. Payment of Sum Insured XIII. Extent of Insurance XIV. Average Clause

XV. Partial Loss XVI. Proof of Loss XVII. Period Elapsing before Settle­ ment ...

XVIII. Arbitration XIX. Classification of Risks XX. Losses Covered by Fire Policies XXI. Variations in Property Insured XXII. Period covered XXIII. Assignment of Policies

XXIV. Government Supervision XXV. Deposits with Government XXVI. State and Municipal Insurance

XXVII. Fire Prevention

Question No.

19

20-27 28

29-30 31·33 34•40 4I

42

43-44 45-51

52-55 56-57 58-59 6o-65 66-67 68-69 70-72 73·78 79-85

XXVIII. Fire Inquests

86

87·9I 92

93-95 96-97

XXIX. Incendiarism XXX. Proposals, Policies, &c.

I .-COMPANY REPRESENTED.

I. What is the name of tQ_e Company which you represent?

H.-CoNSTITUTION AND LocATION OF CoMPANY. z. On what date was yourCompal'ly founded? 3· Where is the head office of your Company

situated?

4· In what countries is Fire· Insurance business carried on by your Company ? 5· tinder what Act or Charter does your Company carry on business in the Commonwealth?

(Supply .copy.) 6. What is the capital of your Company?­ (i.) Nominal, £ (ii.) Subscribed, £

(iii.) Paid up £

7. What is your opinion of the relative merits of­ (i .) Proprietary Companies;

8.

ro.

(ii.) Mutual Societies, for carrying on Fire Insurance business?

III.-BusrNEss OF CoMPANY. What other business, if any, does your Company traasact in conjunction with that of Fire In­ surance? On what date does the financial year of your

Company close ? YVh at was the date, rate, and amount of the dividend last declared by your Company?

tV.-INSURANCEs IN FoRcE. r r . (a) \ \i h [l t was the aggregate amount of fire

insurances on Commonwealth property on your books at the close of your latest financial year, including amounts re-insured with your Company, but excluding amounts re-insured

by your Company? (b) What ratio does this aggreg ate arr.ount bear to the total fire insurance business of your Com­ pany? 12. Give similar particulars for each of t he States

of the Commonwealth in which fire insurance business is carried on by you r Company-

13 .

14.

rs. r6.

I 7.

r8.

20.

2 !.

2 2 .

23 .

New South Wales, Victoria, Queensland, South Australia,

Western Australia, Tasmania.

V.-ASSETS.

What \\"aS the total value of the assets o f your Company in the Commonwealth at the ·d a te of your latest balance-sheet? On what general principles are the asse ts of

your Company valued? By whom is such valuation carried out? At what average rate of interest were the funds of your Company invested at the date· of

your latest balance-sheet?

V I.--RESERVE FUNDS .

In prep arillg its balance-sheet, what provJSJo n is made by your Company for unexpired risks? In your opinion should there be any minimum

ratio of reserve fund to total amoun t at risk ?

VII.-INCOME.

\Vhat was the tota l Commonwealth income of ·your Company for its latest fi11ancial year from-(i.) Fire Insurance Premiums, £

(ii.) Other Premiums, £ (iii .) Interest, Dividends and Rents, £ (iv. ) Other Sources £ ?

VIII.-PREMIUMS.

Are the premium rates of your Comp any at pre­ sent payable in the Commonwealth fixed by open competition or are they determined by a T ariff association or by some other arrange­ ment? VVhat is the minimum rate of premium in each

class of risk chargeable by. your Company at the present time in the Commonwealth in re­ spect of-(i.} Urban properties;

(ii.) Rural properties? What rate or rates of commission are allowed by your Company in respect of fire insurance p remiums collected?

What period of grace is allowed by your .com­ pany for the payment of renewal premmms? What is the p ractice of your Company with re­ ference to the right of renewal ?

1265

25 Would it, in your opmwn, be practicable to

tabulate the combined experience of fire in­ surance companies in a manner similar to that in which the experience of life assur-26.

2

.,

,.

ance companies is tabulated? YVoul d it be possible to classify the d ata ac­ cording to--(i.) Locality; and

(i i.) N ature of risk, so as to f urnish a reliable basis for the com­ p utation of standard rates of premium? If you consider s uch a tabulation practicable,

what steps would you suggest for effecting it?

I X . - -CLAIMS.

z8. W hat was the total amount p aid in fire ins(Ir­ ;:nce cl aims by your Company in the Com­ monweal til during its lates t year ?

X .-- R E INSTATEMENT.

29 J s the right to reinstate made a condition in

the policies iss ued by your Company? 3L' l f so , in what proportion of cases approxi­

mately is the right exercised?

XI.-R E -INSURANCE.

31. (a) D oes your Company re-insure its risks ? (b) If so, to what extent? 32 . Wh at is the maximum amount of risk which your Company will carry alone on a single

property ?

33· I n your Comp any what general principles are f ollowed in the selection of Companies with whif:h re-insurance is effected?

34·

35·

X II.-P AYMENT OF SuM INSURE D.

Wh at is your opinion concerning the proposal to make the actual amount insured by a fire policy payable in every case of total loss? H a Company requires proof of aibount of loss

sustained, can it equitably retain premiums paid in excess of the risk incurred ? D o you consider that such excess should be re­ turned? 37 Does your Com.pany ever issue " valued " poli­

cies?

39 ·

40.

Do · you know whether the principle of

" valued " policies has ever been extensively auplied in Australia ? (a) l-ias your Company had any experience of " valued " policies in any other part of the

world? (b) If so, give particulars. (a) Do you consider the principle of " valued" policies a satisfactory one to appl y to fir e in­

surance business ? (b) Give reasons for your opinion.

XIII.- - E xTENT OF INSURANCE. 41. (a) Do yo u consider it desirable that a property should be insured to its full value or other­ wise?

(b) Give reasons for your opinion.

XIV.-AVERAGE CLAUSE.

42. Are the policies iss ued by your Company-

43·

44·

45·

47·

49·

(i.) Specific policies insuring a specific sum irrespective of the total value of the property ; or (ii.) Policies containing an average clause

under which the amount payable in the case of loss depends upon the

ratio of the sum insured to the total value of the property?

XV.-PARTIAL Loss.

Is there usually any serious practica l difficulty in arriving at a settlement in the case of

partial Joss by fire ? What is the method employed by your Com­ pany in such cases ?

XVI.-PRooF oF Loss. Within what period after the occurrence of a fire must proof of loss be furnished to your Company? Does this period vary in different countries in

which your Company transacts fire insurance business? What do you consider is a reasonable time to allow between the occurrence of a fire and

the date on which proof of loss is furnished? Is it the practice of your Company to require the production of the books immediately on the .occurrence of a fire ? Would it be possible for such a demand to

seriously retard the insured in preparing his statement of claim? 50. Has it, in the case of your Company, ever so retarded the preparation of statement of

claim?

51. Are there any provisions in the Act, Charter, or Articles of Association of your Company relating to this matter?

XVII.-PERIOD ELAPSING BEFORE SETTLEMENT. 52. What il, approximately, the average period at present elapsing in your Company between the date of a fire and that on which a settle·

ment is effected ? 53· What were the maximum and minimum periods so elapsing in the Commonwealth in the latest financial year of your Company? 54· Has your Company ever declined to effect a.

settlement on the grounds of-(a) Fraud; (b) Misrepresentation; (c) Breach of contract. 55· What was the total amount (if any) and the

number of claims, so declined in the Com­ monwealth by your Company during its latest financial year ?

XVII I.-ARBITRATION.

56. What, in your Company, is the approximate proportion of claims referred 1o Arbitra­ tion? 57· What is the usual procedure in connection with

such reference ?

XIX.-CLASS1FrCATION OF RisKS.

58. Is there any simple classification of fire risks undertaken by your Company ? 59· If so, please specify?

XX.-LossEs CovERED BY FIRE PoLICIEs. 6o . (a) Are losses by lightning or explosion regarded by your Company as being covered by a fire policy?

(b) If sci, is such fact explicitly mentioned in your contracts? 61. Is damage by water used for fire extinguishing purposes considered by your Company as

part of the risk covered by a fire insurance policy? 62. Is damage by smoke or heat (other 'than actual fire) considered by your Company as being

covered by a fire insurance policy ? 63. Is damage resulting from spontaneous combus­ tion (e.g., in the case of a hay stack, etc.)

considered by your Company as being

covered by a fire insurance policy ? 64. Does your Company give, in its policies, a

general cover over buildings and contents, or does it require a specific statement of risk incurred in respect of detailed items? 65. What is the practice of your Company in re­

gard to floating insurances on goods trans­ ferred from place to place ?

XXI.-VARIATIONS IN PROPERTY INSURED. 66. What are the provisions of your Company with reference to notification by a policy-holder of any alteration in the insured property or

in any property adjoining it? 67. Does failure to notify invalidate the policy?

XXII.-PERIOD CovERED. 68. What is the usual period for which fire in­

surance contracts are entered into by your Company? 69 . Does the period vary in different countries in which your CompaJ?.y transacts business ?

XXIII . ....,.-ASSIGNMENT OF POLICIES. 70. What provisions are made by your Company for the assignment of fire insurance policies ? 7 I . In the event of a fire occurring in a property

subsequently to the date of its sale, would a claim made on the vendor's unexpired policy be admitted by your Company ? 72. Are there any circumstances under which your

Company would decline to admit such a claim?

XXIV.-GovERNMENT SuPERVISION. 7 3· (a) Do you consider that, in the interests of

the public, fire insurance business should be subject to Government supervision? (b) What objections, if any, exist from the

stand-point of your Company to Government supervision? 74· What do you consider should be the nature of the supervision (if any) by the Go­

vemmertt?

/

75·

79·

8o.

81.

82.

Do you consider that, if exercised, such super­ vision should be by the Commonwealth or by the State Government? Would it, in your opinion, be desirable to re­

quire the publication of details of business of Fire Insurance Companies on similar lines to the details required from Life Insurance Companies? What objections, if any, could be urged against

such publication ? At what intervals, if at all, do you consider such details should be published ?

XXV.-DEPOSITS WITH GovERNMENT. What is your opinion as to the desirability of requiring a Company to lodge a deposit with the Government prior to commencing Fire

Insurance business in the Commonwealth? In your opinion, should such deposit remain with the Government so long as Fire In­ surance business is transacted by the Com­

pany in the Commonwealth? Do you consider that a deposit should be re ­ quired from all existing Companies as well as from those commencing business ? Do you consider that such deposit should bear a

definite ratio to the amount of risk carried · by the Company in the Commonwealth? Do you consider that Companies having their head offices in Australia should receive pre­

ferential treatment as regards deposits or other matters? Has your Company, in any of the States of the Commonwealth, been required to make a

deposit with the State Treasurer? If so, give particulars as to States and amounts.

XXVI.-STATE AND MUNICIPAL INSURANCE. 86. Would it, in your opinion, be-(i.) practicable; or (ii.) desirable,

for fire insurance business to be undertake11 by-(a) The Commonwealth Government; (b) A State Government; or

(c) Municipal authorities?

31

s,.

88.

1267'

XXVIL-FIRE PREVENTION. Should there, in your opinion, be compulsory contribution by Fire Insurance Companies towards the maintenance of fire brigades?

In what proportions do you consider that the cost of such brigades should be borne by-:-(i.) The State, (ii.) The Municipalities,

(iii.) The Fire Insurance Companies? Under what system of fire brigades' organiza­ tion do you consider that the best results are obtainable? What effect, if any, on the rate of premium has

been produced by the extended use of sprink­ lers or other appliances. for fire prevention in the erection of new buildings ? Has the rate of premium been reduced in con­

sequence of the use of fireproof materials in the erection of buildings ?

XXVIII . .:__FIRE INQUESTS. 9 •

92. What is your opinion concerning the necess1ty for · exhaustive inquests in the case of fires?

93·

9·l·

XXIX.-INCENDIARISM. Does the experience of your C?mpany furn!sh evidence or indications of w1lful destruction by fire for purposes of gain? Are such cases relatively numerous in the Com­

monwealtl:}?

95 How d6es the ratio of such cases to total fires varv in the different countries in which your transacts business ?

97·

XXX.-PROPOSALS, PoLICIEs, ETC. Please submit copies of policies, proposals, and all other forms or documents which either expressly or by implication, are made part of

the fire insurance contracts of your Company. Indicate what conditions specified in such forms or documents are considered by your Com­ pany to be non-essential.

APPENDIX B.

REPLIES TO QUESTIONS SUBMITTED TO OfFICERS OF THE .FIRE COMPANIES.

(Repl,ies to Qnestions 11, U, 19, cmd 28 have been treated by the Commission as wnjidential and a1'e not published herein).

SECTION I.-COMPANY REPRESENUD. Question I.

What is the name of the Company which you repre­ sent? Replies. 1. Aachen and Munich Fire Insurance Company. 2. Alliance Assurance Company Limited, Victoria. 3· Alliance Assurance Company Limited, New

South Wales and Queensland. 4· Atlas Assurance Company Limited, which is incorporated the Manchester Assur­ ance Company. 5· The Australian Alliance Assurance Company. 6. Australian Mutual Fire Insurance Society Lim-

ited.

7. Batavia Sea and Fire Insurance Company. 8. Caledonian Insurance Company. 9· The Central Insurance Company Limited. 10. City Mutual Fire Insurance Company Limited. II. The Colonial Mutual Fire Insurance Company

Limited.

12. Commercial Union Assurance Company Limited. 13. The Commonwealth Insurance Company Lim­ ited. 14. The Derwent and Tamar Assurance Company

Limited.

15. General Accident Fire and Life Assurance Corporation Limited. 16. Guardian Assurance Company Limited. 17. Law Union and Crown Insurance Company.

z8. The Liverpool and London and Globe Insur-ance Company. 19. London and Lancashire Fire Insurance Com­ pany. 20. Mutual Insurance Company Limited.

21. The Mutual F ire Insurance Company of Tas­ mania Limited. 2 2. The National Insurance Company of New Zealand Limited. 23. New Zealand Insurance Company Limited. 24. North British and Mercantile Insurance Com-

pany.

25. Northern Assurance Company Limited. 26. Norwich Union Fire Insurance Society. :z 7. The Ocean Accident and Guarantee Corpora­

tion Limited.

28. The Palatine Insurance Company Limited. :zg. Patriotic Assurance Company, now united with the Sun Fire Office (A. D. 1710 ). 30. Phcenix Assurance Company Limited. 3r. Queensland Insurance Company Limited. 32. Royal Insurance Company Limited. 33· Samarang Sea and Fire Insurance Company. 34· The Scottish Union and National Insurance

Company.

35· The South British Insurance Company Limited. 36. Standard Fire and Marine Insurance Company of New Zealand Limited. 37 · The State Fire Insurance Company Limited.

-

Sun Insurance Office. Union Assurance Society Limited. The United Insurance Company Limited. The Victoria Insurance Company Limited. Victoria General Insurance and Guarantee Com-

pany Limited. .

43· Yorkshire Insurance Company Limited.

SECTION H.-CoNSTITUTION AND LocATION OF COMPANY.

Question 2.

On what date was your Company founded? Replies. 1. In the year 1825. 2. !824.

3· J824. 4·, 18o8. 5· 1st October, r862. 6. 24th January, 1872.

7. 1843· .

8. Founded r8o5. ,

9· In r899, and re-constituted 1007. 10. 8th October, 1877. I I. 4th July, 1878.

r2. r86r.

13. 3oth day of April, 1903. q. October, 1838. IS . r885. r6. 17th December, 1821. 17. In the year r825. r8. 1836. •

19. r862. 20 . roth January, 1878. ' :n. 2 rst October, 187 3· 22. rst October, 1908 . A transfer of the N ational

Fire and :Marine Insurance Company of New Zealand, founded rst October, 1873. 23. 1859· 24. I n r8o9. 25. znd June, r836. 26. February, 1797. 2'7 . 13th December, 187r. z8. August, 1900.

29. 1824. 30. 1782. 31. zoth November, 1886. 32. !845· 33 · r 866. 34· Established 1824. 35 · September, r872 , but re-organized in March,

rgo8.

36 . The Company was registered as the Sta.ndard Fire and Marine Insurance Company of New Zealand, on 23 rd January, r874, and re­ registered as the St:mdard Fire and Marine Insurance Company of New Zealand

Limited, r rth February, 1908,

37. incorporated roth April, r8gi. 38. 1710. 39· 30th July, 1907. 40. rst September, r862.

41. Originally in 184-9, re-formed 1879, and again in 1898. 42. 18th Jnne, 188g. 43· 1824.

Question 3·

Where is the Head Office cif your Company

situated?

Replies.

1. Aix Ia Chapelle, Germany. 2. London. 3· Bartholomew-lane, London. 4· London.

5. Melbourne. 6. Corner Pitt and King streets, Sydney. 7· Batavia, Java. 8. Edinburgh, Scotland. 9· No. I Cornhill, London, E.C. ro. No. 9 5 Pitt-street; Sydney. 11. 6o Market-street, Melbourne. 12. London.

1J. No. 56 Queen-street, Melbourne. 14. Hobart, Tasmania. 15. Perth, Scotland. 16. II Lombard-street, London.

17. 126 Chancery-lane, London. r8. Liverpool, England. I 9· Liverpool, England.

zo. 120 Pitt-street, Sydney. 2 r. Launceston, Tasmania.

22 . Dunedin, New Zealand. 23. Auckland, New Zealand. 24. London.

2 5. London and Aberdeen.

26. Surrey-street, Norwich. ,. 36 to 44 Moorgate-street, London, E.C.

28. London (z4-6 Cornhill). 29. 63 Threadneedle-street, London. 30. London. 3 r. Corner of Pitt and Bridge-streets Sydney.

32. Liverpool, England. 33· Samarang, JaV"a. 34· Edinburgh, Scotland. 35· Auckland, New Zealand. 36. Dunedin, New Zealand. 37. Dale-street, Liverpool, England. 38. London.

39· London. 40. Sydney, New South Wales. 41. 53 Market-street, Melbourne. 42 · 53 Market-street, Melbourne; 43· ·London.

Question 4·

In what countries is Fire Insurance business carried on by your Company?

Replies.

1. Germany and generally all parts of the world. 2. Practically all over the world. 3· Nearly all over the world. 4· Practically every civilized part of the world.

F or more precise information we should have to apply to our Head Office. 5· The Australian Commonwealth (except Tas­ mania) and New Zealand. 6. New South Wales only.

7. Unable to say, but if desired this information could be acquired from Head Office at

Batavia. F.I4377· :c

8. I have not the information. 9· Not to me. ·

1269

ro. Australian States of New South Wales, Vic­ toria, ·South Australia, and We&t Australia. r r. Australia . 12. All British possessions, America, Germany, and

Japan.

13. Australia only. 14. New South Wales and Victoria. 15. As far_ as I am aware--United Kingdom,

Belg-mm, Holland, Egypt, India, Canada, Spain, Australasia, and Fiji. r6. all over the world, with the excep­

tlon of the United States of America. · r 7. We believe their operations to be world wide, but have no list of the various branches and agencies. r8. Throughout the world. 19. The operations of this company are world wide. 20. New South Wales and Victoria. 2r. State of Tasmania only.

22. New Zealand, Australia, and Tasmania. 23 . In New Zealand, Commonwealth of Australia India, China, Japan, Pacific coast of

, United States, South Africa, Argentine Re­

public, Fiji.

24. The company conducts a. world-wide business, but I am not able to enumerate the coun­ tries which it includes or excludes. 25. In all.

z6. I cannot definitely state, but the balance-sheet discloses a few of the principal colonial and foreign branches, and it would appear as if the society's operations are world wide .. 2 7. United Kingdom, Australia, New Zealand

and possibly elsewhere. '

28. England, America, Australia, and most Bri­ tish Possessions. 29 . Cannot say outside United Kingdom and Aus­ tralasia. 30. Throughout the world. 3r. Commonwealth, New Zealand, Fiji, and the

P acific and South Sea Islands. 32. Practically all over the world. 33· Batavia, China, India, Queensland, Manila, and other Eastern ports. 34· I have not the information.

35· New Zealand, Australia, Fiji, India, China, Japan, and the East generally, Egypt, South" Africa, and the United Kingdom. 36. Australia and New Zealand. 37· United Kingdorrt, United States of America,

and Australia. 38. All over the world. 39· Cannot give a list, but in every country.

40. Commonwealth of Austraha and Dominion of New Zealand. 4r. Commonwealth and New Zealand. 42. The Commonwealth of Australia. 43· Cannot say.

. Question 5·

Under what Act or Charter does your Company carry on business in the Commonwealth? (Supply copy.)

Replies.

r. Cha;ter granted the Emperor of Germany

m r82_5, and subJect to various local Acts in countnes where the Company does business · we have no copy. J

2. Companies Act, Victoria. _)· The Alliance Assurance Company's Act x886

(Copy (New South Wales.)

Compames Amendment Act, No. 22 of 19o6. Cannot say for other States.

34

4· Constituted by deed of settlement dated 1st Sep­ tember, 18o8, 5· Copy of the Company's Deed of Settlement and Copy of Act No. 305 of the Parliament of

Victoria herewith. 6. Formerly under deed of settlement, now under the Companies Act 1899. 7. No. 5 Government license. 8. Act 90 Victorire Cap. XLV., r 8th June, r 846

(43 and 44 Victorire), Ch. LXVIII., 19th July, 188o. (55 Victorire), Ch. VII., 2oth May, 1892. 9· Licensed and registered in the various States

under their respective Companies Acts. 10. The Companies 11.ct, 37 Victorire, No. 19. The Companies Act 1899· The Companies (Amendment) Act 1906, New South Wales.

rr. Companies Statute 1864. 12. Under the. various Companies Acts in the Com-monwealth. 13. Companies ilct r89o, 54 Victorire, No. I074· 14. Companies Act 1869-1895.

15. No. 5 Government license. r6. The Company was constituted by deed of

settlement, dated 17th December, r821, but is now incorporated under the English Com­ panies Acts to 1890. There are the

following Acts of the Imperial Parliament­ (r) Guardian Assurance Companies Act r85o (13 and 14 Vic. Cap. XXV.); (2) Guardian Company's Act r866 (29 and 30

Vrc. Cap. CCXXV.); and (3) Guardian As­ surance Company's Act 1893· With the ex­ ception of sections 17, 18, 19, 25, 26, 27, 2.8' 29, and 30 of tJ:.e Act of 1850; and sec­ tiOns 14 and 16 of the Act of 1866, the

Acts of 185o and r866, have been repealed by the Act of r893. A copy of the Act of

r893 is supplied herewith. r 7. We do not know of any ·special Act. Copy of the Company's memorandum and articles of association is sent herewith. r8. Act of Parliament, England, 4 Edward VII.,

Cap. XXXIV., 24th June, 1904. Copy of memorandum and articles of association, and Acts of Parliament herewith. 19. This Company has no special Australian Act or

charter, but is carrying on business in con­ formity with the various Acts of several States of the Commonwealth. zo. Companies Act. 21. The Companies Act 1869. 22. Registered according to law in several States,

cannot specify Act or charter. 23. Under the Companies Acts of New Zealand, of which, no doubt, you have copies available. 24 We are licensed or registered, as required by

the various Companies (and other) Acts, in all the States of the Commonwealth, hcept Tasmania. 25. Act of British Parliament, 1908. Spare copy

not available here meantime. 26. By British Act of Parliament known as The Norwich Union Fire Insurance Society's Act of Parliament 1879, as per copy herewith. 27. Certified copy articles of association sent here-

with.

z8. Various Companies Acts in the Commonwealth. 29. Will have to refer to London for copy. 30. Copy enclosed. 31. The New South Wales Companies Act r899 and

1900.

Copy herewith.

33· Do not. know; foreign company.

34· Acts of Parliament dated 1878, r886, r892, and 1906. (Copies lodged with Commission of Titles. If you want extra copies they

must be procured.) 35· The Companies Act of 1903, New Zealand. 36. In New Zealand.-Under and in pursuance of The joint Stock Companies Act r86o, and

The joint Stock Companies Amendment Act r862. In Australia.-Registered according to law in the several States. 37. See reply to No. 2, but the Company is regis­

tered the New South Wales Companies Act No. 22 of 1906, and the Companies

(Amendment) Act, New South Wales, No. 9 of 1907. 39· Articles of association are lodged with the re­ gistrars in the various States of Australia,

and I have not got a copy left. I can get a

copy, if you wish it, from England. 40. Originally incorporated by Act of Parliament of New South Wales, as an unlimited com­ pany, afterwards, when changed to a limited

company, registered under the Companies Acts of New South Wales 1874 and r888. Copy of articles forwarded herewith. 4 I. Incorporated under the Companies Act of Vic­

toria, and registered under the Companies Acts of various States. 42. The Companies Statute r864, 27 Victoria, No. 190. 43· Companies Act New South Wales, No. 40,

1899, amendment, 1906.

Question 6.

What is the capital of your Company­ (i.) Nominal, (ii.) Subscribed, (iii.) Paid up?

l. (i.) £450,000. (ii.) £450,000. (iii.) £9o,ooo. 2. (i.) £5,450,000.

(ii.) £5,450,000. (iii.) £r,ooo,ooo. 3· (i.) £5,450,000. (ii.) £5,450,000.

(iii.) £r,ooo,ooo. 4 (i.) £2,2oo,ooo. (ii!) £2,2oo,ooo. (iii.) £264,000. 5 (i.) £25o,ooo.

(ii.) £25o,ooo. (iii.)£125,ooo.

Replies.

6. (i.) £roo,ooo, with power to increase to

£1,ooo,ooo.

(ii.) £Ioo,ooo. (iii.) £75,ooo. 7· (i.) Unlimited Company. (ii.) 1,5oo,ooo francs.

(iii.) 1,35o,ooo francs. 8. (i.) £537.500. (ii.) £537.500. (iii.) £ro7,500. 9· (i.) £roo,ooo.

(ii.) £roo,ooo. (iii.) £roo,ooo. rc. (i.) £5oo,ooo. (ii.) £3oo,ooo

(iii.) £37.500. II. (i.) £25o,ooo. (ii.) £roo,ooo. (iii.) £roo,ooo.

12. (i.) £2,950,000. (ii.) £2,950,000. (iii.) £295,ooo. lJ. (i.) .£so,ooo.

(ii.) .£24,705-(iii.) .£19,764. 11. (i.) £Ioo,ooo. (ii.) £10o,ooo.

(iii.) .£5o,ooo. 15. (i.) £I,OOO,OOO. (ii.) £700,000. (iii.) .£174,997-

16. (i.) Power is given by the Act of 1893 to in­ crease the capital. (ii.) .£2,ooo,ooo. (iii.) .£1,ooo,ooo. I7. (i.) .£2,ooo,ooo.

(ii.) £1,5oo,ooo. (iii.) .£9o,ooo. 18. (i.) _£2,ooo,ooo stock. (ir.) .£245,640 stock.

(iii.) .£245,640 stock. 19. (i.) £3,ooo,ooo. (ii.) .£2,641,250. (iii.) £264,125.

20. (i.) .£15o,ooo, with power to ipcrease. (ii.) .£15o,ooo, with power to increase. (iii.) .£45,ooo. Uncalled capital in reserve, .£1o5,ooo. 2!. (i.) .£187 ,500.

(ii.) .£!87,500. (iii.) .£37 ,500. 22. (i.) .£2,ooo,ooo. (ii.) .£r,ooo,ooo.

(iii.) £10o,ooo. 23. (i.) £r,5oo,ooo. (ii.) £1,5oo,ooo. (iii.) £3oo,ooo. 24. (i.) .£3,000,000.

(ii.) .£2,75o,ooo. (iii.) .£687 ,500. 25. (i.) £3,ooo,ooo. (ii.) £3,000,000.

(iii.) £3oo,ooo. 26. (i.) .£1,100,000. (ii.) .£1,IOO,OOO.

(iii.) £132,ooo. Reserve funds and reserve on current policies, .£923,119 6s. nd. 27. (i.) Authorized, £1,ooo,ooci. (ii.) .£621,540·

(iii.) £172,308. 28. (i.) £1oo,ooo. (ii.) .£1oo,ooo.

(iii.) _£1oo,ooo. 29- (i.) .£2,400,000. (ii.) £2,400,000. (iii.) _£1zo,ooo.

30. (i.) .£2,.760,230; (ii.) Fully subscribed . (iii.) £3401JIO. 31. (i .) £soo,ooo.

(ii.) £r5o,ooo. (iii.) £75,ooo. 32. (i.) £3,000,000. (ii.) _£2,6rz,58o.

(iii.) £391,887. 33· (i.) ,£2,ooo,ooo. (ii. ) Not advised. (iii.)

34· (i .) £6,ooo,ooo. . (ii.) £5,ooo,ooo. (iii.) £300,000, 3S · (i .) ;(z,ooo,ooo.

Iii .) .£r ,ooo,ooo. · n:i.) £ 1 oo,ooo.

cz

36. (i.) .£r,ooo,ooo. (ii.) £.7 s,ooo. (iii.) I 5s. per st1are. 3'i. (i.) £8oo,ooo.

(ii.) .£56o,ooo. (iii.) £7o,ooo. J8. (i.) .£2,400,000. (ii.) .£z ,4oo,ooo.

(iii.) .£1zo,ooo. 39 · (i.) Not available. {ii.) .£450,000. (iii.) .£4s,ooo.

40. (i.) .£soo,ooo. (ii.) .£341,61 0. (iii.) £85,402 10S. 41. (i.) .£5oo,ooo.

(ii.) .£179.752. (iii.) £50,180 15S. 4d. 42. (i.) £1,ooo,ooo. · (ii.) £8o,ooo.

(iii.) £2o,ooo . . 43- (i.) £1,ooo,ooo. (ii.) £ss6,46o. (iii.) £ss;646.

Question 7-

What is your opinion of the relative merits (i.) Proprietary Compani·es, (ii.) ·Mutual Societies, for carrying on Fire Insurance business?

/

RePlies.

1271

1. Proprietary can give ,the fullest

security, and deal with all classes of busi­ ness ; we believe in proprietary companies. Mutual companies cannot give the best security nor management that means success. 2. We have no knowledge of any purely '

"Mutual" Fire Office, although some com-- panies use the word " Mutual " in their

title.

3· Although some companies in the States use the word " Mutual " in their title, I am not

aware of any purely Mutual Fire Insurance l.ompany. 4· Proprietary Companies . offer greater security to the public, for the reason that in the case

of Mutual Societies there is no shareholders' capital to meet losses. As members of Mutual Societies partici· pate in profits, they are liable for losses,

and a conflagration might throw a burden of liability on a section of the public unpre­ pared to meet it. 5· I have no experience of Mutual Societies for

Fire Insurance business. 6. The merits of an Insurance Company, whether Proprietary or Mutual, depend mainly on the management_. All things being equal, I

prefer a Propnetary Company sharing its profits with the policyholders. _

7. I prefer the proprietary principle, as I think it best serves the interests of all concerned. 8. The P:opriet:;ry Company has the advantage for that a loss is paid 'to

a pohcyholder w1thout that person having to contribute directly to his own loss. .(P.S.-I do 1_10t know of a purely Ftre Company m Australia, there are many so called.) Q. I do not know of the existence of a purely

Mutual F,ire Company ; therefore, cannot forrn any compari3on

; ·

to . 'l'he business ca11 oniy be o?

torily, and with safety to the 1nsurmg pubhc, by properly-constituted and properly-managed Proprietary Companies. .

Mutual Companies for the transactiOn of Fire business are unknown in these States. I I. Equal merits. . .

12 . Cannot offer an oprn1onj have had no experi- ence of purely mutual societies . r.) · H ave formed no opinion on the matter. 14. I have none.

15 . I prefer the proprietary principle, as I think

it bes t serves the interests of all concerned. 1 6. I h ave not had sufficient experiencf,l to enable me to form an opinion. There are no Mutual Companies in Australia. So far as I know,

there are now none in the United Kingdom. q. We have had no experience of Fire Insurance by a Mutual Society, and do not know of a purely Mutual Society carrying on Fire busi­

ness in Australia. r8 . I have no knowledge of any but so-called

Mutual Insurance Companies, which are ­ Proprietary Companies, but my opinion is t·hat Fire Insurance is f ar too large and

hazardous an undertaking to be entered into without substantial capital and funds. 1 9 . In my judgment, Mutual Companies are quite

unsuited for carrying on operations over an extended area, or in areas comprising great insurable values, e.g., Flinders-lane. This view appears to be confirmed by the world­

wide preference for Proprietary Companies. The so-called " Mutual " Companies in Aus­ tralia are Proprietary Companies. Purely Mutual Fire Insurance Compani es have

·not been a success. It is necessary to have a considerable amount o£ capital to carry on Fire Insurance. A l'roprietary 'Company dividing profits with pol.icyholders commerl:ds itself as the most equttable form of F1re

2 Fire Insurance Companies on the mutual prin­

ciple$ do not to be able to carry

out t4eir intention of distributing a portion of thei l" proi1ts to .jheir clients in consequence of Proprietary Companies loweri.Pg their rates or premium to equalize any $UCh re­ turn. u . Am in favour of Proprietary Companies.

r. Thev start with a paid,up capital. z. With reserve liability. J· Shareholders' liability compels a pro­ per distribution of risk. and building

up of reserves, which accumulate at compound interest. The stability of prudently-managed companies has been proved. 23. Naturally, my opinion is strongly in favour of

the Proprietary Companies. z4. I · am not prepared to offer an opinion on this subject. I have no knowledge of any purely Mutual Insurance Companies operating in

the Commonwealth. 25. In favour of Proprietary Comvanies. Mutual Companies believed to be non-existent in the Colony. . ,

26. No purely Mutual Fire Insurance Company transacts business in the Commonwealth, and it is, therefore, possible to express an

opinion on its relative merits as compared with a Proprietary Company. Even with adequate GoveriUllent . supervision

and solid deposits with the Federal Govern­ ment, there is still a great objection to

Mutual Fire 1nsurance Societi.es trom the point of view of the insuring public, viz., the liability of the policyholders in the event of the funds proving inadequate to pay

losses . This is a serious matter in the event of bad management or of a conflagration. 28. Not in a position to offer an opinion. 29. I believe companies with' large capital and re­

serves are best for the safety of the insured. 30. Cannot say, as there are no purely Mutual Fire Societies in Australia-they are all pro­ prietary. JI. I am very strongly in favour of Proprietary

Companies. .1< or the building up of busi-

32.

33 ·

ness, proprietary shareholders must be very unselfish with regard to the payment ot large dividends, in order to build up a reserve

tund. ln purely :Mutual Companies, the tendency is to ignore this feature, and pay more in dividends than is justified. At the present time, there are no Mutual }'ire Com­

panies in Australia, except in name j two

companies known as Mutual Companies are, in ract, proprietary. In my opinion, no

company should be allowed to advertise as a Mutual Company which is not so in fact. There is no such thing as a Mutual Fire Insur-ance Society transacting business in the Com­

monwealth. There are companies that have that name, but they are all l'roprietary Com­ panies. Some, but not all, of the so-called ·' Mutual '' Societies make it a practice to return a proportiOn of their profits to their insured, but an equivalent amount is given by the ' ' Proprietary ' ' Companies in the

shape of a discount off the premiums. In Great Britain, there were, until recently, two Mutual Insurance Companies-one of them, the " Hand-in-hand," founded in the

City of \Vestminster, started in the year

1696, and the other, the " Westminster," in the year 1717 (when the H Hand-in-hand" removed from Westminster into the City of London), at which time insurance was not general, and very great restrictions and safe­ guards were imposed. They were very

limited in their operations, and were, at

first, particularly confined. to the insurance of buildings in Westminster. I entered the service of the last-named com­ pany over 50 years ago, and they were then

transacting a quiet unpretentiOU$ business, with ample funds accumulated out of past profits; but, later on, they their

operations, probably in an endeavour to meet modern requirements, but presumably they felt that they were handicapped in con­ sequence of their limited resources for doing a large general business, and they sold out to the Alliance Assurance Company, London.

(The " Hand-in-Hand " a lso sold out to the " Commercial Union.") The " MutuD.l " system purely must, of neces­ sity, either impose upon the members the

obligation of contributing to the losses of the other members 'if the funds in hand

· should not be adequate to meet liabilities, or else the contract must -be one not to pay the loss, but such proportion of the loss as the funds of the company would et:Iable them to pay ; and in modern times · such a system could certainly not enjoy public confidence for .general insurance business. Not sufficient knowledge to enable us to form

an opinion.

\

1273

37

34· The Proprietary Company has the ad_vantage 8. for its policyholders that a loss is paid to

a policyholder without that person having

Life Annuities, Leasehold Redemption, Em­ ployers' Liability, and Burglary.

to contribute directly to his own loss. (P.S.-I do not know of a purely Mutual Fire Company in Australia, there are many so called.) 35· Mutual concerns, without exception, have a

Yery small capital. Profits are divided be-. tween shareholders and contributors of busi-ness. There is, therefore, no substantial

accumulation of reserve funds. The con­ trary is the case with. ;Proprietary Com­ panies. L-arge funds are essential to public safety. This is a striking feature of Pro­

prietary Companies. Hence, in any in­

surance business, other than life, I believe Proprietary Companies to be safer and better in the public interest than Mutual concerns. 36. Proprietary or Joint Stock Companies who

conduct their business on ordinary commer­ cial lines stand pre-eminent. Mutual Associations are not usually successful, and do not meet the varied needs of the

public.

37. There are no purely Mutual Fire Companies in Australia. So-called Mutual Offices do not offer any special advantages to the in­ sured, either by extra security or by lower cost in the way of premiums. Such as are

doing business are really Proprietary Com­ panies. 39· There are no such things as really Mutual

Companies in Australia, so I have not had an opportunity of comparing the two classes. 40. All Fire Companies doing business in the

States are Proprietary, even those termed "Mutual." ,

4 I. The merits appear about equal ; one society cannot give any greater advantage to the public than the other. 43· Have no experience of Mutual Societies, there

being none in Australia to my knowledge.

SEcTioN III.-BusiNEss oF CoMPANY.

Question 8.

What other business, if any, does vour Company tnmsact in conjunction with that of fire in­ surance?

Replies.

I. Fire, only as far as we know, and all their

funds are available for Fire losses. z. Accident in the Commonwealth. Has

also some Renewal Life business ; but no new Life business being now taken in the Com­ monwealth. ::;. Accident, and Burglary.

Life, Hail Insurance, and Leasehold Invest­ ment and Capital Redemption. Policies are issued by the Company, but not in the Com­ monwealth. 4· Life, fixed term (Le;-,sehold), PEirsonal Accident,

and Disease, Employers' Liability, Burglary. Plate Gbss, and Third Party or Puhhc

R i.sk, and Guarantee. .

5· Mar;ne Insurance, Fidelity Guarantee, AcCI-dent, Life. -

6. In June, roo8, the necessary sanction of _the Shareholders was obtained giving the SoCletv power to transact insurance business in all its branches excent ordinarv life insurance, hut up to advant-age has not been

taken of it.

7; fn Ai1stralia-Marine.

9· No other, in the Commonwealth. IO.

II

12.

I4. rs.

r6. I7.

IS. 19·

20.

Personal Accident, Personal Accident and Skk­ ness, Employers' Liability and Workmen's Compensation, Public Risk, BttrgYary, Plate Glass, and Fidelity Guarantee. The Company transacts-

Marine, Fidelity Guarantee, Rlll'rglary, Acci­ dent, Employers' Liahihty, and Prate Glass Insurances. Accident and Marine. Marine Insurance only.

Marine. In the United Kingdom, Fire, Li,fe, Accident, Burglary, Guarantee. None in Australia. Life and Accident-but at this agency we tran·s.­

act Fire Insurance only. Life, Accident, Fidelity Guarantee. Accident, Guarantee, Burglary, Prate Glass, Marine.

Accident and Plate Glass Insurance. 2 I. No other.

22. 2_).

24.

z6. .:,..,,.

zB.

33·

35·

4I. 42. 43·

Accident and Marine. Marine and Accident. None-that is, none in the. Commonwealth, but in the United Kingdom we transact a large

Life and annuity business, and a small

Burglary and Accident Business. Fire business in the Commonwealth, com.biueQ. with Life business in the States of and New South Wales alcme.

The latter business is intermittent in charactc;r, and of an extremely limited nature. Fire Insurance business only. Accident Insurance.

Fire Insurance only. Fire only in Australasia. Life and Accident in England. Proposing to start Accident in the Commonwealth shortly. Marine, Accident, Employers' Liability, PubliC

Risk, :Fidelity Guarantee, Burglary, Plate Glass. Life, Accident, Fidelity Guarantee, Burglary, Plate Glass.

Marine. Life Annuties and Pensions, Personal Acci­ dent and. Illnesses, Burglary and Theft, Workmen's C:ompensation, Third Party,

Transit, Fidelity, Property Owners' Capital Redemption. Marine, Accident and Guarantee of every de­ scription-excepting Life.

Fire, J\LHine, Guarantee, and Accident Insur-8:1Ce business in all branches. The Company transacts the following insurance business :--Fire, Burglary, Personal Acci­

dent, Personal Accidents and Specified Diseases. Personal Accidents and all Sick­ ness. Cycle, Employers' Liability, Plate Gbss, Fidelity Guarantee, Public Liability,

Property Owners' Liability, Drivers' Acci­ dents, Coupon, Loss of Profits (Fire busi­ ness only in New South 'Vales). Fire Insurance only_ in this State (N.S.W.). Accident in all its hr3.ndi.es. J\farine Insurance ; but the Company has power

to rJo other classes of business except ordinary Life Insurance. Marine, Accident, Indemnity and Guarantee, Fidelity Guarantee ·and Marine. Accident, Live Stock; Marine;

Question 9·

On what date does the financial year of your Com-pany close?' I. JISt December iru each year. 2. JISt December. J· JISt December. 4· JISt December. 5· JISt August. 6. JISt March in each year. 7. JISt December. 8. JISt December. 9· JISt December. 10. 31st December. r I. Joth September. Iz. JISt December. IJ. JOth June. I4. JISt October in each year. I5. JISt. December. I6. JISt December. 17. JISt December.

I8. JISt December. I9. JISt December. zo. Joth June. zr. Joth September. 22. Joth September. 2J. JOth November of each year-at the Head

Office-Foreign Branches of course close at an earlier date. 24 . JISt December. 25. JISt December. 26. JISt December. 27. JISt December. 28. JISt December. 29. JISt December. JO. JISt December. Jr. JOth September. J2. JISt December. 33· 3rst December each year. 34· JISt December. J5· JISt August. J6. JISt December. 37. JISt December. 38. JISt December. 39· JISt December. 40. Joth September in each year. 4I. JOth June. 42. JOth June.

4-3· 3rst December.

Question ro.

What was the date, rate, and amount of the divi­ dend last declared by your Company ?

Replies.

I. Seventy-five per cent., £67, soo. 2. r. zoth April, I908.

2. ros. per share. 3· £35o,ooo. 3· Date, April, Igo8. Rate, ros. per share.

Amount, £35o,ooo. 4· Date, 26th April, 1908. Rate, ss. per share. Amount, £ss,ooo. 5· 31st August, 1908, 4 per cent. per annum.

£?,$00.

6. rsth May, 1908, I.)-9 per cent., £r0,4JO. 7· 1907, ro per cent., 20,76!.70 francs. 8. To 31st December, 1907, r 5 per cent.,

£r6,soo.

9· May, 1906, per cent., £'2,206 IJS. 9d.

ro. 22ncl May, 1908, 5 per cent., £1,875. II. r8th November, 1908, 8 per cent., £8,ooo; also a bonus. 12, May, 1908, 6s. per share, £88,.soo.

38

13. 3oth June, 1908, 6 per cent., £r,x8s x6s. 9d. 14. 14th December, 1908. A dividend of zs. per share, equal to ro per

cent. and bonus of rs. per share equal to 5 per cent.-equal in all to I$ per cent.; £7,500. 15. Twelve months- ending JISt December, 1907, 6 per cent. on preference shares (4 shares

called up to IOS., equal to £2), per

cent. on ordinary shares, £2r,874 rzs. 7d. 16. For the year 1907, ro per cent. ; a copy of our Statement of Accounts and Balance-sheets for that year is sent herewith. 17. It is noted in the Directors' Report for 1907 :­

"The Directors recommend the payment of a dividend for the year now current of

6s. 6d. per share, free of income tax, and payable half-yearly on the 31st May anct 3oth November." r8. 36s. per £z of stock. 19. Dividends are paid half-yearly, but the total

annual return to the shareholders for 1907, paid rst May, 1908, was £84,520, i.e., r6s. per share. This is at the rate of J2 per cent. upon the

paid-up capital, 3.6 per cent. upon the pre­ sent market value of the shares (£22), and 4 per cent. upon the invested funds of the Company, £z,oss,soo. 20. On sth August, I908, a bonus equal to about

xs! per cent. on the paid-up capital was

paid shareholders, which amounted to

£7,048. A similar sum, viz., £7,048, was also paid to policyholders as a cash bonus, representing ro per cent. on their premiums. Altogether £244,718 have been divided in bonuses policyholders and share­

holders by this Company. 21. 2oth October, 1908; 9 per cent. on £37,500 (the paid-up capital); £J,J75· 22. 19th November, 1908; 15 per cent.; £rs,ooo. 23. In February, 1908, rate 10 per cent. per annum.

Interim dividend, August, 1908, ro per cent. per annum. Amount per annum, £3o,ooo. In all probability another dividend will be de­ clared in a few days to same extent. 24. 8th May, r9o8, £195,250, being 35s. 6d. per

share on r ro,ooo shares (part of this divi­ dend was derived from a share of the profits of the Life business). 25. 6th May, 1908, at the rate of £3 xss. per

share. Total dividend, £uz,soo. z6. A dividend of £z per share in month of Jan­ uary, and in month of June a further divi­

dend of £z per share with the addition of a bonus of £1 per share, total £ss,ooo. 27. zo per cent., with bonus of 5 per cent., for

year ended 31st December, 1907. Declared March, 1908. 28. JISt December, 1907, 5 per cent. preference, r8 per cent. ordinary shares, £r7 ,867 ros. 29. JISt December, 1907, and JOth June, 1908, of

ss. per share, each absorbing £6o,ooo. 30 . .)OS. per share for the year 1907. 31. 27th November, 1908, 8 per cent., £6,ooo. J2. Date, June, 1908.

Rate, per cent.; amount, £z6r,zs8, on

the sum actually paid up as capital. The

business is not carried on the capital alone, but with the funds available for meeting the losses. These amounted to £4,649, r 59 (exclusive of Life and Superannuation

Fllnds), and the rate of dividend on the

whole is s.6r per cent.

•

33· Last year, 8 per cent., H).07; not yet advised as regards 1908. 34· JISt December, r9o7, per cent., £52,500.

35· October, 1908, 30 per cent., £Jo,ooo for the year. 36. Divi?end paid for the year 1907, 7}. per cent., w1th a bonus of 2l per cent.

The last dividend paid was for the half-year ending 3oth June, 1908, at the rate of 7!

per cent. per annum. 37 . 6th April, 1908, 5 per cent., £3,500.

39

38 . May, 1908, roo per cent., £r2o,ooo. 39 · The Company in its present form had only

been in existence for six months, and I do not think any dividend was declared. 40. z8th October, 1908, at ro per cent. for the year, and bonus of per cent. for the year.

Interim dividend to 31st March, r9o8, £4,270 2S. 6d. Dividend for half-year, 3oth September, 19os, £4,270 2S. 6d.

Bonus, 2! per cenf for year, £2,135 rs. 3d. 41. 28th July, 1908, 35 per cent., £r7,975 4s. 42. July, 1908, 20 per cent., £4,ooo. 43· r8th April, r9o8, ros . per share, payable 3oth

April and October in equal instalments. Being 5 per cent. on each share value £ro. About 4! per cent. on present price of share, £n.

(a)

(b)

SEcTION IV.-INsURANCEs IN FoRCE.

Question r 1.

What was the aggregate amount of Fire Insur­ ances on Commonwealth property on your books at the close ·of your latest financial year, including amounts re-insured with your Company, but excluding amounts re-insured by your Company ? What ratio does this aggregate amount bear to

the total fire insurance business of your Com­ pany?

Question 12 .

Give similar particulars for each of the States of the Commonwealth in which Fire Insurance business is carried on by your company. New South Wales,

Victoria, Queensland, South Australia, Western Australia,

Tasmania.

Replies to Questions r r and r 2 have been treated by the Commission as confidential, and are consequently not published.

SECTION V.-ASSETS.

Question rJ.

What was the total value of the assets of your

Company in the Commonwealth at the date of your latest balance-sheet ?

Replies.

1. Impossible to say, as Government securities are held at Head Office, we have some £r5,ooo in deposits we have placed in local bank in name of Company.

1275

2. Have not got the information. In Victoria

ho ld property valued by municipal officers at · £20,000. 3· £ 6r,soo in this State. Not aware of the

amounts in the other States. 4· In addition to certain freehold properties and fixed deposits, the Company holds a large amount of Australian Government stocks, for

precise information regarding which we would require to refer to our Head Office. 5· Fire and marine, £r85,825 os. 8d. 6. £ z r6,642 7s. 7d.

7. I am not aware of the amount invested in

Australian securities. 8. H ave not the information. 9· Not known to me. ro. £80,953, after making provision for the divi-

dend for the year 1907. II. £257,068. 12. In Victoria, £44,300. 1 3· £25,793 19s.

r 4· Balance-sheet enclosed. 15 . I am not aware of the amount invested in Aus• tralian securities. r6. _£6 ,356 7s. ud.

I7 · We are unable to say. In Victoria the Com­ pany had investments to the extent of

£26,ooo, and other assets representing £J,07 5 JS. Jd. r8. About £rz5,ooo, but I do not know the value at which the Sydney, Melbourne, and Gee­

long freehold properties stand in the Com­ p any's books at Head Office. 19. £ z8,832 JS. rd.

:ao. £114,14 5 19s. rod., in addition to the un­ called capital of £ro5,ooo. 21. £76,251. 22. Denosi.ts , £2,6oo. }

balances, £7,065 .

1 9°7 ·

23. R eal est ate, value £85,954· If you include our investments in bonds, &c., in the Commonwealth, as I suppose is the case, my best answer is to furnish the last

balance- sheet, which gives a full list. 24. £37 ,500 on fixed deposit with Bank of New • South W ales and National Bank of Aus­ tralasia, in addition to vari.ous amounts on

current account with banks and floating balances in the hands of agents. 25. £244,162 dealt with at this office. 26. In Victoria and Tasmania, £22,525. 27· £57.782. 2 8. Unable to say, but included in the total assets

as ner balance-sheet herewith. 2 9 . Bank · of Australasia, £2,500 fixed deposits; also current account. Outstanding premiums,

£r,844 5s. 6d. 3o. Office furniture in Sydney and Launceston, and bank balances totalling £ r, 61Jo I7S . Jd. Otherwise do not know beyond what is dis­

closed in balance-sheet. 31. £r68,ooo J S. 4d. 32. £r26,7o6. T hese include freehold properties " f allen in,"

which, whil:e standing in the books of the branch at original valuations , have been reduced on our recommendati on in Head Office ; but property ::tCf]uired in

Sydney since the rlate f ar more th an exceeds the difference. 33. Do not know. 34 · H ave not the information. 35· £s6,o4r. 36. £r8,15o rs. rd.

37·

39·

Cannot reply a:s we only act for New South Wales. If the Commissioners so desire we will ascertain the particulars from Head Office. In New South Wales the total assets were

£,579 8s. rod., being composed of bank

deposit at current account, plus sundry

debtors, minus sundry creditors. Cannot say, have about £,ro,ooo in New South Wales. Do not prepare any balance-sheet for the Com­

monwealth, and there ,are no assets except cash in banks, in hand, and outstanding

premiums.

40· £240,874· 41. £,r58,5o2 rrs. 6d. 42. £4I,J40. 43 . Cannot say.

Question 14.

Or what general principles are the assets of your Company valued ?

Replies.

I. This matter is dealt with by Head Office, but we believe the market value is taken on JISt December each year, and statutory declara­ tions required by directors and management on that date. 2. On market values. 3· Market value. 4· We have no information here. The necessary

particulars could be obtained from our Reid Office, if required. <;. P artly by cost, and partly by book values.

6. Valuations are periodically made of each indi-vidual asset. 7. I am not in a position to answer.

8. Have not the information. 9· Not known to me. ro. Market value. I r. The values of the assets are reviewed in order

to see that the book values are consistent therewith. r2 . Unable to say. 13. Debentures and fixed deposits (face value) when

market value is not less than face value. I4. Face values. rc; . I am not in a position to answer.

r6. I am unable to sav 'vithout reference to the

H ead Office, but it is doubtless the market value at the date of the valuation. 17. We have no information concerning this mat­ ter. The valuation of the assets is. we

presume, undertaken at the Head of

the Company. T8. D0 not know. 19. We c::>n only refer you to the certificate of the < lllrlitors attached to our annual balance­

sheet.

zo. Government stocks, debentures, &c., taken at cost, unless same is above market quota­ tions ; other assets at book values after

being written down.

{

Cost of property

zr. Premises, Hobart, £r,7oo years back, plus Office furniture, £,roo cost of alterations

and additions.

Mortgages, £,6g,76o. Launceston Municipal Council deposit, £,r,ooo. Cas h in bank, £3,025. Sundry ledger balances, £666. 22. At cost price, depreciation if any written off.

Increase in value never taken into account;

2J.

24·

25·

26. 27.

z8. zg. 30. .)I.

32.

33· .H · 35·

I

By using the best information obtainable from local authorities. I cannot answer this question. · The Company's assets are valued at H ead Office. Cannot answer this question. Responsibility rests with· H ead Office boards.

Copy actuary's valuation, rgo5, can be fur­ nished. We have no knowledge at 'this branch. At cost price. is an investment reserve

and contingency account of £ror,ooo held against possible fluctuati on in the value of our securities to save the necessity of annual re-valuation. Have no information on this point. Cannot say. Do not know.

Freehold property at original cost, bank de­ posits and Government securities at cost. This is practically market price at the date of each balance-sheet. (a) Office buildings at approximate cost (not

more).

(b) Other properties (fallen in) at an estimate of present value. Do not know. Have not the information:

We do our best to ascertain the true market value, and keep our book . values below that figure. _

36. · Cost price, with depreciation written off as

37·

43·

Unable to reply, but will ascertain from Head Office if the Commissioners so desire. Only bank deposit receipts 'It par. I do not know. Freehold property, book value ; remainder,

market value. The assets are taken at book values, and any probable depreciation is provided for by a contingency fund. Market values. Cannot say.

Question I5.

By whom is such valuation carried out?

Replies.

r. The direction and auditors at Head Office. z. Officers in London office. 3. H ead Office. 4· Vide reply to Q. 14·

5. Officers of the Company. 6. By a competent surveyor and valuator. 7. See reply to No. 14.

8. H ave not the information. 9· Not known to me. ro. The directors, with such expert advice as may from time to time be deemed necessary. I I. The management.

12 Uriable to say. r3. Manager, directors, and auditor. !4· The properties under mortgage are nearly all known to the directors, and the Company

always obtains two (2) valuations at time of advance. rs. See reply to No. 14.

r6. I am unable to say without reference to the

H ead Office, but I should think it is done by the directors-possibly assisted by ex­ perts, so far as other than liquid securities are concerned. J7. We do not know. r8. Do. not know. t.

19. See reply to question No. J4.

zo. The board and the auditors with expert as­

sistance.

4:1

2 r. Advances by way of mortgage on real estate,

two-thirds ::md under of value of properties advanced. Experienced valuators employed who visit properties, and furnish reports

\Yith valuations. 22. by auditors. on mortgage only

milde after exoert valuation. 2_1 . Bv our own assisted bv the best local

. experts that can be obtained.-24. See reply to question 14. 25. See reply to question 14. 26 . We have no knowledge at this branch.

2 7. See reply to question No. I 4.

28. See reply to question No. 14. 29 . Cannot say. 30 . Do not know. ,u. The company's auditor.

.)2. By myself. :13 · Do not know. 34· H ave not the information. 35. S0IT"etimes by ,our branch managers and some-

times by outside valuers. .".6 . Checked by auditors. 37 · See reply to question No. 14. ,o9· T do not know.

;10. T he directors and auditors. •. 1. The board of directors.

1 The board of directors.

.. 1.3· Cannot say.

-Question 16. wh at mte of interes t were the funds of your Company invested at the date of your latest balance.sheet? Replies. 1. Cannot say. Have not got the information. 3· Unable to answer this question. Have not the information. 4· w·e have no information here. :: 2.485 p er cent. (fire and marine departments). 6. 3.89 per cent. 'i . 6. 5 per cent. 8. H ave not the information. ') ot known to me., 1 c. 3· 2 5 per cent., 1 r . 4· r per cent. r z. 4i per cent. 13. 3.8 per cent. r 4· £4 6s. per cent. r 5· 4. 2 per cent. 16. My only source of information is the statement of accounts submitted by the directors to the shareholders, a copy of which is supplied herewith. From the statement for the year 190 7 I extract the following :-Amount at 1st J anuary, 1907-Capital , £r ,ooo,ooo ; life funds, £4,004,7 63 ; fi re funds, .£73 ,3 ,ooo; accident, &c., funds, .£7.5;648: total. £s,8r3,411. Interest and dlVlde_nd (less income tax)-Capital, ;£,41,754; hf_e funds,£ r57,579; fire funds, £28,709; accJ ­d ent, &c., funds, £3,524; total, ;{231 .566. The ratio of interes t and dividends to the above funds is, therefore, 3 . 98 per cent. r 7. About 41 per cent. Please refer to balan;:e­:.heet , wh ich discloses the only informahon we possess. Assets -of £u,218,883 return interest and divi­dends to ,£382, 454, equal to about ,£3 8s. 6d. per cent.

I 9 .

20.

2 2 .

27. zy . 30,

J I. , ., ,_) - .

40 .

4I · 42 . A. ·> 'I,).

1277

We have no Uctta beyond that contained in the balance-sheet, and p re fer, therefore, not to maKe any definite statement. T his ques tion has not the significance in connexion with a fire company which life companies attach to it. ""!!

About 3t per cent. 4.66 p er cent. £4 IIS . 7d. per cent.

3.78 per cent. , as per balance-sheet enclosed . The funds of the fire department appear to be invested at an average rate of about per

cent.

£3 13s. 9d. (1905 .) I have no definite information at this branch, but f rom the figures in the balance-sheet, the average rJ.te appears to be 4 per cent.

Ra te on mean funds, 2z per cent. Rate (less income tax), 3·73 per cent. L ife funds, £3 r8s. per cent. Otherwise, do not know beyond what is disclosed in the

balance-sheet and report enclosed. Nearly 3 per cent. .3 . 7 6 per cent.

Do not know. H ave not the information. A trifl.e over 5 _per cent. 4.40 per cent .

Interest, dividend, rents, and transfer fees

earned and accrued in 1907 were £6,o78 . The investments being valued at .£.r36,6o8. T he interest, &c., earned and accrued was, apparently, £4 8s. IId. per cent. About .>! per cent.

I do not know, but I send you a copy of the

latest balance-sheet. A little over 3 per cent., about one-half of the securities being Government. 3 per cent. 3.28 per cent.

See balanct>sheet herewith.

S E CTION VI.-RESERVE FUNDS.

Question 17 .

In prep aring its b:!lance-sheet, what provJSion is made by your Company for unexpired risks?

Replies.

; . See balance-sheet attached. _. \V e have a Fire Insurance Fund of ,£2,ooo,ooo. The amount required to cover unexpired risks is calculated at 40 per cent of the

ve:u's income. :-1 T h e Company has a Fire Insurance Fund of

,£z,ooo,ooo.

40 per cent. of the premiums is reserved for un­

expired liabilitie;; un<'ler current policies, m to the fire and .reserve funds of

the Company . N'o spec ial provision for fire insurance risks.

6. N o speci :tl pnwi:;ion is made for unex pired risks, ns the !;:serve and contingent funds are

nrl ded to every vear, and are considered more than sufficient. 7 I n(: !udin g other branches of the business, the ron1pany in 1907 had a reserve of

Il7 , 247. 0 5 francs. 8 . I not the information, but the Australian

b;· u.nch is charged with 33\ o£ its net pre­ miums fo" ri sks .

9· I do not know.

,, .... ,

.: .. :.. ,

42

1c. The whole of the funds, including paid-up 37 .

capital, are available for the settlement of losses, and in 1908, on extension of the

operations to accident business, a special re-serve of .£ro,ooo was set aside. I z. The reserve fund which is used in the business. 38.

12. None. But ample provision is made by a fire 39· fund of .£2,r96,rr9. 13. Reserve fund equal to, or exceeding, the amount of premium required to re-insure such. 14. None.

r6. Not less than 40 per cent. of the net premiums

40.

is set aside annually as a reserve due to 42 .

policies unexpired on JISt December. In 1907 the ratio was 44· 52 per cent. In addi-tion, there is a general fire reserve fund, 43·

which amounted on JISt December, 1907, to .£sro,ooo. I;. A portion of the premium income is set' aside annually as a reserve for unexpired risks.

The Company's last report (i.e., for 1907) shows that of the net premiums for the year the sum, equal to about per cent., was

reserved as sufficient provision in respect of current policies at the close of the year. 40 per cent. 40 per cent. of the year's premiums. At an average of about so per cent. of the net

fire premiums for the year. The amounts of the re-insurance and reserve funds are regarded as provision for unex­ pired risks. The amounts of the re-insurance and reserve

funds are considered as a provision for un- · expired risks. See balance-sheet annexed.

Question r8.

your opmron should there be any rrummum ratio of reserve fund to total amount at

risk?

At the end of 1907 the sum of .£so,ooo was In added to the fire reserve fund, which, as shown in the fire account, then stood at

£250,000.

18. 40 per cent. of the annual fire premium is Replies.

placed to special reserve fund for unexpired 1. All Companies have specjal figures for working risks, which ratio is recognised in England out percentages of premiums for unexpired and America as being the proper proportions risks, we think the usual percentage is 40

to reserve. per cent.

19. The "Fire Fund," i. e. prov1s10ns for unex- 2. Owing to the uncertainty of fire, it is impos-pired liability, is at present 31 per cent. of sible to lav down anv fixed ratio, but sub-

the premium income j but, of course, the stantial reserves shouid be held . .

whole funds of the Company are available 3· Every Company should hold very substantial for the settlement of losses. reserves, but it is hardly practicable to lay

zo. One-third of the annual premiums is regarded down any fixed ratio of reserve fund to total as a liberal provision for unexpired risks. amount at risk. .

2r. c;o per cent. of the premiums set on one side. 4· No. We question it is practicable to decide

zz . Reserve for unexpired risks maintained at 50 from amount at risk as to what would be a

per cent. of fire premiums, in addition to proper reserve fund.

general reserve and capital. 5. I think that a Company should hold undivided

2.) . Y:_ou will see from the Company's balance-sheet profits equal to 33! ·per cent. of the yea.r's we have a re-insurance fund of £zso,ooo revenue from fire insurance premiums. provided for this purpose, which is over 40 6. Block hazard being carefully considered with per cent. of our premium income. maximum limits thereon, and maximum

:q. 40 per cent. of the year's premiums is placed limits adhered to on all isolated risks, there

to credit of the premium reserve account. is not, in my opinion, any necessity to fix a

25 . 50 per cent. of net income from premiums. hard and fast rule. ·

zo. per cent. 7. All Companies create reserves in proportion to

27. We reserve one-third of the year's premiums to the net premium income, and past experience cover unexpired risks. h as shown the reserves sufficient to cover

28. 40 per cent. of the premiums are set aside to liability.

meet liability under current policies. (See 8. 3J per cent. of net profit (sic.). balance-sheet attached.) 9. It is advisable.

29. Reserve of 40 per cent. of unexpired premiums ro. No. Experience in other countries has proved for the year. this to .be a menace to sound and properly

30. According to ·the balance-sheet about 40 per managed and constituted Stock Companies. cent. of premiums. . All properly managed Companies maintain

31 . General reserve fund. The only call that cou],1 reserves sufficient to cover liability for run-be made upon the reserve fund would be a ning off risks, and to meet probable losses.

provision for the unexpired risks, or similar 1 I. It would be desirable. liabilities. r z. Yes.

32. The entire capital and funds of the Companv . 13 . Have formed no opinion. (except " life " funds, which are, by British r 5. All Companies create reserves in proportion to law, ear-marked for that department) are the net premium income, and p ast experience available for unexpired risks. These funds has shown the reserves sufficient to cover

largely exceed the whole of the premiums re- liability . . ceived during the ye8r. r6. The practice of Companies is to make the re-

33· Large reserves are provided, but on what basis serve in ratio to the net annual premium in-we are not advised. come; and the experience of this Company

34· I have not the1information, but the Australian has shown that this method has provided

branch is charged with 33l per cent. of its sufficient funds to cover all unexpected caUs. net premiums for unexpired risks. 17. No. '

35· 40 per: cent. of net fire. premiums and actual r8. No; it is not customary to calculate reserves marine premiums on risks current, and not on basis of amount of risks, but in proper-

run off on 31st August. tion to premium income.

36. Special reserve, £2s,ooo, also, reserve fund , 19.· No. The amount at risk in the case of a Life £ss,ooo. · Company is a certain liability, but in the

·_t;(

43

20.

2I.

22.

30. 31.

case of a Fire Company, it is only a con­

tingent liability, and every well managed Company limits the amount of its liability subject to one fire. It would be more practicable to base the re­

serve on the premium income. Not necessarily. Some underwriters may have their risks more congested than others. Cannot suggest. Reserve must be accompanied

by a prudent distribution of risk . Concen­ tration may lead to ruin. Yes. Forty per cent. of the premium revenue I consider a fair reserve, others may think

less, but I would not make any particular percentage mandatory. Yes; or to net premium income, which is an­ other way of saying the same thing.

Yes; 45 per cent. of net revenue. The practice of all Companies has been to

create a reserve in proportion to the net

premium income, and the experience of offices in the past has been that the reserve thus established was sufficient to cover all liabilities. No. I think this would be useless. A Com­

pany writing non-hazardous risks only might have a far larger amount at risk than an­

other Company writing a general business, and yet might quite safely reserve a smaller amount of the year's premium income in respect of outstanding liabilities. Yes.

It is not necessary if there is a large paid up

capital and other reserves, but most Com­ panies have a reserve for unexpired risks of from 33 I/ 3rd per cent. to 40 per cent. of

the year's prel:niums. No. ·

No; the suggested basis is an incorrect one. I certainly consider, however, that there should be minimum of reserves and paid up capital to net premium income. A '' reserve fund '' has no relation to '' amount

at risk," for the obvious reason that a £.soo risk at £5 per cent., yielding a premium of £25 would, as regards the reserve for un­ expired risk, require as much reserve as

£2o,ooo at 2 / 6 per cent., yielding a similar premium. Properly spea'king, a reserve fund cannot be distinguished from any other ' portion of the Company's funds which are

liable for the payment of losses. From a

financial point of view, there is not the slightest difference. I take it, therefore, that the

question is really intended to what

proportion of the premiums shown In the accounts to have been received during the year would be required to pay losses occur­ ring during the remaining duration of the

policies on risks in respect of which the pre­ miums have I;Jeen received, and that if that is ascertained, a f air conclusion may be

drawn as to whether the Company is pos­ sessed of sufficient funds to meet its liabili­ ties. This is a point upon which opinion!>

differ, though not to any very great extent, and, personally, I should put down 33 per cent. as about a f air average. I t must be

borne in mind that a certain of

all business is what is kno-wn as short penod, that is taken out for a less term than one

year. This is very largely the case in large mercantile communities, and very l arger in the F.urope;u, and North Arnencan, India, and China centres than here, aP.d

thousands of policies are taken .out even for such short terms as three days, or a week,

1279

and many more for one to six months. 1l. very large proportiOn of these have expired, and no reserve is required to meet them, there being no more liability. Then, again,

even amongst the vast bulk of the policies which are taken out for one year, a portion of the time, varying from I day to 364, has expired ; and, assuming the business to be

pretty steadily spread over the whole year, the average uncompleted duration of the policies in force would be about six months. Ignoring assumed profit, which is not a lia­ bility under the policies, and bearing in mind

tha t almost the whole of the expense, ex­ cept that arising out of the adjustment of losses and some minor office expenses, has already been paid, I think an estimate of 33

per cent. is reasonably f air. 33· Yes. .

34· 33 per cent. of net profit. (Sic.)

35· I can best answer this question by saying that no Fire Insurance Company can possibly have too big a reserve fund. No effort should be spared to build up a reserve fund, and

to keep on adding to it.

36 . A conflagration may sweep away any reserves. Insurers are protected by the capital and reserves of a Company, whose success de­ pends upon a careful distribution of risk. 3 7. The amount at risk is usually estimated by the

! net premium revenue. It is certainly desir­ able that funds should be reserved for .un­ expired risks, and such reserve funds should not be less . than the unearned premium on unexpired risks. 38. Yes. 39· No. The result is obtained by a percentage

of the premiums. 40. The ratio of reserve is calculated on the net annual premium income. 4 I . I do not think so, as the liabilities on risk of

a Fire Insurance Company may be dis­ tributed over a larger or smaller area. A

Company transacting almost an exclusively large city business would require a larger reserve than a Company transacting a limited city business, and otherwise having its risks

well scattered throughout the non-congested area. 42. No. 43 · Certainly.

SECTION VII.-INCOME.

Question 19.

What was the total Commonwealth income of your Company for its latest fin ancial year from­ (i.) Fire Insurance Premiums, £ (ii.) Other premiums, £

(iii.) Interest, dividends, and rents, £ (i.v.) Other sources ? £ Replies to question 19 have been treated by the Commis:oion as confidential, and are, conse­

quentl y, not published.

SECTION VIIL-PREMIUMS.

Question 20.

Are the premium rates of your Company at present payabl: _in the Commonwealth fixed by open competition, or art: they determined by a tariff association, or by some other arrange­ ment?

,

. .,_ ..

Repltes.

1. Minimum rates are agreed to according to clas­ sification, but each Company is at liberty to write about risks they desire. 2. Rated by individual offices. on the basis of a

graduated scale fixed by association in all States except Western Australia. 3· Individual Companies assess the rate on the basis of a scale fixed by the association. In

Western Apstralia there is no such arrange­ ment. 4· Rates are fixed by each office on its own esti ­ mate of the risks. Offices have, however,

associated and agreed upon what their com­ bined ooinion indicates should be minimum rates fo; practically all classes of risks. :Minimum rates determined by tariff, excepting

in Western Australia. 5· 6.

7· 8.

10.

II.

By a tariff association. Minimum rates charged after careful inspection of risks. Tariff association. Some by open competition, and some by agree­

ments. By tariff agreements, except in Western Aus-tralia. Minimum rates are fixed by agreement between

offices, except in Western Australia. (1) Open competition. . .

(2) Special cases rated on the recomtr..endatlOn of a committee of underwriters. (3) Regulated by schedules, according to th e hazard of the risk. 1 2 . Bv tariff associations-excepting Western Aus·

· tralia.

13. By a tariff association. 14. T ariff. 15 . Tariff association.· 1 6. Except in Western Australia, by an _association.

This is the only method of keepmg rates at a level , so as to insure the absolute solvency of the Companies and their ability to meet their obligations. 17. By tariff association.

r8. P artly by agreement amoug companies, accord­ ing to nature of risk and locality, and uy

open competition. 19. In Western Australia by open competition, else· where by tariff arrangements based upon the past experience of the business. 20. By a tariff association.

z r. Tariff. 22. Tariff association, except in Western Australia. 23. Where tariff associations exist, this Company has joined same in the Commonwealth. 24. By a tariff association, except in Western Aus·

tralia.

2 5. Agreements exist, but not in all States. .

In a paper read before the I nsurance Institute of London, on the r8th November, 1908, one of the oldest an d most experienced J1re underwriters of that cit y remarked- " The question of competition suggested a defence of the principle of a tariff in fire insurance. The rates thus fixed become a standard by

which all the tariff offices m ust abide, and as these are founded upon their combined ex­ perience and collated statistics, grtthered to­ gether for the purpose of arrivinL ; at a true estimate of risk, it follows that t h is must be the only sound way of conducting the busi­ ness, and it affords a f air guaran:ee that the insured will get his full compens CJ.tion when his loss occurs. There is really no ' ring '

in such a system being adopted. It is for

the good of the public quite as much as for the good of the offices;"

44

z6. Risks are rated on a graduated scale of rates, determined by tanff association. 27. By tariff associations. z8. By tariff associations, except in Western Aus­

tralia.

29. They are determined on an ascertained basis, according to locality, construction, occupa­ tion, and surroundings of each particular hazard. 30. By both. 31. Both. 32. Except in Western Australia, the rates through­

out the Commonwealth are qetermined on the basis of a scale formed upon the joint ex­ perience of all Companies. Differences of opinion prevail as to proper rates, and no absolute statistics are procurable. The ex­ perience of individual offices is by no means identical, from various reasons which would be difficult to define. Considerable diversity of views may exist as regards the proper

rate for any particular class of risk, and,

therefore, what is done is to ascertain the opinion of the majority, based upon indivi­ dual judgment, as to what is proper, and

arrange the scales accordingly. They are very complex, and provide, not only for the rating of risks of each individual occupation, but they suodivide that occupation even in the case of factories manufacturing the same kind of goods, so that those performing the more hazardous processes are charged more than those which confine themselves to the less hazardous. There are minute rules as to surroundings, so tnat the building which is free from objectionable surroundings gets insured at a lower rate than that which is

not. Details of construction are proyided for, ·the better class of buildings being sub­ ject to various deductions for their

superiority. Deductions are also made for fire appliances on the property itself; and the " basis rates " for every class of risk

vary according to the general construction of the town, as well as of the individual build­ ings, the water supply, and the fire or other appliances for the extinguishing of fires. It inay be broadly stated that an in­ surance business could not be carried on at a pro'fit otherwise than under tariff arrange­ ments. Independent of the fact that the

personal interest created by the earning of the commission might create a conscious or unconscious bias, the. difference of opinion as to actual risk would cause considerable bona · fide variations of opinion as to what was a

proper rate, and under such conditions the proposer would go from office to office for every particular risk, and ultimately every risk would go to that quarter where it was accepted at · fhe very lowest rate, which

would be pretty sure to . be wrong. As it is, under a tariff, it is accepted at approximately the average or opinions. Fire and some

other branches of insurance are unlike other businesses in this respect. Competition be­ tween traders as to who shaii selJ at the

cheapest rate may or may not be right upon economic grounds, but, at all e\'ents, they have invoices to show what the total cost of goods landed in their store is. and th ey !mow the total cost of handling between that time and the sale. and they know what profit they expect, so that they know whether the price is extravagantly remunerative, is moderately remunerative; or must result in

A ioss, and consequent disaster to creditors. A Fire Insurance Company has no such in­ voice; it sells its policy without any invoice but that of combined opinion; and the actual

cost comes in afterwards. S1milarly, it may be right of the so-called working man to

combine to sell his labour for a fair price,

or for the most he can get for it, fair or

unfair. He knows what he gives and what he gets, and he may get all labourers in his own trade to combine not to sell their labour at less than a certain rate, becoming thus

possessed of the monopoly of that labour; but an insurance Company has no such

monopoly. It is open to any one to come in to compete. It is simply wisdom gained

by experience that dictates to those who are in the business how to conduct it on safe

lines to the advantage of the community. 33· Bv tariff. 34· by open competition, and some by agree­

ments.

35· I\fostly by agreement with other Companies, lnsed on united experience. 36. Tariff associations where this Compa.ny

operates.

,)7· In Western Australia, there is no tariff between Companies. In the other States minimum rates are determined by agreements among the companies-but every Company can, if

the risk be not sufficiently rated by such

agreements, charge any necessary increase. 38. By tariff, except in Western Australia. 39· Partly by open competition, but in the

majority of States the rates are fixed accord­ ing to a schedule of merits and defects

agreed on by all Companies. 40. Pardy by tariff, and partly by open competi­ tion. 4r. Partly by competition, but certain basis rates

have been fixed bv the association, based on scientific principles. 42. Fire risks by The Victoria Insurance Company Limited.

43· Minimum rates are fixed in New South 1N8les by agreement amongst various Companies.

Question 21.

What is the minimum rate of premium in each class of risk chargeable by your Company at the present time in the Commonwealth in respect of-

(i.) Urban properties; (ii.) Rural properties? Replies. I. (i.) 2s. and upwards,

(ii.) 2s. 6d. and upwards. z. (i.) Say from 2s. 6d. per cent.

(ii.) Say fron" 5 per cent. J. (i.) 2s. per cent. (less ro per cent.) upwards.

(ii.) 4s. per cent. (less ro per cent.) upwards.

4,. Risks are divided into four main classes ac­ cording to occupation, and the minimum rate'; are as shown on memorandum attached

hereto.

5· (i.) IS. 6d. per cent.

(iL) 4s. per cent. 6. (i.) 2s. per cent. (less bonus of ro per cent.)

brick.

(ii.)

6s. per cent. (less bonus of ro per cent.)

wood.

4s. per. cent. (less bonus of 10 per cent.) brick. ros. per cent. (less bonus of IO per cent.)

wood.

1281

7. (i.) Dwellings, zs. per cent. Stores, 4s. per cent. Retail shop, ss. per cent. Hazardous, 7s. 6d. per cent. (ii.) Dwellings, ss. per cent.

Stores, 7s. per cent. Retail shops, 9s. per cent . Hazardous, r rs. 6d. per cent. less JO per cent. bonus to the

both (i.) and (ii. ) ..

Brick.

s. d.

-insured in \.food. s. d. 8. (i.) Ordinary Hazardous 2 5 7 5 0 0 7 6 14 0 hazz<:,nJ.ous 6 zo 0 (ii.) Orclinarv ... Extra hazardous 0 X4 0 9 0 22 6 I I 6 . . . 29 0 Not including VVestern A.m'traEa; there, <1)\proxi­ half rates. Brick.- --:'v!.inimum, 2s. 6d., less 1 0 per cent. Wood.---A.\1 rates subject to deduction of 2s. for all hth and plaster, and rs. for partly lath and plaster, and rs. earth floor and I o per cent., but minimum not less than 6s. per cent. s;. (i.) 2s. per cent., 4s. per cent. , ss. per cent., T'· 6d. per cent., less ro per cent. dis­count to assured. (ii.) zs. 6d. per cent., 6s. per cent. , 7s. per cent. , ros. per cent., less ro per cent. discount to assured. I 0. (i.) II. 12. I3. I4-Driek. Wood. Cont·2.-nts. Buildings a11d Oolltents. Non -2 0 2 6 7 6 l\.fedium hazard 4 0 6 0 II 0 Hnarclous 5 0 7 0 !2 6 Extra hazardous 7 6 IO 0 I7 6 ( .. \ ,11./ Non - h::lzz:_rdous 3 6 4 0 IO 6 I\1ediurn 6 6 8 6 r6 0 Hazardous 7 6 9 6 20 0 Extra hazardous II 0 I3 6 25 0 All less IO per cent discount to insured. (i.) Dwellings, etc., IS. per cent.; trade risks, 2s. 6cl. per cent. (ii.) DwelJings, etc., IS. 6d. per cent.; trade risks, ss. per cent. " [!. d. 8. d.

17. (i.) .

·-

Dwelling-s.

Per cent. s. d.

2. 6

(ii.)

Bulk Stores and the like.

Per cent. 8. d.

4 0

Retail Shops and Non-hazardous

Per cent. 8. d.

5 0

Hazat"dous Risks.

Per cent. 8. d.

7 6

5 0 7 0 9 0 II 6

These rates, which are subject to a discount of ro per cent., apply to Victoria only.

z8. The ra tes in various States vary, the average minimum basis rates on various classes of risks as follows :-Dis· tricts.

Risks.

----,.-------------------8. d. 8. d. 8. d. s. d. 8. d. 8 w .. X .. y .. z s. d. 8. d. 2 0 7 6 4 0 l1 0 5 0 12 6 7 6 17 6 2 5 6 II 6 8 0 12 0 15 6 20 6 3 0 9 6 5 6 t5 0 7 0 17 0 10 0 22 0 3 0 6 6 7 6 11 0 10 6 16 6 20 0 25 d. 8. d. 8. d. 6 4 0 12 6 0 7 0 17 6 080226 0116 276

I9.

All less zo per cent.

A. B, C, D, E represent localities:­ A-Cities with good fire brigades and water supply. B-Towns in Country with good fire brigades

and water supply. . ·

C-Towns in Country with f air fire brigade and water supply. D-Towns in Country with fair fire brigade, but medium water supply. E-Country districts. W, X, Y, Z represent classes of risks­

W -Domiciliary. X-Non-hazardous bulk stores, brick hotels, halls and such like. Y -Commercial risks, shops, stores, non­

hazardous factories. Z-Hazardous risks.

Urban-

nrick. Wood.

Buildings

Buildings. Contents. and

Contents.

s. d. $. . d. .. d .

Non - hazardous 2 0 2 6 7 6

Medium hazard 4 0 6 0 I2 6

H azardous 5 .o 7 0 I4 0

Extra hazardous 7 6 IO 0 20 0

Rurdl-,-Non - hazardous 4 6 5 0 II 0

Medium hazard 6 6 8 6 I6 0

H azardous 8 6 10 6 I7 6

Extra hazardous I I 0 13 6 24 0

All less ro per cent. discount to insured.

20. (i.) 2s. per cent., less IO per cent. (ii.) 4S. per cent., less IO per cent.

2 I. Information should be obtained from the secre­ tary of the Fire Underwriters' Association of Tasmania, Hobart.

22. Varies according to classification and districts. Details too numerous to mention.

23. (i.) Say IS. per cent. per annum for dwellings. (ii .) Say rs. 9d. per cent. per annum for dwel­ lings; but in some of the States, the minimum rates

are usually, say, 2s. 6d. per cent. for

city properties, and ss. per cent. for

country. properties.

46

24 . (i.) 2s ., 4s., ss., and 7s. 6d. per cent. respec­ tively, less ro per cent. discount. (ii.) 4s., 7s., 8s., and Irs. 6d. per cent. re­

spectively, less IO per cent. discount. 25. (i.) 2s . per cent., 4s. per cent., 5s. per cent.,

7s. 6d. per cent. (ii.) 38. per cent., ss. 6d. per cent., 7s. per

cent., ros. per cent. Rates being partly adjusted upon basis of water supply and fire brigade protection in the various places. 26. (i.}

Dwellings and such like Risks. 8. d.

2 6

(ii.)

Bulk Stores and Risks of a Similar Nature. s. d.

4 0

Retail Shops and Non·ha.zardous Factories. 8. d.

5 0

Uioks of the Hazardous Class. 8. d.

7 6

5 0 7 0 9 0 II 6

All the above rates are subject to a ro per cent. cash discount.

27.. (i.) Dwellings Wholesale risks . Manufacturing and re­ tail riskS generally

Extra hazardous risks Less ro per cent.

(ii.) Dwellings Wholesale risks , Manufacturing and re-

Wood. s. d.

7 6

II 0

I2 6

I7 6

in all

Wood. s. d.

12 6

17 6

tail risks 2 2 6

Extra hazardous risks 27 _ 6

cases.

Less Io per cent. in all cases.

Brick. s. d.

2 0

4 0

5 0

7 6

Brick. s. d.

4 0

7 0

8 0

II 6

28 . (i.) 2s. , 4s., ss., 7s. 6d. , less ro per cent dis­

count to the insured. (ii.) 4s., 7s., 8s., IIS. 6d., less roper cent. dis­ count to the .insured. 29. (i.) Brick, 2s. 6d. per cent.

Wood, 6s. per cent. (ii.) Brick1 ss. per cent. Wood, 14s. per cent. 30. (i.) rs. per cent.

(ii.) Is. gd. per cent.

31. (i.) rs. rod. nett, brick; ss. sd . nett, wood . (ii.) 3s. 7d. nett, brick ; 9s. nett, wood. J 2. (i.) ;2S . 3d.

(ii.) 2S. 8!d.

33· (i.) 3s. brick, • (ii.) ss. brick,

8s. wooden. I3S· wooden. Briok.

s. d.

Wood.

34· (i.) Ord;::.ary 2 o

s. d.

6 7

35·

Hazardous 5 o

Extra hazardous 7 ·6

(ii.) Ordinary 5 o

Hazardous .. . : 9 o

Extra hazardous I I 6

14 20 I4

22

0

0

0

6

0

Not including vVest Australia ; there, approxi­ mately, half rates. Brick-Minimum 2s. 6d., less zo per cent. Wood-All rates subject to deduction of 2s. 6d.

for all lath and plaster, and rs. partly

lath and plaster, and rs. earth floors, and ro per cent.; but minimum not less than 6s. per cent. (i.)

Business Premises. Dwellings.

Massive. Wood. M,...lve. Wood.

s. d. s. d. s. d. s. d .

4 6 12 0 2 0 7 6

(ii .) 8 0 20 0 5 Q 13 Q

1283

47

36. These vary in different districts, and are lowest where there is a plentiful water supply and efficient fire brigade. Rates are regulated according to the character of the building

and nature of occupation.

I4. Launceston agents, 10 per cent.

37· (i.) We are only agents for New South Wales, for wh1ch State we reply as follows:­ zs. per cent., 4s. per cent., *5s. per cent., *7s. 6d. per cent., less Io per cent. brick. *7s. 6d. per cent., *us. per cent., *rzs. 6d.

per cent., *17s. 6d. per cent., less roper cent. wood. (ii.) *4s. per cent., *7 s. per cent., *8s. per cent., *IIs. 6d. per cent., less ro per cent.

brick. *Ios. 6d. per cent., *qs. 6d. per cent.,

*22s. 6d. per cent., *27s .. 6d. per cent., less Io per cent. wood. Those marked * are subject to deductions for special fire resisting construction, and for

special fire appliances, varying from 6 per cent. to 40 per cent. 38 . (i .) 2s. per cent., less IO per cent. cash bonus. (ii .) 4s. per cent., less ro per cent. cash bonus.

Dwellings, &c.

Trade Risks, N (· n Hazardous. Other Trade

Hisks.

Extra Hazardous

s. d. s. d. s. d.

2 0 4 0 5 0

4 0 7 0 8 0

s. d.

6

6

7

II

39· (i.) (ii.) This applies to States where there are agree­ ments as indicated iri reply to question

No. 20.

40 . Entirely depends on construction, occupation, and situation of the risks. For first class pro­ perties, City, rs. to 7s.; and Country, 2s . to ros. Manufacturing and wood risks higher. 41. (i.) The minimum rate for the mi.nimum risk is

2s. 6d. per cent. less 10 per cent. (ii.) The minimum rate for the minimum risk is 5s. per cent. less 10 per cent. 43· (i.) IS. 9.6d.

(ii.) 3S· 7 · 4d.

Question 22.

What rate or rates of commission are allowed by your Company in respect of Fire Insurance \ premiums collected?

Replies.

r. 5, ro, and 15 per cent., according to location of risk. 2. Brokers, IO per cent.; agents, IS per cent., ·2o per cent., 2 s per cent.

3· 5 per cent. to 20 per cent. The usual sub-

agent's commission is 15 per cent. 4· Rates vary from 5 per cent. to (in the case of special agents) 25 per cent., according to the work and duties undertaken. 5· From S per cent. up to 2S per cent. 6. s per cent., roper cent., IS per cent., and 20

per cent. .

7. Solicitors, &c., 5 per cent. Brokers and estate agents, IO per cent. Agents, IS per cent. Agents, agricultural risks, 20 per cent. 8. 5 per cent. to 2S per cent.

9· 5 per cent. to IS per cent., and in three special cases, up to 20 per cent. 5 to 15 per cent. on ordinary risks. 2o per

cent. on growing crop and hay stack risks. 10. II . · 5 to 20 per cent. I2 .

I3-Ordinary rate from 10 per cent. to IS per cent 5: 10, rs, and 20 pet cent.

Sub-agent itr Tasmania, 14 per cent. and 15 per cent. Melbourne and Sydney chief ·agents :­ (i.) S per cent.

(ii.) An allowance. (iii.) 2_ 0 per cent. on profits for year. IS . Solicitors, &c., s per cent. Brokers and estate agents, IO per cent.

Agents, IS per cent. Agents, agricultural risks, 20 per cent. r6. Presumably, what is meant is the rates of ·

mission to ordinary agents for collection of ordinary premiums, in which case the usual rate is Is per cent. I7· S per cent., ro per cent., IS per cent., and in

some special cases, 20 per cent. r8. From S per cent. to 20 per cent., according to class of business and district. · ·

I9. IS per cent . zo per cent. on haystack business. zo. From 5 per cent. to 20 per cent. 21. From S per cent. to I5 per cent. 22. r 5 per cent. on business coming through agents.

Have a permanent staff and offices. 23. Varying in different localities, but usually 15 per in the Commonwealth.

24. Various rates-ranging from s per cent. up­ wards, the prevailing rates being 10 per cent. and IS per cent.

2 5. 5 per cent., I o per cent., and Is per cent. 26. The rates of commission paid are 5 per cent., ro per cent., IS per cent., and in some

special instances, 20 per cent. 27. From S per cent. up to 20 per cent., according to the class of risk. 28 . From ro per cent. to I5 per cent . .

29. 5 per cent. to 2s per cent., according to work done. ·

30. 5 per cent. to 30 per cent. 3r. 5 per cent. or ro per cent., or IS or 20 per

cent., according to class of business. ·

3 2. 5 per cent. to I 5 per cent. On agricultural pro- duce, 20 per cent. 33· 10 per cent. to zs per cent. 34· 5 per cent. to 25 per cent.

35 · From IO per cent. to IS per cent. 36. From s per cent. to 20 per cent. 37. S per cent. to certain persons and institutions.· 10 per cent. to fire brokers.

IS per cent. to sub-agents for general business. zo per cent. to sub-agents for special business such as haystacks, &c .. 38. They vary from 5 per cent. to 15 per cent. and

zo per cent. on certain agricultural risks. 39· 5 per cent., per cent., I5 per cent., 20 per

cent., and m one or two cases of special agents, 25 per cent. The usual commissions are ro per cent. and 15 per cent. 40. From IO per cent. to 20 per cent., according to

the nature of the agency and interest insured. 41. Up to 20 per cent. 42. Up to 20 per cent. 43· From S per cent. to 20 per cent.

Question 23.

What period of grace is allowed by your Company for the payment of renewal premiums?

Replies.

1. No day: of wace allowed, but we give fourteen days notice to all policyholders and any days of grace that may be asked for. 2. None. J· None.

•.

4 · None, but cover may be obtained for any rea­ sonable period, and we have reason to

think the insured has overlooked the expiry we often voluntarily give cover pending in­ quiry. 5· None. 6. Up to r zth May, 1906, fifteen days' grace was

allmved ; since that date none, but a cover for fifteen days from due date is printed on our notices of expiry. 7· None. 8 . No grace, hut cover granted when Company

willing to continue risk. 9· None. granted as desired, otherwise generally IO.

II.

12. IJ.

14. rs. 16. I7.

I8.

I 9.

20.

, 2I.

22 . 2J.

25. 26. 27. 28.

30. 3I.

32. 33-34·

35· 36. 37 .

Cover pending renewal is but no days of grace

' allowed. N one. None. No definite period.

In some instances fifteen days. None. None. None.

None, unless asked for, then up to one month . None. N one, unless asked for. Not any, unless specifically arranged. None. Broadly, we do not allow any days of grace.

There may be some few special exceptions. Renewal premiums should b e paid when due. There are no recognised days of grace. None, unless application is made. None. None. None . Any reasonable period on application, but as a

rule renewal premiums are paid promptly. None. ,

None generally, with the exception of brokers who are allowed t9 the roth of the following month. None. None.

No grace, but cover granted when Company willing to cor1tinue risk. None, except by agreement. Days of grace ;:.re not allowed. N o period of grace is allowed in Australia.

We do not know what the Company does elsewhere, but will ascertain from head office if the Commissioners so desire. 38. Fourteen days. 39· None.

40, 41. 42 -43·

N one, None. None. Var ies

unless under specia) arrangement.

according to arrangement.

Question 24.

What I S the practice of your Company encc to the right of renewal ?

Replies.

with refer-

r. E•1tirclv in the h;mds of the assured if the

Company is content to continue the risk. 2. \V e reserve the right to decline to renew a

policy v;hei1 it has expired if in our opinion the risk has become inferior. Our general practice is to renew all policies as they m:t -Wre. ·

48

3· The practice is to renew policies as they fa1i due every year, unless circumstances come to our know ledge which make the risk un­ desirable. 4, There is no right of renewal. 5. The holder of a fire policv has no right of re-

newal . ·

6. The Company has the right to refuse renewal, and the assured also has the right of cancel­ ment . 7. The Company exercises its own discretion ac­

con;Iing to the merits of each case. 8. Optional. 9· Optional . with Con>pany and assured. :o. The issue of a policy carries no right of re-

newal. All insurances are renewed by

mutual consent. II. Company reserves to itself the right of re­

newal.

I 2. Our con tracts as a rule are for twelve months,

and no special provision is niade as to right of renewal. IJ. I f we do not wish to renew a risk, we state

such on our expiry notice. I4. It is quite optional for the Company to renew ; if it does not infend to do so, notice to that

effect is given to the assured. The Company exercises its own discretion ac­ cording to the merits of each case. r 6. The portion the policy relating to the pay-

I7·

IS.

20.

ZI. 22. Zj. 24.

26.

28 .

ment of the renewal premium says, " and for so long afterwards as the said assured .. : ...

. ... .... . shall pay ........ ... , .,. __ , ... the sums re

quired for the renewal of this policy,- and the directors of the sai:d Company shall

agree thereto by accepting the same. " .. ...... .

The contract may be terminated at any time at the request of the insured, or at th e option of the Company, on notice being given to that effect. From th e above it will be seen that there is no

,right of renewal. There is no right of renewal. It is optional

with the insured as well as with the Com­ pany. The policy being a n annual contract it ·can be renewed so long as the insured shall pay to

the Company, and they shall accept 'the sum required for the renewal of the policy. Fire Insurance is an annual contract terminable at pleasure of either party. A renewal is never refused unless under special

circums tances. Does not bind itself to renew any policy. Company retains the right There is no right of renewal in fire policies. There are no rights of renewal on either side.

T he Fire Insurance contract is made for a defini te period, and although provision is made in event of renewal being mutually desi red, neither party has any right of re­ newal. Renewal right unchallenged except at notice or

for special reasons in exceptional cases. In Fire Tnstmmce there is no right of renewal, it being optional w·ith the assured and the society. The policy is an annual contract only, renew­

able by agreement of both parties. Our contracts are usuall y for one year, and no special provision is made as to right of re­ newal.

49

2g. All policies are renewable, unless formerly de- . dined, but the contract is generally a yearly one. :;o. All contracts for a fixed term, without any

rights of renewal on either side. 31. We reserve entire right. 3::1. There is no such thing as right of renewal.

The contract is for a definite period. 33· No rights on either side. 34· Optional. 35· We are under no obligation to renew any policy

unless by agreement. Our practice, however, is to renew all policies for what we consider good risks. 36. Clients are advised by notice of the expiry date

of their insurances. 3 7. Fire Insurance policies are contracts for speci­ fied periods, and do not give any absolute right of renewal to the.._ insured, nor can the

insured. be forced to by the Company.

The insured possesses the right of renewal conditionally on the acceptance by the Com­ pany of the premium for an extended period, and he1 of course, always possesses the right

of non-renewal. :;8. Optional either side. 39· It is optional on the Company to renew the

policy or not, just as it is optional with the insured to drop it if he wishes. 40. Being an annual contract, the Company has the right to decline to renew. 4r. No rights exist; contract is only for a

period. · ·

4;? , No rights exist. 13· Optional with either party at expiry of term.

Question 25.

Would it, in your opinion, be practicable to tabulate the combined experience of Fire Insurance Companies in. a J.Uanner similar to that in which the experience.of Life Assurance Com­

panies is tabulated?

Replies.

1. N.o, pr?fit or loss in fire . business comes out by the Judgment of the fire underwriters. One fire underwriter can make profit in certain !rades; others make losses, although charg­

mg the same rates. 2. No. As fire risks vary so very much.

3· No. Death is certain, fires are uncertain. 4· No, the two classes of insurance being so widely different. A conflagration might change the entire outlook which the statistics for a large

number of years appeared to warrant. 5. I think this is practically impossible. 6. No.

7 . Yes, owing to varying drcumstances I do

not think that standard rates could be per- manently fixed. ·

8. No.

9· I do not think it practicable to tabulate the

experience as a reliable basis for computing standard rates of premium. (O, Not in similar man11er to life companies, the two classes of insurance not being analogous.

rr. Yes. 12. Canoot say. IJ. Probably it might, but I · have no experience of how life o$ces tabulate.

14. I should think so. Have no opinion in the

matter. F.14377.

1285

15. Yes, but owing to varying i do

not think that standard rates could be per­ manently fixed. r6. It wouid be possible to tabulate the experience of companies, and classify data in the man­

ner suggested, assuming that all companies adopted identical methods of classification. But the result would not necessarily furnish a reliable basis for the computation of

standard rates of premium. The combined experience of life assurance com­ panies is practically constant, whereas the experience of fire companies varies from time

to time, according to the results of the busi­ ness on particular classes of risk, and in

particular towns and localities in varying series of years. I7. We do not think so.

r8. No. Fire business is so entirely different to life, the former is uncertain, and it is im­ possible to fix any scale of losses in any

particular class of business, whereas life insurance is .conducted on certain well­ defined lines after many years of experience, and based on actual statistics. Fire loss is an uncertainty. Death is a certainty. rg. No.

zo. No. z I. I should think so, expense of extra clerical

assistance would have to be taken into con­ sideration. 22. Not practicable. Not analogous. Longevity is ascertainable. 23. I do not claim to know about the experience

of life companies ; but I suppose so. 24. I think not.

25. Combined whole world experience British offices -revenue, losses, expenses, and so on, pub­ lished by London financial newspapers from time to time. z6. No doubt it would be possible to classify the

data in a somewhat similar manner to life companies, but it does not necessarify fol­ low that as a result of such, standard rates of premium could be permanently fixed.

Rates are fixed as a result of the combined experience of companies over a series ' of years, and which may vary considerably from time to time, both as regards

and the nature of the risk.

:0

27. Yes. z8. Do not think it practicable. 29. Yes, but a great deal more detail would be re­ quired.

30. No. No, absolutely impossible. The conditions

change too rapidly, and no two risks can be tabulated as. absolutely identical; and ap­ preciation of the relative values is the result of daily experience, and every year sees new

features in different classes of risks. 32. It would not be practicable. Life insurance tables are based upon actual facts, and the application of the knowledge acquired from

these facts appears very crude as compared with the very complicated subdivision of the elements of risk, which is now adopted in the fire insurance business for determininu the actual degree of risk applicable in ever; case. 33· Cannot say. Have no experience in life as-

surance business. 34· No. 35· No . .36 . Not practicable.

37 . It would be practicable to tabulate the com: bined experience of F ire I nsurance Companies, but the comparison with Life Companies can hardly be applied. In fire insurance there

are so many and such varied conditions, in­ cluding the moral hazard and conflagration hazard that it is questionable whether the application of a combined experience would not result in an increased rate of premiums being charged for risks in Australia. The business is now conducted on a world-wide basis and experience. with considerable ad­ vantage to the public. If this system be dis­ turbed, and the business transacted on purely local experience, the f actor of " restricted fi eld ' ' would operate to increase the cost

of insurance to the public in the Common­ wealth. 38. No. 39 · I do not know how life assurance experience is

tabulated, so cannot say. 40. N o. It would be impracticable to frame anv reliable data which would apply to

various classes of risks. 41 . Possibly it could be done, but it would entail a large amount of work, and be of little

use, as it would require co nstant revision. 42 . It would be difficult, and of no use. 43· No.

Question 26 .

Would it be possible to classify the data according to-(i) Locality ; and (ii) Nature of risk, so as to furnish a reliable

basis for the computation of standard rates of premium?

Replies.

I. No, it would take years to compile, and then would not be reliable unless you had so years data, as the hazard of a town increases or otherwise yearly, it would be most. difficv.It as rates are constantly varying. 2. We do not think so, as localities and risks are

so different. 3· I do not think so.

4· Not to: furn!sh any basis. So many

cons1deratwns enter mto the computation of a rate, contiguity and propinquity

of bmldmgs 1t wo uld be frequently difficult to allot losses 1

to which class they

should be charged. Any rates which n·ight appear to be warranted could not be 1ooked upon as standard, for results vary materially f rom year to year, and the anticipations ap­ parently warranted by long periods f•f ob­ servation would be liable to be overthrown at any moment by a serious conflagration. 5. I think not.

6 . No.

7· See reply to question No. 25. 8 . No.

9· See reply to question No. 25. IO. Owing to the varying conditions of the busi-ness it would not be practicable. 11. Yes . 12. Not possible. 13. Yes. 14· I should think so. 15. See reply to .question No. 25. 16. See reply to question No. 25 . ·: ...... .......... ,.

50

q . It would be possible to classify the data, but

we do not think it possible to fix standard rates for fire insurance, as the experience of the different classes varies from time to time. r8. It would be possible to arrive at sufficient data

if the experience of insurance managers could be tabulated over a large number of years, but then where one company will make a p rofit on its business another will show a loss. After all, it is a question of under­

writing and experience. Rates are based on such experience. 19. We are of opinion that the 'ack of uniformity in, and in many cases the absence of, sta­

tistics would be an insuperable difficulty. It would also be found exceedingly difficult to ascertain the basis for a " standard " rate applicable to a class or classes of risks

destroyed in of a conflagration.

Should the total cost of a conflagration be charged against a class of risk in which the fire started? If so, the resultant rate would be over roo per cent., and such risks would consequently be uninsurable This is but one of numerous, practical and real diffi­ culties. 20. I think not.

zr. Yes. 22. Approximate basis for one company. The ex­ perience of companies varies, and to some extent their methods, so that a reliable basis

is not possible. Moreover, a conflagration upsets all calculations. '

23. It might be, if you had many years of ex­

perience, and the data that would thus be accumulated to guide you. 24. I should say tha t it is not possible in fire (as

it is in life) to arrive at ·a scientifically

accurate rate for every class of risk, and for every different individual ri:;k in each class. 25. Yes, at considerable cost and trouble. 26. See reply to question No. 25. 27. Yes, it would be possible, but the time and

expense involved in the work would be very ' great. 28. No.' 29. Yes, but not at all to the same extent as in the

case of life assurance. 30._ No. 31. No.

32. No. (See also reply to question No. zo).

In _the fire department there are about r,ooo primary classifications of risk, and each of these is subject in its turn to a large variety of additions or reductions, . according to the internal qualifications of the risk or to its external surroundings. This system is

adopted, not for the purposes of amusement or creating work, but to determine, as far as possible, the most equitable rating of each particular risk on the basis of common experience, so that a · man with the larger amount of hazard has to pay a larger pre­ mium, and the man with the less amount has not to pay for the higher risk of his

neighbour. Conditions are constantly chang­ ing, and new materials are constantly being introduced. This has been markedly the case of late years in consequence of the large introduction of inflammable substances, which are not only h:>.zardous in their own manufacture, but are used in the manufac­ ture of non-hazardous goods, and many of them are now stored !n every small shop and used in dwellings. _. .. Also new machinery,

... l'' · .

51

with iargeiy incteased speed and other ele­ ments of risk, is constantly coming in; ancl risks nominally of the same character, which have proved profitable in time past, have been demonstrated to become unprofitable on account of their changed nature. In Life Insurance of course•;there are disturbing

elements, but of a much less degree. Con­ ditions are probably more constant over the whole field under examination, because varia­ tions are, broadly speaking, more dependent

upon a single cause, viz., the improvement of sanitation knowledge and practices both in the towns and in the country. Li-fe In­

surance is based upon the whole number of cases, but the experience of Fire Insurance Companies is based only upon insured cases. Life Insurance contracts are either for the

whole remainder of life, or endowment

transactions for a long period of years ; and there is no power to alter the terms during the contract. Fire Insurance is a contract from year to year, and the terms Can be

altered or the insurance absolutely rejected every year. In IllY opinion, the only way of ascertaining the combined experience of Fire Insurance

Companies is that adopted by mutual con­ ference and determination; but that is not tabulating in a manner similar to that in

which Life Insurance Companies experience is tabulated. It would be possible to classify insurances ac­ cording to the " locality '' in . which the risk

is situate, and the nature of the risk, but it

would not be possible to do it so as to con­ stitute a reliable basis ·for the computation of standard rates of premium. Fire In­

surance cannot be successfully carried on by tabulated statements and questions and answers. There is too much of the personal factor on the one hand and too much of the

personal experience and power to apply that experience to facts on the other hand re­ quired. The nature of risks is constantly changing, and the insurance nature of locali­

ties is no less changing. An inexperienced individual could classify every " building" in the main street of a wooden country town according to the nature of its occupancy, but

to determine the nature of each " risk" is

another. matter, and that would require an exercise of judgment which is much better used in other directions. T he answer to this question altogether might

be "Yes, in some respects, and No in

others."

33· Yes. 34· No. 35· No.

36. See reply to question No. 25.

furnish a reliable basis. Would not

3 7. (i) Yes; subject to classification for construc­ tion, grouping special P,azards, water supply, fire brigade, conflagration

hazards, &c.

(ii) Yes. 38. Yes. 39· I do not think it possible to arrive at a classifi­ cation .sufficiently complete to fix standard

rates, If by standard rates is meant fixed

rates for a class. Most companies do classify their risks. 40. This is answered in the reply to question No. 25 .

1287'

4r. Yes , but the cl assification wouid require con­ stant revision, and would not furnish a re­ liable basis for the computation of standard rates. 42. Possible, but not of much value. 43· Yes.

Question 27 .

IY" you consider such a tabulatio n practicable, what steps would you suggest for effecting it?

Replies.

r. Do not think it could be done. 4· Do not consider it practicable; 5· See reply to question No. z6. 7. See reply to question No. 2 5. 8. See reply to question No. 25. 9· See reply to question No. 25. ro. See reply to question No. 26. .

r r. The furnishing of returns and analyzing same. 12. See reply to question No. 26. 13 . I do not consider it practicable. r5. See reply to question No. 25.

16. As such a tabulation would, in my opmwn, be useless, perhaps it is hardly necessary that I should answer this question. r8. By obtaining the opinion of Fire underwriters,

and adopting similar lines to those acted upon when the fire tariffs now in force were arranged, i.e., agree upon a basis rate for the best risk in a class, and then load up for extra hazards, defects, and exposures. 19 . D eeming it impracticable, have no suggestions,

2o. See replies to questions Nos. 25 - and z6. 2 r. Special locality and cl ass registers be kept. 22. See reply to question No. 25. 23 . H ave nothing to suggest in thiS direction. 24. See reply to question No. 25.

25. Only an invitation for voluntary action on the part of offices. 27. I do not feel able to make any suggestions. 28. See reply to question No. 25.

29. Uniform system of detailed records by all Com-panies. 31. See reply to question No. 26. 32. I . can make no suggestions, for reasons given. Already effected by the Fire Underwriters ' As-

sociation.

34· See reply to question No. 25. 35· Can offer no suggestion. 36. See reply to question No. z6. 37. Such a tabulation could be made bv a series

of questions to be answered by all Companies. This <::;ould- be done under sealed conditions, say by a recognised and reliable actuary, each Company merely sending in the infor­ mation on blank forms, so that its name and

business, &c., should not be revealed. Any tabulation of this nature, in our opinion, would be of little real value, and would not be reliable for practical purposes. F or in­ stance, it would have to be based on a cer­

t ain number of years, and the similar. pro­ ceeding in following periods would pro­ bably give entirely differen t res ults. 38. We already have it. 39· Do not consider it practicable. 40. See reply to question No. 25. 41. Whilst possibly practicable, I co uld not recom­

mend it, and cannct suggest any steps for effecting it. 42. Cannot suggest. 43· By a centra l bureau, who "·ould collect and

tabul ate all returns.

52

SECTION IX.-CLAIMS.

Question 28.

What was the total amount paid in Fire Insurance claims by your Company in the Common­ wealth during its latest financial year? Replies to question No. 28 have been treated

by the Commission as confidential, and are consequently not published.

SECTION X.-REINSTATEMENT.

Question 29.

Is the right to reinstate made a condition policies issued by your Company ? m the

Replies.

I. Yes. 2. Yes . 3· Yes. 4· Yes. 5· Yes ; 6. Yes. 1· Yes. 8 . Yes.

condition 14. (See reply 17 below.) See condition 14. (See reply 17 below.)

9 · See clause 14 of policy attached. (See reply 17 below.) 10. rr.

12.

15 . r6. 17.

Yes. See clause 14 of conditions of policy as per copy attached hereto. (See reply 17 below.)

Yes. See clause 14 in policy conditions. (See. reply 17 below.) Yes. See condition No. 14 of policy herewith

attached at back of this form. (See reply

17 below.) Yes. Yes. Yes. Condition No. 14 of the policy.

14. The Company may at its option rein­ state or replace the property damaged or destroyed, or any part thereof, instead of paying the amount of the loss or damage, or may join with any other Company or in­ surers in so doing; but the Company shall not be bound to reinstate exactly or com­ pletely, but only as circumstances permit, and in reasonably sufficient m,anner, and 4.n no case shall the Company be bound to ex­ pend more in reinstatement than it would have cost to reinstate such property as it was at the time of the occurrence of such loss or damage nor more than the sum insured by the Company thereon.

If the Company require, and whether the Company shall have determined to reinstate or not, the insured shall, at his own expense, furn!sh the Company with such plans, speci­ ficatlOns, measurements, quantities, and such particulars as the Company may re­

qmre; and no acts done or caused to be

done by the Company, with a view to rein­ statement or replacement, shall be deemed an election by the Company to reinstate or replace. No amount shall be payable under this policy unless the terms of this condition h ave been complied with.

18. Yes; in the Commonwealth. tralian uniform policy. above.)

Clause q. Aus­ (See reply 17

19·

20. h.

22.

Yes . See Clause 14, policy conditions. reply I7 above.) Yes . Yes. Yes . 23. Yes . 24. Yes.

(See

25. Please refer to Clause No. 14 of printed con-(See reply I7 above.) ,

26. Yes . 27. Yes. z8. Yes. 29 . Yes. Condition No. 14 of policy. All Com­

p anies' policy conditions are now uniform. (See reply 17 above.) 30. Yes. 31. Yes.

32. See exhibit No. 3, condition 14· (See reply

,17 above.)

33 · Yes . 34· Yes. 35 · Yes. 36. Yes. 37· Yes. See condition No. 14 in enclosed form of

the Company's policy. (See reply 17

above.) This condition -is necessary to pre­ vent arson and incendiarism as well as un­ f air and extortionate claims. Insurance

companies act largely as distributors of the premiums paid by the public, and it is neces­ sary that the cost of insurance should be kept dow n by the prevention of such class of

claims.

38. Yes. 39· Yes. See condition No. 14. (See reply 17

above.)

40. Yes. 41. Please see condition No. I4 of policy. (See reply 17 above.) 43· Yes .

If so,

Question ,30.

in what proportion of cases, is the right exerGised?

Replies .

approximate! y,

r. We have only exercised the right once in fifteen years. 2. Very seldom. Have not had a case for years, except small claims for partial loss. 3. This branch has on! y exercised its right to re­

instate once during the last sixteen years. 4· In the past five years it was once exercised, and, as over 2,ooo losses were settled in that period, the proportion would be as r is to

2,ooo, approximately. 5. A fraction per cent. of the losses, and re­

instatements are almost entirely at the re-quest of the insured. .

6. Have not exercised our right in reinstating a single risk during the last year, but have re­ instated damage to buildings at request of assured to save him the trouble, and in each case have received a certificate from the policyholder that the work has been carried out to the assured's, or his representa'tive's, entire satisfaction. 7. Reinstatement very rare; cannot recall a case

with this company. 8. Not one in soo. 9· Roughly speaking, I in soo.

If in any case the Company shall be un­ able. to reinstate or repair the property here­ by msured because of any municipal or

other regulations in force affecting the align­ ment of streets, or the construction of build­ ings,. or otherwise, the Company shall in every such case only be liable to pay such sm_n as would be req ui site to reinstate or re­ pau such property if the same could Jaw­ full y be reinstated to .its former condition. · 10. Say, I per centum over 30 years.

I r. About I in s,ooo cases.

r 2. V exy seldom. 13. We have never had reason to exercise the right. J4.. In most cases. I 5. Reinstatement very rare j cannot recall a case

with this company. I6. A very small fraction of I per cent.

I 7. We not had to exerCise the right

durmg the operatwns of this Company in Victoria. r8. On1y twice during past so years in the Com­ monwealth, when incendiarism was suspected,

but not once within past fifteen years. Db not know about other parts of the world. 1 9· In extremely rare cases, and only when the

amount of a claim is, in our judgment en­ tirely unjustifiable. Probably not more' than one case per annum on the average. 20. Not in one case out of each hundred. 21. Very _seldom reinstate. The Company obtains

estimates from two or more leading builders, the amounts of which are almost invariably accepted by the insured. 22. Very seldom. Too seldom to be named in pro­

portion.

23. I presume the inquiry refers to buildings. In regard to total losses-So rarely that it may be deemed an ab­ solutely negligible quantity for purposes of

calculation. In regard to slight partial

losses, the insured often prefers that the Company should repair the building. 24. Hardly ever; probably not 1 in 1,ooo. 25. Unable to ascertain the proportion, but it is

very se1dom that the right is exercised. 26. The right of reins;tarement is rarely exercised. 27. None so far. 28. Very rarely exercised. 29. So far, we have not liad one single case of

reinstatement.

30. Practically nil. Have not exercised the right more than, say, six times· during a management of eight and a half years. 31. Very rarely, but when it does occur, in most

instances it is on account of over-insurance. sometimes accompanied by suspicions of arson. 32 . About 1 in to,ooo, but it is an essential con­

dition.

33· Very rarely. None with the Samarang Com pany. . '14 · Not r in soo.

35· Since I assumed the management of the Com nanv twenty years ago. we have onlv once during that time exercised our right in the Commonwealth to reinstate. Very rarely.

37. Has never been exercised in our exoerience as the Company's agents in New Soutli Wales. As a matter of uractical experience, it is

very rarely indeed resorted to · bv Fire Com­ then nearly alwavs in ca,es onlv

"ihere the cause of fire is suspicious. Jts

application is hardly ever resorted to on the grounds only of the claim being excessive. 38. During our 20 years' e'll,perience, we h ave. neYer exercised till> option.

39· Cannot say. In six vears' opf'rations of this

societv and its predecessor in Anstra:lia it has not been exercised once tto. To a very limite.d extent. and mostly at the

reouest of the in the Ci!Se of

lo:rses.

43·

1289

As to repq.irs, seldom arbitrarily, frequently by mutual consent. A.s to complete reinstate­ ment or re-erection, only one tase, a small one, about 30 years ago, can be recollected

by the officials of the Company. . .

Have never exercised it in New South Wales.

SECTION

Question JI.

(a) Does your Company re-insure its risks? -(b) If so, to what extent?

Replies,

r. Ves.

(b) Impossible to say, class of risk and locality, all enter into the qu€stion of any retained line. 2. (a) Yes, in some cases. .

(b) No fixed rule as to ratio. All depends upon the risk and its surroundings. 3· (a) Yes, to a certain extent.

(b) It all depends upoh circumstances, such as the nature of the risk and the adjoining buildings. '4· (a). Yes, in the case of large insutahces over

the limit laid down by our he.ad for

our retention. (b) Approximately, to pet cent. 5· (a) Yes.

(b) 22.26 per cent.

6. (a) Ves.

(b) 15.44 per cent. of gross ptemiums. 7· (a) Yes.

(b) According to limits fixed by head office, the excess in each case being specially re­ insured. 8. (a) Yes.

(b) According to judgment in each case. 9· (a) Yes. (b) Excess of its retained line. 10. (a) Yes, some of them.

( !J) As experience and the nature of the risk may suggest or require. r r. (a) Yes, in some instances. (b) According to our 1dea of amount to be re­

tained.

12. (a) Yes. (b) Depends entirely upon the nature and class of risk. 13. (a) Yes.

(b) The manager's judgment . 14. (a) Some of them. (b) About 25 per cent. of premiums. 15. (a) Yes.

(b) According tci limits fixed by head office, the excess in each case being specially re­ insured. r6. (a) Yes.

(b) For 1907, the proportion re-insured was about 30 per cent., but, of course, it

varies.

17· (a) Yes, in some cases. (b) We have no fixed rule, but re-insure the excess of such an amount as, in view of the. risk, we deem it wise to retain for

the Company's own account. 18. (a) Yes. (b) In excess of what is considered a proper amount to nold on any risk or group of

risks.

19. (a) Yes. (b) Varying according to conditions of indiviT dual risks.

I •

20. (q)

(b)

21. (a) (b)

22. (a) (b)

2J. (a) (b)

24. (a) (b)

25 . (a) (b)

26. (a) (b)

Yes. .£1o,5oo was paid for re-insurance last year. ·

Yes, a proportion of same. No fixed rule. Yes. Varies · matter of judgment.

Yes, if thought desirable to do so. Left to discretion of managers. Yes. Some lines largely, others not at all. Yes. Roughly, 25 per cent. of revenue re-insured.

Yes, in some instances. To no fixed extent; each particular risk is dealt with on its merits, and a limit fixed to retain for the society's account, and

any sum in excess of that amount is re­ insured. 27. (a) Yes. (b) Only when the amount of the insurance is

above our authorized limits. z8. (a) Yes. (b) Depends entirely upon the class of risk, situation, construction, hazard from ad­

joining buildings, &c. 29. (a) Yes. (b) Governed by circumstances. 30. (a) Y e's.

(b) Roughly, about 38 per cent. of premiums. 31. (a) Yes, in part.

(b) Varies according to the nature of the risk or amount of liability the Company may have in certain blocks or districts.· 32. (a) Yes, its surplus lines.

(b) Impossible to say, the circumstances differ in every individual case, according to judgment. 33 · (a) Yes.

(b) All over its limit of retention. 34· (a) Yes. (b) According to judgment in each case. 35· (a) Yes.

(b) As may be necessary to keep our retentions on individual risks down to a moderate amount. 36. (a) Yes, to some extent.

(b) Depends on class of risk-we do not retain as much on hazardous risks as non­

hazardous.

37 . (a) Yes, that is the excess of its limits, or for

special reasons, such as block or group­ of risks in congested areas. (b) In New South Wales the paid for

re-insurance in 1908, were 2.47 per cent. of the total net premiums received. This question is very indefinite, for instance, it

would be quite possible that the Company's limits might never be exceeded, and con­ sequently no re-insurances might be quired · on the other hand, the re-insur­

ances :Uight be a large proportion of the premiums received . 38 . (a) Sometimes. (b) Varies according to nature of the risk. 39 · (a) Yes, some of them.

(b) No ]]articular proportion, but the excess of what we deem it advisable to retain on each particular risk. 40. (a) Yes.

(b) According to the nature of the risk. 41. (a) Yes. (b) Say, 25 per cent. (a) No.

4:{ (a) Yes, some of them. (b) Cannot say. In New South Wales re-in­ surance is effected as prudence dictates.

54

Question 32.

What is the maximum amount of risk which your Company will carry alone on a single pro­ perty?

I . .£5,ooo. 2 • .£ro,ooo.

3· .£Io,ooo.

Replies.

4· .£8,ooo on an unexposed b:i:k or stone warehouse, with an addrtwnal amount of .£4,ooo for head office account. 5· For best risks-.£3,ooo for trade risks; .£4,ooo

private residences. On t'vo or three properties, .£6,ooo. 6 . .£4,000. .

7· .£s,ooo. 8. Depends on the property. .£4,500. 9· Depends on the property. ro . .£5,ooo. II . .£5,ooo, unless in some very exceptional case. 12 . .£ro,ooo. 13 . .£2,ooo. 14· .£4,000. I 5· .£2,5oo.

16. £5,ooo. 17 . .£r2,ooo at this agency. We have no informa­ tion with regard to the Company's practice elsewhere. r8 . .£5,ooo. 19. On a single risk, i.e., in our judgment likely

to be destroyed by one fire, .£7,500. 2(' .£J,OOO. 21. .£2,ooo. 22 , Select cases, .£3,ooo; average, under .£2,ooo. 23. Say, .£6,ooo; but very rarely so much. 24. In some cases .£1o,ooo. 25. Current maximum, .£7,500. 26 . .£6,ooo. 27. Up to .£ro,ooo on the best class of city pro-

perty.

28 . .£5,ooo. 29 . .£4,000. JO. In the Commonwealth, .£ro,ooo. JI. Varies very much according .to knowledge of

moral risk and physical conditions ; about .£5,ooo is the maximum on a first-class risk. 32 . .£250, or less in some cases . . In special cases up to, perhaps, .£ro,ooo. 33· .£1,500 in Queensland. 34· Depends on the property-.£4,500. 35· We very seldom exceed .£3,090. 36 .. .£J,OOO. .

37· .£15,ooo. 38 . .£5,ooo. 39· It depends on what is meant by a property. In Australia I would not .keep more than

.£5,ooo on what I considered one risk. qc. About £6,ooo to £7,ooo. 41.. Say, .£5,ooo on a first-class isolated risk. 42 . .£2,ooo. 43 · .£15,ooo.

Question · 33·

IP your Company what general principles are fol­ lowed in the selection of Companies with w hkh re-insurance is effected?

Replies.

I. Any Company of approved standing. 2. That same must be in a solvent condition. 3· Stability of the Company and its power to re­ ciprocate. 4· We re-insure with Companies with whose financial

position and strength we are satisfied, and with whom we reciprocate by accepting por­ tions of their excesses.

55

5· This Company selects Companies that are in a position to reciprocate. 6. To those who reciprocate. Preference to Colo­ nial Companies.

7. Select Companies W'ho are, in our opinion, finan­ cially strong. 8. Solvency, exchange of premiums, and friend­ ship.

9· Suitability of Company and its business relations with this Company. ro. Security, good faith, reciprocity. II. We re-insure with Companies of good financial

standing who will reciprocate. 12. Position and standing of Companies and amount of reciprocal business. 13. Re-insure with those Companies who recipro­

cate or are likely to do so. 14. We re-.insure with Companies which can give re­ turn business, stipulating that, as far as pos­ sible, they must give us business in return

pound for pound of premiums. 15. Select Companies who are, in our opinion, finan­ cially strong. 16. We will re-insure with practically any Company

which, in our opinion, is in a position to meet its engagements. 17. We re-insure with any Company which, in our opinion, is able to meet its obligations.

r8. With Companies who are cqnsidered financially sound and recognised as fair and honorable in their dealings. 19. A reciprocal basis.

20. The Board re-insure chiefly with Companies who reciprocate. 21. Local Companies obtain the preference. 2 2 . Entirely a matter of judgment.

23 . A good substantial Company is the first and last qualification. 24. We re-insure, as far as possible, with friendly offices, which give us business in return. 25. Re-insure with all, watching contra accounts.

26. The selection of those Companies who, in our opinion, are in a position to meet their liabili­ ties.

28.

32·

33·

34·

35·

37·

39·

We consider, first, the financi al standing of the Company. Beyond this it is mainly a ques­ tion of friendship or expected reciprocity. Financial position and standing of Companies

and amount of business received in return. We only re-insure with Companies we consider absolutely safe, and we generally receive re­ turn business from them.

Stability, and reliability to honorably carry out their contracts. Companies having their head offices in the Com­ monwealth, where practicable.

No set general principles, but the reputation and solvency of the Company and the facili­ ties it affords us are the main points. In Queensland, with the object of reciprocal

business. Solvency, exchange of premium, and friend­ ship. Reciprocity with good Companies of high finan­

cial standing. This is a matter of business arrangement. There are no general principles other than strength and solvency of the Company w1th

which we re-insure. VIle re-insure with those Compa nies who re­ insure with us. No general rule, but we satisfy ourselves as to

the soundness of the Companies with wh om we exchange business. With approved Com2anies and reciprocity.

1291 ,\.: .. ,- : ..

4r. Australian and New Zealand incorporated offices are first favoured, then foreign incor­ porated offices. 43· Stability and reciprocity.

SECTION XII.-PAYMENT OF SUM INSURED.

Question 34·

What is vour opinion concerning the proposal to make the actual amount insured by a fire policy payable in every case of total loss?

Replies.

1. Such a practice would encourage and legalize fraud · would close up, in our opinion, most Insur;nce Companies, and seriously restrict commerce and trade. 2. That the proposal is most pernicious, and

if carried out be a menace to the commumty. 3· In my opinion, the proposal is a most one, and the number of fires would mcrease by leaps and bounds throughout the Com­

monwealth. 4· I append a printed statement issued by the

associated offices on the occasion of a Bill being brought befote the Federal House in 1908, entitled "A Bill relating to Fire In­ surance."* -I the views expressed in the statement,

and am of opinion that the proposal referred to in this question is absolutely un'llorkable. 5· I do not approve ot If

there would be a great·temptahon to mcen­ diarism. 6. All kinds of property depreciate in value,

buildings and machinery not only suffer from wear and tear, but their value may be

affected by other causes, such as the decay of a particular locality or changes in process of manufacture, while stock-in-trade and other movable property may vary. greatly in

quantity from time to time. To agree to

pay a fixed indemnity witho':t question in all cases of complete destruction would open the door to fraud, and would undoubtedly lead to an increase in the number of fires

wilfully caused. It is understood that a fire policy is an a15ree­ ment to indemnify on the basis of actual loss only. 7. I am adverse to the proposal which, in my

ouinion, would not be beneficial to the honest policyho1der, because the Insurance Com­ panies would have to increase rates to pro­ vide for increased payments. 8. It would be against the interest of the public

and the Company, and make insurance more costly. 9· Would be an incentive to arson. ro. Impracticable and most undesirable in the in­

terests of the community, as it would be an incentive to fraud and necessitate increase of rates so as to be prohibitive to bona fide pro­ ponents. r r. Unsound. The policy is a contract of in-

demnity.

r 2. Proposal unsound and against proper conduct of business. r 3· It would he unwise.

* Some by the fire unti erwriters in on a. u Bill re·

lating to fire ins urance," brought in by .Mr. Frazer ·

14· I think such would certainly lead to fraud and tend to make people dishonest who are not so at present. A fire policy is a contract of indemnity; no

person should be able to make money by in­ surance. rs. I am adverse to the proposal which, in my

opinion, would not be beneficial to the honest policyholder, because the Insurance Com­ panies would have to increase rates to pro­ vide for increased payments. r6. This being a of "valued policies," see

reply to Question No. 40. I7. It w?uld destroy the fundamental principle of Fue Insurance, namely, indemnity for the actual loss sustained. Every kind of pro­

perty is subject to fluctu ations in value, and under a " valued " policy, therefore an in­ sured might obtain more than the ?estroyed was worth, or, in other words, an msured would be placed in a position to make a profit out of a fire . The conse­

of such a state of affairs would

inevitably be serious for the community· as for the Insurance Companies, they h.ave to regulate 'their rates of pre­

m VIew of the very heavy expense

which would have to be incurred in con­ tinually inspecting and inquiring into values, and the cost of insurance would be corre­ spopdingly increased. It niay not be out of place here to quote from the judgment of

Brett, L. J., in Castellain v. Preston (r883. rr Q.E.D.) See reply 16 to Question No. 40. .

r8. Most unadvisable, as such a measure ·would be a direct incentive to fraud. Fire Insurance provides for indemnity against loss ; under a valued policy it would become a means of gambling and dishonesty, and a source of great danger to the general community. It

would alter the whole system of insurance business, and the Companies would most likely withdraw from business in the Com­ monwealth as they did from various States in the United States of America,

legislation of this nature \vas passed, only to be almost at once withdrawn. It is also opposed to the views of commercial men who find that they receive fair and honorable treatment by the Companies. Only a cer­ tain class of people, mostly undesirable from an insurance point of view, appear to f avour it. 19. Such a proposal we consider to be----

(i.) A direct incentive to arson ; therefore contrary to public policy. (ii.) Would necessarily increase cost of in­ surance ; therefore not in the interest of the honest section of the community, who ap­ pear to ·be quite satisfied with an indemnity against actual loss sustained. 2c. It would encoural!e fraud and l:ie the means of

increasing the of Fire Insurance tb the

public.

·2I. Absurd. 22 . Bad principle; would encourage fraud. 2J. It would be absolutely against public interest; even immoral in its tendency. ·

24. Such a proposal seems to me absolutely absurd in the first place and immoral. 25 Adverse. 26. By adopting such a practice the fundamental

principle of .a II Fire Insurance, namely, in­ demmty agamst loss only, ot compensation

56

for- the actual loss sustained, would be

abolished. Every description of property is subject to fluctuations in value, conse­ quently if the full face value of the poricy was paid in every instance, the insured might obtain a greater sum of money than the pro­ perty destroyed was worth at the time of the fire. :tvj:aking a " profit " out of a fire would have a. very bad effect on the community generally, and tend to lower the moral

hazard, which would probably bring about a system of investing ' ' in Fire Insurance

policies. Companies, in order to protect them­ selves and provide against such a contingency, would have to materially increase premiums all round, and the extra cost thus imposed would not be in the interests of the public. z 7. I consider that the suggestion is impracticable

on the ground of expense, and nndesrrable on grounds of public policy. z8. The proposal i5 unsound and unworkable. 29. The idea is utterly opposed to the fundamental

principle of Fire Insurance business, that no profit should be made out of a fire. 30. Would act as a direct incentive to fraud. Simply an absurd proposal which, if carried

out, would result either in most Companies ceasing to do business in the Commonwealth, or increasing rates in an abnormal manner. 3L I am strongly averse to this. A fire policy is

a contract of indemnity; to construe it as a valued policy would encourage arson, which is already sufficiently prevalent. It must not be forgotten that the honest trader pays

for cases of arson; the only basis upon which it would be possible to issue valued policies would he that every year-or in mining cities every six months or even more frequently­ the property would have to be Valued; this would increase the cost of insurance con­ siderably, it might be 200 per cent. or 300 per cent. It is plainly impossible to issue a. valued policy on stock under any circum­ stances; the value of stock varies from day to day, which would mean a daily valuation. 32. The term "amount insured" is misleading,

although it is used in policies. There is no " sum insured, " the contract being to pay the possible amount of loss not exceeding the amount set forth in the policy. Except in the case of policies subject to average, the athount of the loss is always p aid. It-would be preferable that the words "sum insured" should not be used in any policy. With re­ gard to making the amount of the policy p ayable in the event of loss, there are three ways of looking at it-(a) from the point of view of public interest; (b) f rom the point of view of public policy; and (c) from the point of view of the Insurance Company. As to the general public, the principle that the amount of the actual loss is to be paid is almost universally understood, and the whole principle of a Fire Insurance policy is that of indemnity against loss, and not

wagering that a certain sum must be paid in _ the event of a certain thing occurring. In­ deed, a policy of the latter sort would be a wagering policy, and therefore invalid under the old British Act known as the Gambling Act, which I believe is in force here. No honest man should seek to be more than com­ pensated for his loss, and any attempt to do so is a deliberate fra:ud, which no one but a rogue would attempt, and no one but a

57

rogue or ignorant person encourage. Such a system as that contemplated under this in­ quiry would be simply an encouragement of fraud. It would be obviously impossible

to carry out such a system with the great

bulk of insurance business, and it would be impracticable i.n the remainder. Take, for instance, the simplest case-a small dwelling­ house. Instead of the present inspection by

a fairly capable insurance clerk or agent, who would satisfy himself from his own ex­ perience or knowledge that the sum proposed was apparently not excessive, there would have to be a special expert survey in order

to determine the exact value, just the same as a man might have made on his behalf if he were preparing to purchase a property, and for which a special fee would have to be

paid. All this would result in delay and

great expense. Even in town risks a pro­ fessional valuer would not undertake the work for less than £1 IS., which is, in a

large proportion of cases, three or four times the amount of the premium. The fee could not therefore be paid by the Company, and would fall on the insured, who probably

would not insure at all in the face of that

expense. In the country such a valuer

would be less easily found, and he would have, in many cases, to travel many miles specially to do that one job, thus increasing the expense. By -this means, in order to

satisfy the outcry of a few rogues, the whole insuring community would be oppressed with heavy charges, or would be, to a very large extent, debarred by them from the benefits

of The loss ratio also would

probably be very materially increased on account of the increased number of fire losses, because whatever care is exercised by Insur­ ance Companies not to accept excessive

amounts but to keep insurances well within• the value (which is a .standard principle), it is not possible to avoid mistakes, and should ·it be provided that the total a,mount of the

policy shaH be paid in the event of loss,

there would be a premium offered to the man who could evade the vigilance of the Com­ pany and set fire to his premises and make a profit. This loss would not be borne by

the Insurance Companies, and the conse­ quence is rates would have to be raised. Another item for consideration is that it is very difficult to determine the actual value of

buildings, even in such a simple case as that of a :o.mall dwelling-house (already referred to) ; many are liable to be deteriorated from various re<:tsons. For instance, the erection

of an objectionable or noisy factory in the neighbourhood, a railway bemg carried close by, dry rot, white ants, &c. (not readily de­ tected), and many other similar causes; and, in the country towns principally, through the fluctuation of population. There are many towns throughout the :"here

a dwelling-house in fairly good repa;r IS not now worth one-fourth part of what 1t would cost to erect, and Insurance Companies keep a watch over this as far as they can, and

insure only very small amounts, some of them avoiding such risks altogether. There are other cases where railways pass through, and a place which had been' a terminus and

consequentlv a centre for the surrounding country, depopulates rapidly after the

original people leave and there are no new­ comers, and consequently deterioration takes place there. All these things are carefully looked after in insurance practice, but in

spite of every care mistakes must creep in. As regards chattels, an answer to the question appears almost superfluous. Furniture is constantly changing or wearing out, and it

is very easy to remove considerable values. Stocks, of course, vary greatly with the sea­ son, and there are other causes, and without any one being the wiser a man may deplete his_ stock in various ways (which cannot be

watched), so that a full investigation is al­ ways necessary after a fire. A merchant

will take out a policy for £Io,ooo because he has received a shipment of goods. He sells this from day to day, and in a fort­

ni_ght's time there is £z,ooo worth left, and still, on the supposition of the so-called

" valued policy," he would have to be paid his £Io,ooo if that £z,ooo was totally de­ stroyed. (See also Reply to Question No. 39 b.)

33· Very good, if the Insurance Companies' in­ tere?ts are protected, but at present

agamst the pnnc1ple of insurance. 34· It would be against the interest of the public and the Company, and would make insur­ ance more costly. 35. A fire policy is an indemnity against the as­

actual loss. Values fluctuate, espe­

Cially as regards stocks. Valued policies would inevitably cause more fires; would pay many assured to have fires; are against the best interests of the community. No per­

son requires, or should require, more than an actual indemnity such as is now given by all Companies. ,36. This is practically a proposal tliat the policy

should be a valued policy, as against the

usual form of indemnity now used. It

would not be sound business, and would en­ courage fraud. 3 7. Any such system would be entire! y opposed to the public interest (as well as that of Insur­

ance Companies), and would result in-(i.) Large increase in arson and incen­ diarism. (ii.) Heavy increase in the risk and danger to human life and property.

(iii.) Heavy increase in tlie conflagration risk in cities and large towns. (iv.) Increase in the moral risk. (v.) The necessity for expensive expert on the effecting of any insurance,

and on 1ts renewal. (vi.) The consequent heavy increase in cost to those requiring insurance. (vii.) Fire insurance contracts are largely

contr?cts of good faith, but this character would be largely done away with, to the dis­ advantage of both the insured and the Com­ pany.

(viii.) Except from the fact that experi­ ence (world-wide) has proved the advantage of the cost of insurance being kept as low as possible, Insurance Companies are not cOG·

cerned. as the rate of premiur' would have to be made to fit the risk. In anv exneriment of this nah:--:! suggested in the auestion. before the nece!ssary experi­ ence could he gained to enable adequate rates

to he r;auged, fires of such magnitude and

58

general extent would probably wipe many of the Companies out of existence. If such result occurred, the cost of Fire Insurance would be so increased as to become almost prohibitive. .38. Consider such a proposal an incentive to arson,

and in course of time every Company would be wiped out of existence. .39· That it is a disastrous proposal to the commu­ nity, as has been proved in several parts of

the world. It places a premium on fraud. 40. This is considered inadvisable and impractic­ able. 41. Not possible, owing to the fluctuation in value

of the interest insured owing to depreciation, deterioration, or insufficient want of interest. 43· Absolutely impracticable, and opposed to pub­ lic policy and safety.

Question 35·

If a Company require proofs of amount of loss sustained, can it equitably retain premiums paid in excess of the risk incurred ?

Replies.

I. Proof of loss and premiums paid are two dis­ tinct matters, our Company always inspects all risks to prevent any question of this kind arising. We do not think .we have a build­ ing or stock in our books over insured. 2. Yes. 3· Yes. 4· Yes; for the rates of premiums are

based on the existing conditions. Any

alteration in the latter must necessarily affect the question of premiums, and with no cor­ responding advantage to the public. The Companies deprecate over-insurance, and in their own interests endeavour . to check it. 5· If a policyholder insure an excessive amount

I think a Company could not equitably re­ tain the premium paid on such excess, pro­ vided it were proved that the excess was material and inadvertent. 6. When application for insurance is first pro­

posed, so far as my society is concerned, an inspection and valuation is made. of the risk, and the amount approved, but. we look to the assured who must know, to notify any de­ preciation or reduction in value thereafter. To revalue risks before every renewal is a matter of great expense, and would neces­ sarily large! y increase . the rates. 7· Yes.

8. Yes; as the value may change several times during the currency of the policy. 9· Yes; as it frequently happens that the value of the interest insured fluctuates above and

below the amount for which the premium has been paid. Io. Yes. 1 I. Yes; in my opinion. The amount at risk at the

time of the fire may be less than premium is paid upon, but for the greater portion of the currency of the insurance th e full amount may be represented. 12. Yes. 13. Yes. 14. Yes. rs . Yes. r6. This is a legal question whicn 1 am afraid l

am unable to answer, but we have been ad vised by our solicitors that we can equitablY retain the premiums. ·

I 7 . This being a legal question, ' we consul ted our

solicitor, who says, " Yes." r8. Certainly; a policy may be for £r,ooo; and the loss £5oo only; the policy would be reduced by £5oo, and still remain in force

for that sum. Losses are not always total, and my experience is that when it is total, the difference between the loss and policy face value is not very great. 19. The Company agrees to indemnify the insured

against loss sustained for an agreed pre­ mium. It is difficult to see upon what legal or equitable grounds, a readjustment of the terms of the contract should be made, after

the event insured against has happened. In the event of such a proposition being

seriously entertained, it would necessitate a substantial increase in rates. 20. If the Company is aware of the circumstance, it should make a refund. 21. Yes.

22 . Yes . If loss is not total, the balance of the

pol!cy is still good for the property that re­ mams. 23. Yes; because the full value may have been at risk nearly the whole time. 24. Certainly. Although at time of fire the value

of the insured property may have been below the amount of the policy, yet at other times it may have been fully equal thereto.

Always the Company was liable, in certain contingencies, to the full extent of its policy. 25. Watchfulness against over-insurance makes payment of excess premium improbable.

Stocks vary in value in course of a year, or during currency of a policy. Fact not over­ looked in fixing rates of premium. z6. Yes. In the opinion of our solicitor. 2 7. No Company knowingly allows over-insurance.

Where the policy covers a larger sum than the value of the insured property, there is either misrepresentation on the part of the assured in making the proposal, or careless­ ness in not advising the office of changes in the nature of the risk. 28. Yes. 29. In the case of a partial loss, it is usual to re­

duce the amount of the policy by the amount paid, and keep the balance of the policy in force till the end of the term. 30. Yes.

JI. The Companies might certainly :,return pre­ miums under Fire policies when losses occur, and it is found that the property is over­ insured, as a valuation of the property in­ sured is then made. It would be impos­ sible, however, to carry this back previous to the existing policy, as no data could be furnished shewing the value under previous insurances, the amount of premium that could be returned under these conditions would be infinitesimal. 32. I hardly understand the question, because the

equity of retaining premiums paid in excess of the risk incurred must necessarily be ir­ respective of whether any loss is sustained or not. Viewing the question from that

point, I should say that it not only applies to the original premiums paid in excess of the risk incurred, but the Company should be allowed to charge an extra amount for the extra moral hazard incurred by misrepre­ sentation of value, leading to over-insurance, and consequent increase in the moral risk.

[ have elsewhere shown that it is not prac­ ticable on the part of the insuring Company

to determine exactly the value of the pro­ perty at risk at any one moment. To admit that the return premium should be made on account of over-insurance would involve a

further difficulty as a daily adjustment of value at risk would have to be made, which would give infinitely more trouble and cost to the insured than he would save by the

adjustment of premiums by the Company; for it would be more trouble to the Company, by which rates would necessarily be raised. In addition, the adjustment so made of the pre­ miums would be more costly to the insured,

because an alteration would have to be made to the amount insured from time to time, and short period rates, which are on a much

higher scale than annual rates, would have to be paid, which would make up a total pre­ mium of a greater sum than that payable on a continuous policy for the larger amount.

Every insured knows whether his property is over-insured or not, and no Company would over-insure (except in unavoidable cases); and if they know of that over-insurance,

would cancel at the earliest possible moment. Over-insurance implies a belief on the part of the insured that he has superior know­ ledge, that he has hoodwinked, or can hood­ wink, the Company, and that he is willing

to pay extra premium on the chance of

getting a sum larger ·than represents the amount of his loss. 33· Under present system, yes. 34· Yes; as the value may change several times

during the currency of the policy.

35· Certainly.

36. Yes. If this were equitable, it would be

equally so to return the premium to an in­ sured person who has had no fire during the year. The premium is paid for an indem­ nity up to the face value of the policy. 3 7. Yes; without doubt. The system of rating

under present conditions of insurance is based on the assumption that the sum in­ sured, and the actual value is the same, or practically so, and Companies when making

fire contracts believe that they will be called upon to pay the full insured amount. In

all cases, except, perhaps, buildings, and certainly in the case of merchandise,

goods, stocks, and the like, the Company probably runs the full risk at some period of the contract. Why, therefore, if

risk had been run, should premium 5e re­ turned because at the time of loss the value happened to be reduced ? The question is again one merely of cost, and if premiums are not to be retained, the necessary adjust­ ment and increase of rates will have to be made. The matter is in the hands of the

insured, i.e., not the Company. In other words, if there be no over insurance, the question will not arise. E ven in the case of buildings, there are fluctuations in values of

labour, material, etc., ana even compara­ tively sudden unlooked for depreciation in value by ch<).nge of local values. An actual instance is as follows :-A bought a house

which cost £r,ooo for £soo, owing to country becoming liable to fl ood. He m­ sured for £soo although it co uld not be re­ built for less than £r,ooo. His investment

proved very bad, and he offered to. sell to. B for £400. If it had been burnt JUSt pnor

to such offer the Company would have had

39·

40. 4!.

43·

1295

to pay £soo; why, there,fore, if the build­ ing had been destroyed after such offer to sell, and they had paid £4oo, should pre­ mium be returned on the £ICc. The amount of premium is so trifling that it is

not worth consideration, and if values had to be ascertained before a fire occurred, pre­ miums would have to be raised very cort'­ siderably. Certainly; because the amount of the policy

represents the limit of the risk incurred by the Company, and it is quite possible that at any other period than the actual day · of fire, the whole amount was at risk. Yes.

Yes; for amount of policy may have been ,at risk during the major part of the currency of the policy. Yes; as the contract is plainly one of indem­

nity for loss sustained, no one is asked to take a policy covering more than his loss could be. He is in the same position as an.y one else who buys something he does not

want, and under the circumstances, no trader would take back the goods, and refund the money after such goods had been used.

Question 36.

Do you consider that such excess should be re­ turned? Replies. r. Yes, we think the premiums should be adjusted

if such a case arises. 2. No.

3· No.

4· No.

5· Yes. 6. In the circumstances, no. 7· No.

8 . No.

9· No.

ro. No. The insured has the .option to review

amount insured at any time prior to loss hap­ pening, but cannot equitably claim refund after . the occurrence of the contingency in­ sured against. rr. No.

12. No. 13. No. 14. No.

rs. No. •

r6. This also is a legal question which I cannot answer, but the opinion of our solicitors is that it need not be returned. r7. Our solicitor says-No.

1 8. Only in cases of deliberate over-re-insurance by the Company, but not in cases where the owners · of the property . make a false state­ ment as ·to values, and on a loss occurring endeavours to recover from the Company more than the amount of his real loss. r 9 . No, for reasons indicated in reply to Question

No. 35·

20. See reply to Question No. 35· 2r No.

22. See reply to Question No. 35· 23. Certainly not. 24- No. z;:. See reply to Question No. 35· z6. No. In the opinion of our solicitor. 27 . Certainly not after a claim has occurred. If

discovered by the Company during the cu'r­ rency of the policy, and before a fire occurs, the Company will usually reduce the line, and make a pro rata return of premium on its own initiation.

z8. No. No. No.

JI. 32. See reply to Question No. 35. This is answered virtually under Question No.

35, and I may add that the whole proposi­ tion seems too involved, and such cases are comparatively trivial, and would never com­ pensate, and if the suggested rule were ap­ plied, the expense of carrying it out would very many times exceed any benefit to be derived. 33· Under present system, no. 34 No.

35. No, because during the C'2!":.-c:ncy of the policy the value at risk might be equal to or greater than the amount of the policy, although at the time of the fire it might happen to be

less.

36. No, certainly not. 37 No.

3&. No. 39· No. 40. No.

41. No. 43· No,

Question 37.

Does your Company ever issue " valued " policies ?

Replies.

r. No.

2. Not in the State of Victoria.. Have no informa-tion regarding other places. 3· No.

4· No.

5. No, except practically as regards pictures and works of art. The fire policy does not speci­ fically admit the interest as " valued." 6. No.

7. Not in Australia. 8. Not that I am aware of.

9· No.

ro. No.

rr. No.

r2. No.

13. No. 14. No. r 5. Not in Australia. r6. No.

17. Not at this agency. We cannot say whether

they do or not in other countries. r8. Not to my knowledge. 19. Not in Australia. 20. No. 21. No.

22. No. Specific sums usually put upon pictures and works of art. 23. In fire business ?-Never. 24. No.

25 No.

26. No. 27. No. 2P. No. 29. No.

30. Believe not. JI. No, contrary to public policy. 32. No. 33· Not in Queensland.

36. No.

37· No. 38. No. 39· Not in Australia, at any rate. 40. No.

41. No. 42. No.

43· I cannot say; would not think so.

Question 38.

Do yo:1 know whether the principle of "Valued " policies has even been extensively applied in Australia.

Replies.

r. No.

2. Never extensive! y applied. 3· It has not.

4· Never extensively applied. 5· No.

6. No.

7. I think not.

8. It has not.

9· I do not know.

I l.

I2. I3.

!5. r6.

'

17. r8.

20.

2I. 22.

It has not been applied at all. Think not. Not to my knowledge. Do not know. I do not.

I think not. I am practically certain that it has never been applied at all. It has not to our know ledge. No. Not to my knowledge. I have never heard that any Company issues

valued policies. I believe not. No. 23. Never heard of it. 2 i· It has not.

25. Believe not. Re-insurance in such cases being impossible. 26. No.

27. No. 28. Have never heard of it. 29. No, it has not.

30 Believe not. 3r. No, it has not.

32. It has not.

3 . .;., Cannot say. 34· It has not.

35. Never applied in the Commonwealth, excepting, perhaps, as regards pictures, or other works of art.

36. Valued policies must be of very rare occurrence. ;; 7. It has never been applied.

,3.?.. It has not ever been applied, as far as we know.

39· It has not. 40. No.

4r. I am not aware that it has ever been so applied. 4<'· Never applied to my knowledge.

Question 39·

(a) Has your Company had any experience of

" valued " policies in any other part of the world? 34· Not that I am aware of. 35· No. (ll) If so, give particulars.

61

.l?.eplies.

t. (a) We do not take them.

2. Presume so, but have no details. 3· (a) I have no definite information on the point, but understand that one or two States in America passed a law compelling the

issue of valued policies, but which was very soon repealed, as nearly all Fire Insurance Companies ceased doing busi­ ness in that State. 4· (a) Yes, in America " valued policy bills "

have frequently been introduced, but we believe the system has been abandoned as unworkable. (b) For definite information we should have to

apply to our head office. 5· (a) No.

6. (a) No.

7· (a) I cannot say.

8. (a) I cannot say.

9· (a) I do not know.

10. (a) No.

11. (a) No.

12. (a) Not to my knowledge. 13. (a) No.

14· (a) No.

15. (a) I cannot say.

16. (a) Not as far as I am aware. So far as I

know the only country in which

" valueo " policies are issued is the

United States of America, from which country we withdrew in 1894. 17· (a) We do not know. r8. (a) Cannot say.

19. (a) I am unable to say what is clone elsewhere. 20. (a) No.

21. (a) No.

22. (a) No.

23. (a) No. The principle of valued policies is

so contrary to the principle of indemnity for loss that we have never taken it up. 24. (a) So far as I am aware, no.

2:;. (a) Not to my knowledge. 26. (a) I cannot say, as I have no information at

this branch.

27. (a) Not that I know of.

28. (a) Not so far as I am aware.

29. (a) Not to my

30. (a) Do not know. 31. (a:) No. _32. (a) Yes. In the United States. I am not

able to impart information as to the

exact legislation, although I have read some of the Acts. and I note that

wherever such has been at­

tempted it has been invariably followed by a large increase in premiums, and by the withdrawal of insurance facilities. Insurance legislation in the

States is under State control, and m

some of the States (although I canr;ot charge my memory exactly which) whrch adopted this law, it has been having been demonstrated to be srmply a premium upon fraud and arson: Son;e companies have retired from busmess m those States. (b) There is more interference with insurance

business in some of the less enlightened States of the United States than in any other part of the world, except in or two of the South American Republics,

and it is found that when this ignorant interference in ordinary business trans­ actions is carried out, fires are caused and rates go up, whereby honest people

pay for dishonest.

1297

33· (a) Cannot say. 34· (a) I cannot say.

35· (a) No valued policies issued m any country in which we operate. 36. 37· J8. 39·

40. 41. 43·

(a)

(b)

(a) No.

(a) No.

(a) No. (a) I do not know.

(a) No.

(a) No.

(a) Cannot say.

Question 40.

Do you consider the principle of " valued "

policies a satisfactory one to apply to fire insurance business ? Give reasons for your opinion.

Replies,

I. (a)

(b) No. Simply this: If property is insured

2. (a)

(b)

3· (a)

(b)

4· (a)

(b)

5· (a)

(b)

6. (a)

(b)

No.

£ro,ooo, and a small fire occurs domg £r;:, damage, it would be fraud to pay more than £Io, as no further loss has been sustained.

See reply to Question No. 34· No. This has already been replied to under

Question 34· No. Valued policies would necessitate expert spection before acceptance of the nsk

and re-valuation of practically every risk prior to renewal, and consequently for­ midable increase in the cost of in­

surance. They would further en­

courage over-insurance and arson.· Apart from the latter over­

insurance, and often full lnsurance, leads to want of care, and consequent loss to the insurer, and to damage to

property other than the insured's own property. No. My opinion is that the principle would not

be equitable, owing to varying values from time to time. No. Would open the door to fraud, and would

undoubtedly lead to an increase in the number of fires wilfully caused. 7· (a) No.

(b) See reply to Question No. 34· 8. (a) No.

(b) Makei fraud easier. 9· (a) No. . . . .

(b) Fire msurance rs rdemmty for actual

loss incurred, whereas a valued policy might, in all probability would, be a means for profit-making by fire. ro. (a) No. Most unsatisfactory and most un-

desirable in the interests of all con-cerned. .

(b) See reply to Question No. 34· 11. (a) No.

(b) The expense of valuation would in most cases far exceed the cost of insurance. 12. (a) No.

(b) Already dealt with, see reply to Question No. 34· 13. (a) No.

(b) Unwise to upset structure of present Fire Insurance methods, which are based on the experience of years.

14. (a) No.

rs. (a) No.

(b) See reply to Question No. 34·

1 6. I do not consider the principle of valued

policies is a satisfactory one to apply to Fire Insurance. The practice would abolish the foundation of all Fire Insurance, viz., in­ demnity for actual loss sustained. This

rule of indemnity was very fully set forth by Lord Justice Brett, in Castellain v.

Preston (II Q.E.D., 397), as follows:-" The very foundation, in my opinion, of every rule which has been applied to insurance law is this, namely, that the

contract of insurance contained in a marine or fire policy is a contract of indemnity, and of indemnity only, and that this con­ tract means that the assured, in case of

a loss against which the policy has been made, shall be fully indemnified, but shall never be more than fully indemnified.

That is the fundamental principle of in­ surance, and if ever a proposition is

brought forward which is at variance with it, that is to say, which either will prevent the assured from obtaining a full indem­ nity, or which will give to the assured

more than a full indemnity, that proposi­ tion must certainly be wrong." With this view I fully concur.

A Fire Insurance policy on, say, house­ hold goods and furniture, may continue in existence for a very long period, during

which the value would, by wear and tear, suffer a continuous gradual diminution, and if in the course of time a fire occurred

and the face value of the policy were paid, it is obvious that the insured would be get­ ting new goods for old. In the case of pictures, for example, it

is well known that very great fluctuation exists in the prices. At the Ismay at

Christie's, on 4th April, 1908, six pictures for which the owner had paid 4,345 guineas, only fetched 964 guineas. It may be argued that it is the duty of the Insurance Companies to see that the amount of insurance never at any time during the currency of the policy exceeds the value of the property insured, but it is obvious that to do this would mean a continuous system of inspection, which would not only be

harassing to the insured, but would add

enormously tb the cost of insurance. It

has been suggested in some quarters that an inventory of the contents of a b'uilding ought to be made and deposited with the Company as part of the contract, but if this were done it would bind the· assured down to recover only upon the identical property referred to in the inventory, and, in the case of stocks which are constantly changing, and house­ hold goods arid furniture, which are fre­ quently replaced, would entail a system of alterations in the inventory, which would bec.ome burdensome and expensive to both par.ti:s. Under the present system, as the pohcres are worded, contents of buildings are insured in general terms, and therefore there is no necessity for notifying alterations or additions made by reason of renewals of

stock or furniture. 17. (a) No.

(b) Please see reply to Question No. 34.

6.2

18. (a) Certainly not, see reply to Question No. 34, which is practically identical. (b) See reply to Question No. 34· 19. (a) \Ve the principle as a most per­

mcrous one.

(b) (i.) It is contrary to the basis of Fire In­

surance, viz., that a Fire Insurance policy is a policy of indemnity, i.e., compensation for actual loss sustained. It is difficult to believe that the sys­ tem which has been found satisfactory to the commercial community through­ out the world is either unsound in

principle or inequitable in practice. (ii.) Every description of property is liable to fluctuation in value. Buildings

deteriorate, merchandise, wool, and wheat are liable to fluctuations of

market prices. To suggest that goods valued to-day at £r,ooo, which

may not be saleable at the time

of fire for £soo should be paid for by the Insurance Company at the first­ mentioned sum, would obviously be a direct incentive to fraud. (iii.) It is obvious that a valuation by the

Companies would need to be con­ tinuous, and therefore expensive, and the present rates would not stand the. additional expense. (iv.) To establish as a legal principle that a

man may make a profit out of a fire would certainly increase the number of fires, with a more than correspond­ ing increase in the .amount payable. Companies would then either have to cease doing business, or increase rates to a point that would cover the in­

creased losses. This would probably be found to be an undue burden upon the industry of the country. It must be borne in mind that a fire loss is

always a waste. of productive activity of a community. 20. (a) No. It would encourage fraud, and be

21. (a) No.

the means of increasing the cost of Fire Insurance to the public.

(b) Values may depreciate, and a temptation to incendiarism would thus be placed in the insured's way. 22. (a) Inequitable. Would lead to fraud.

(b) Impossible to control the ever-varying quan­ tity and value of merchandise, or con­ tents of a building. 23. (a) No. See reply to Question No. 34·

(b) See above. · The fundamental principle of Fire Insurance is' indemnity for loss, and nothing more. 24. (a) I do not.

(b) See reply to Question No. 34· 25. (a) No. (b) Contrary to public policy, and unknown in the history of Fire Insurance practice. 26. (a) No.

(b) My reply to Question No. 34 would also apply to this question. 27. (a) No. (b) The introduction of this system would

mean the annual valuation of every building and its contents by the Com­ pany, and the resulting expense to the _.:j.ssured would be far greater than the

expected benefit.

28. (a) No.

(b) The pfincip]e is unsound and unwor.kable.

83

:29. (a) No. :See reply to Question No. 34·

30. (a) No.

(b) Could only lead to fraud, and at best a

very b1g increase in rates. 31. (a) Replies to Questions No. 34 a:nd No. 35 will also apply here. It is the same

question asked in a different way. (b) See above. '

32. (a) There can be no "principle" of valued

policies.'

(b) Given elsewhere. 33· (a) Not generally. (b) Because of the difficulty and expense of arriving at correct valuation, prior to

insurance, and of maintaining such

valuation during currency of policy. 34· (a) No.

(b) Makes fraud easier. 35· (a) Certainly not. (b) Already given. See reply to Question No. 34·

36. (a) No.

(b) If such a principle were adopted it would be necessary for values to be agreed

upon between the insurer and the fire office. This would involve the employ­ ment of experts for whose services the insured would be required to pay, either in . fees or increased rate of premium.

This valuation in the case of buildings would have to be repeated annually, and the cost to the insured would be in some cases be equal to the premium. In re­

gard to stocks, which continually fluc­ tuate in quantity and value, it would be absolutely impracticable. 37· (a) No. The replies to Questions Nos. 34 and

35 are practically full replies hereto. (b) See above. 38. (a) No.

(b) It would encourage fires, particularly in bad times. 39· (a) No.

(b) It is against the public interest. See my

reply to Question No. 34· 40. (a) No.

(b) It would open the door to fraud, and prove also a serious danger to the community. 41. (a) No.

(b) A fire policy is only a policy of indemnity. Given a valued policy, you would pay the amount thereof in event of a loss, whether it be an indemnity or consider­

ably more than one.

43· (a) Impracticable, and opposed to all principles . of indemnity. ·

(a)

(b)

(b) Opposed to public policy, and a practice that would encourage . and allow

" wagering " policies, which are pro­ hibited by law in other parts of the

world.

SEcTION XIII.-ExTENT OF INSURANCE.

Question 4I.

r. Do you consider it desirable that a property should be insured to its full value, or other· wise? Give reasons for your opinion.

Replies.

I. (a)

(b) In some cases, yes; in others, no. In case of stocks worth £roo,ooo, yes; for, if a fire occurs doing damage to

extent of £r,ooo, then such. damage

'1299

should all be paid for; but, if valued

at .£r6o,ooo and insured for .£8o,ooo, and damage amounted to .£I,ooo, the insurance only being· to 4/ 5ths of value only, 4/ sths of loss should be paid, as

owner took r J sth of entire risk. 2. (a) No. Should not be insured to full value. (b) The insured should take part of the risk to make him careful. With freedom from

chance of loss, the fully insured man

would be a danger to the community. 3· (a) No, it should not be insured to its full

value.

(b) If a property is insured to the full value, people are apt to be careless, and not

take proper precautions against fire. In my opinion, every owner should be a loser to a small extent in event of loss by fire. 4· (a) and (b). In the case of wooden structures

and stocks, and such like risks, under­ insurance is generally desirable, in that if the owner is his own insurer for a portion of the risk, he will exercise greater care,

thus ensuring greater safety to himself and properties.

Apart from this consideration, the question becomes largely one of rate and insertion, in the contract, of the average clause. Brick and stone risks, for instance, yield

a considerable portion of partial losses, and a heavier rate of premium would be necessary to meet such with a relatively small insurance, if there were no average clause in the policy. It has been computed that liability to loss

under full imurance would not exceed about four times the liability under an insurance of r j roth of the value. 5· (a) Altogether depends upon circumstances.

(b) I have no objection to full insurance on

first-class risks. As a matter of fact,

owners of superior property prefer not to pay the premium for insurance of full value. It is better from an insurance

point of view for second-class risks not to be insured to full ·value, so that the

insured may be induced to exercise proper care. 6. (a)

(b)

7. (a)

(b)

In some cases, yes; other cases, no. Unless the average clause applies, my society does not encourage its customers to insure for more than the actual value,

but rather for something less, and dis­ courages the insured paying premium on a larger amount than he can possibly be -entitled to recover in case of loss. No. An insurance office prefers that the insured

should run a part of any particular risk. but in special cases is willing to give fuE cover. 8. (a) In some cases, yes; in others, no.

(b) Some property in trust, and some oilier classes, I see no objection; but in the

large majority of cases I think the in­ sured should· carry some of the risk. 9· (a) Depends on the property and its owner. (b) Experience. zo. (a) It depends upon the circumstances of the

case.

(b) As a general rule, we prefer that insured should carry a part of the risk, as it in­ sures a certain amount of precaution. r r. (a) Not to the full value.

(b) Would lead to a large increase in the num­ ber of losses.

12. (a) Depends entirely upon the nature and character of insured. (b) See reply to (a) above.

of risk

(a) No. (b) In certain circumstances, it is desirable that an owner should retam some interest in safeguarding the property. 14. (a). Otherwise.

(b) People should run a portion of the risk, as it will make them more careful, and thus look after the Company's interest as well­ as their own. 15. (a) No.

(b) An insurance office prefers that the insured should run a part of any particular risk, but in special cases is willing to give full cover. 16. (a) Generally speaking, I consider it advisable

that property should not be insured to its full value. (b) The practice tends to make the insured care­ ful, as in the event of a fire destroying

all his property, he would be his own in­ surer for the difference between the

amount insured and the value of the pro-perty. •

17. (a) In some cases, to full value; in others, not to full value. Generally speaking, not to full value. (b) We think every case must be considered on

18. (a)

(b)

its merits. In certain cases to its full value, but gene­ rally for less than its full value. A person is entitled to insure for the actual

of _his property, but in many cases

It IS desuable for the insured to have

some share of the risk, in order to make him more careful than he might other-wise be. 19. (a) We prefer that property should be insured

for somewhat less than its full value. (b) Our experience is that fires are less likely to happen where the sum insured is less than the value of the property. 20. (a) No, unless under special circumstances.

2I.

22.

23-

24.

(b) The assured should carry portion of the

(a)

(b)

(a)

(b) (a) (b)

(a)

(b)

risk. No. The insured should always have some stake at risk. Having no interest in the property, the in­

sured would be likely to become careless in taking precautions against fire. Generally speaking, it is desirable to main-- tain an uninsured margin. It stimulates care. As a broad principle, no, I do not. It is always well the insured should run

• some risk himself, to induce care. The desirable thing, in my opinion, is that property should never be insured for more than 90 per cent. of value. In the public interest I think it desirable

that every insured person should have a in avoiding or prec

ventmg fi;e. F1re Insurance ought not to be earned to such an extent that it be­ comes a matter of indifference to the in­ sured whether his place burns or not. 25. (a) Depends upon character of risk. Over-

26. (a) I do not.

(b) The general practice in Fire lnsurance

business is for a Company not to insure • property for full value, in order that the insured may take a portion of the risk, as a guarantee of good faith towards the

office. This, however, is largely governed by the moral hazard, the nature of the risk, and the surrounding circumstances in each instance. 27. (a) For less than its full value.

(b) I consider that the assured should always have an interest in taking proper precau­ tions against fire and in stopping any fire that may break out. :::8. (a) It depends upon the character of the in­

sured and the class of risk. (b) See reply to (a) above. 29. (a) About three-fourths is a reasonable amount

(b)

30. (a) (b)

to insure for. To allow for deterioration. No. When the insured is fully covered and

pressed to realize in a bad market-well, accidents do appear to occur under sud: conditions. 31. (a) Depends on circumstances.

(b) As an insurance manager, I prefer that the assured have some interest in safe­

guarding the property; on the other hand, where the moral risk is undoubted, there is no reason why the assured should not have full cover. 32. (a) I do not (there are unavoidable exceptions).

(b) Although Insurance Companies may be said to live by fires, I consider that they exist not to afford facilities for fraud, but to meet the legitimate requirements of pru­ dent people, and that it is expedient for the protection of the community that fires should_ be discouraged. First, because they are an absolute destruction to pro­ perty, the insurance of which does not negative the loss, but only transfers its incidence j in addition to which, in towns, life is endangered by fire; and, further, in towns, the property of not only the in­ dividual on whose premises the fire origi­ nated, but also the neighbouring proper­ ties, or the whole town or city may be endangered. From a point of

view, therefore, a fire is a thing to be

discouraged; and a rnan who has a fire should suffer a portion of the loss occa­ sioned, independent of the question as to whether tlte fire arose from misfortune or any other cause. A further considera-.­ tion is, " What is ' full value ' ?" I

have shown elsewhere that it is dependent upon a va,-iety of circumstance_s, and the difficulty of coming to any definite de­ cision on every point of such considered circumstances is so great that in practice

or comparative safety, can only be

obtamed upon a basis of aiming at a cer­ tain amount of under-insurance. 33· (a) No.

(b) It would increase the moral hazard risk. The insured should always recognise a fire would result in a loss to him to a cer-

insurance discouraged. (b) Loss of time, trade, profit, debenture in- :i4· (a)

terest, and so on, in case of fire in first- (b)

tain extent. 1

In some cases, yes ; in others, no.

class mercantile risks makes full sum ac-ceptable. In other or unlike circum-

stances full cover sometimes undesirable.

Some property in trust, and some other classes, I see no objection, but itt the

large rna jority of cases think the insured should carry some of the risk.

35· (a) Should not be fully insured. (b) Under-insurance is t,he best possible preven­ tive of fires. 36. (a) There should be a margin between the sum

insured and the value of the property. (b) To secure the moral hazard.

G5

37· (a) and (b) There is no objection to property being insured to its full value, nor do

Companies pay less than full value (if fully insured) unless there be suspicious in connexion with the fire.

In the latter case they might resist the

claims entirelyJ or reinstate; but in the latter case full value would be replaced. 3R. (a) No.

(b) It is desirable that the insured should stand to lose by a fire; otherwise less care is

exercised, and more fires occur. 39· (a) Nearly full, as a rule, but it depends on

the particular case. (b) So that the individual may lose as little as possible in case of a fire. 40. (a) Not necessarily.

(b) It is desirable that the insured should have a direct interest urging him to adopt all precautions to prevent fire. 4L (a) Yes, its full value, with few exceptions.

(b) To complete the intention of a fire policy the insured should be indemnified for what he has lost at its then value.

L13· (a) Quite prepared to grant full indemnity

where occasion requires and depreciation is not likely to occur during currency of contract. (b) The reason for this is obviously that in case

of depreciation it would always be a

temptation to a man to realize by a fire.

SECTION XIV.-AvERAGE CLAUSE.

Question 42.

Are the policies issued by your Company-(i.) Specific policies insuring a specific sum irre­ spective of the total value of the pro­

perty; or

:ii.) Policies containing an average clause under which the amount payable in the case of loss depends upon the ratio of the sum insured to the total value of the pro­

perty?

Replies.

r. (i.) No.

(ii.) Yes, in some cases. z. Both classes of policies are issued. 3. We issue both. 4· In the majority of cases our policies fall under

the first category. 5. (i.) Policies have no reference to the total

' - ," value " of the property, but they are

at times issued for a given proportion of the amount '' insured '' on the property. (ii.) Yes, frequently (see copy of average clause herewith).* 6. (i.} 1 We issue policies under the circumstances

(ii.) \ described in both questions. 7· (i.) Generally. .

(ii.) In large mercantile risks. 8. Some without average, and some with average. 9 Both.

• See reply No. 13 (ii.) loelow.

F.l4-377.

1301

10. Both, but only a smali proportion of policies are declared to be subject to the conditions of average. 1 L. (i.) Yes.

(ii.) Yes, in certain cases. 12. Yes, both (i.) and (ii.).

13. (i.) No.

(ii.) Condition I] of policy herewith provides as follows:-" In all cases where an insurance is declared to be subject to average,

the following clause shall ap­ ply:-If the property hereby in­ sured shall, at the break­

ing out of any fire, be of

greater value than the sum insured thereon, then the insured shall be considered as being his own insurer

for the difference, and

shall bear a ratable pro­ portion of the loss accord­ ingly. Every item, if

more than one, of the

policy shall be separately subject to average. '' ln all cases where any other sub­ sisting insurance or insurances,

effected by the insured or by any other person or persons, covering any of the property hereby in­ either exclusively or to­

gether, with any other property in and subject to the same risk only, shall be subject to average, the in" surance on such property under

this policy shall be subject to ave­ rage in like manner."

14· (i.) We have the bulk of our risks inspected and roughly valued by agents, sub-agents, or officials. (ii.) Certain policies contain the average clause

as per condition I 7. * Policy enclosed. 15. (i.) Generally. . .

(ii.) In large mercant1le nsks. 1 6. The last eight words in (i.) do not appear to be relative to the question; and I therefore

answer that by far the largest proportion of policies issued are as in (i.) j the average

clause is only applied to large mercantile or manufacturing concerns, and to policies covering in one amount tiV'O or more risks. It is never applied to policies insuring house­

hold goods irt a dwelling, or to those which cover ordinary trading or manufacturing con­ cerns. 17. Usually they are, as indicated in (i.), specific

policies insuring a specific sum, but many policies, principally those on large mercantile risks, contain. the average clause, as indicated in (ii. ). The average clause is never applied to insurances on private dwellings and their

contents.

r8. Both. 1 9 . (i.) Yes.

(ii.) Yes. 2<..'. Nearly all policies issued by this Company in.

sure a specific sum, irrespective of the total value of the property. The average clause is applied to a very small proportion of risks. zr. (i.) Yes, so long as the value is greater than

the cover.

(ii.) Yes.

• See reply No. 13 (ii.}a o"oYe.

22. Both. 23. We use both forms as occasion requires. 24. The great majority of policies are " specific." The average clause is applied to certain large

mercantile and manufacturing risks, and when used is expressly so stated on the

policy.

25. Both classes are issued, the latter where more than one risk is included in a single sum. 26. (i.) Generally. (ii.) In large mercantile risks. 27. We issue both forms of policy. 28. (i.) Yes.

(ii.) Yes. 29. Both, according to circumstances. 3c. In some cases, as cited in (i.) · others as in

(ii.). ' '

31. Both. 32. (i.) Such a thing is unknown. We never do it irrespective of the total value of the pro­ perty, so far as we can get information.

A merchant may insure the sum of

£1,ooo on goods in transit from wharf to store, and we will take that insurance, and such acceptance is to a certain extent irrespective of the total value of the pro­ perty, because we know that that mer­ c?ant has not a penny at risk at various times, and we have only his assurance that the sum he proposes is what he esti­ mates as sufficient to cover his risk from time to time. (ii.) We do issue such policies. The rule is

that if a policy covers in a single sum

two or more risks (that is, what would ordinarii y be understood by two or more separate buildings), the insurance is made subject to If these requirements

we.re .not mserted .a firm having several bml.dmgs could msure a single sum to his risk in one building,

makmg ·his proposal in· such a form as to get two or three risks covered for, say, £1,ooo each, under a policy on which he only pay the premium for £r,ooo.

IS to. be noted the general prin­

of busmess is that all poli­

are subJect to average, and it is only

m Great Britain and countries which I may term derived from Great Britain that is, English-speaking countries that

the policy without average exists. ' 33· (i.) Yes, in some cases. (ii.) Yes, i_n some cases; now regulated by exist-ing fire tariffs. 34· Some without average, some with average. 35· Sometimes specific, sometiines with average. 36. (i.) Yes.

(ii.) The average clause is applied to buildings internally communicating-to stocks in such buildings, or lying in several build­ ings, or in the open.

66

Companies would often be running a risk over a valuation much greater than the amount insured, and the premium charged . would, consequently, be too low. We issue both kinds of policies. We issue both classes of policy. It depends

on the risk.

40. Both. 4 r. Yes, both are issued, each for a different class of risk. 43· Both classes.

SECTION XV.-PARTIAL Loss.

Question 43·

Is there usually any serious practical difficulty in arriving at a settlement in the case of partial loss by fire ?

Replies.

r.. No; we have never had any trouble. 2. No.

3· No.

4· Hardly ever. 5. I have not found it so. 6. No.

7· No.

8. No.

9· No.

10. No. Quite the contrary. rr. No.

12. No. 13. No. 14. No. 15. No. 16. No. 17. No.

r8. No.

19. No. 20. No; although £278,097 have paid in

claims by the Mercantile Mutual in the past thirty-one years, only one case of serious difficulty has been experienced, when an ac­ tion was successfully defended. 2r. No. 22. No. 23 .. No. 24. Very seldom. 25. No. 26. No. 27. No. 28. No. 29. No. 30. No. 3r. No. 32.- Not usually, nor by any means frequently. The

adjustment of losses is by no means the most

33· 34· 35· 36. 37·

difficult part of our business. No. ·

No. No. No. No; difficulties of this nature are· very un-

usual.

37. (i.) The Company issues policies insuring ·a, specific sum free from the operation of the average clause. 38.

(ii.) The Company also issues this class of 39·

policies, i.e., subject to the condition of 4°· average. . 4I.

No. No. No.

The former class of policies is generally 43· The latter is chiefly used in large

Very seldom any difficulty. No.

and more complicated and extensive risks, often of extended ranges where it is diffi-.. cult to so nearly approximate the actual ' as in the former cla:ss of policies.'

Withaut the use of the average condition

QueStion 44· /

What is the method emplpyed b; Company in such cases ? ·

Replies.

I. The and the Company compare figures,

and m 999 cases out of every I ooo arrive

at satisfactory results. We ma; say here

the dealt with nearly 3,ooo

drfferent pohcres m the 'Frisco fire, paying 85 to 100 per cent. in each case, and had

no with any policyholder.

2. In all rmportant cases to employ a professional loss adjuster. 3· We employ a professional assessor, whose sole business is loss adjustil].g. Small losses are

sometimes adjusted by one of our own staff. 4· A third party (loss assessor) unconnected with the Company is employed by the Company to appraise the amount of loss, the Com­

pany paying the assessor's fee and expenses. If the insured does not agree with the ap­ matter would probably go

to arbrtratron m accordance with the policy conditions, but such cases are very rare. 5· Usually an outside adjuster is employed.

Trifling losses are settled by the Company's officers. 6. Immediately on receipt of notice of a loss om assessor is instructed to confer with as­

sured or his duly authorized representative. 7. Settlement usually placed in hands of qualified adjuster. 8. Place the assessment in the hands of an inde­

pendent fire loss assessor, who is paid by the Company. 9· Claims are handed'over to the adjuster, who is an expert, for adjustment, and on his recom­

mendation and arrangement with the assured the losses incurred are paid. 10. An independent and experienced assessor is ap­ pointed to assess amount payable.

II. By ascertaining the value immediately before the fire and that immediately after. 12. Employ a competent adjuster or assessor of fire claims. 13. Dealt with by an adjuster.

14. In cases of large claims insurance adjusters are employed. In small cases such as build­ ings, our builder gives an estimate of the

amount he would reinstate it for, and we

get the insured to render his claim, and we then say to him, " We will give you so much (our builder's estimate), or rebuild." In

cases of furniture, if small, we replace the old stuff with new. '

15. Settlement usually placed in hands of quali­ fied adjuster. ,. 16. As a rule an expert' adjuster is instructed, upon whose report and recommendation the Com­

pany settles the claim. In losses of a small or trifling nature the recommendation of the Company's local agent, or one of its own officials is accepted. In many small cases

the insured ask us to reinstate the property, or agree to our doing so upon our offer to

that effect, as a matter of convenience to the insured. I7. In ·almost every case an expert adjuster who possesses practical experience is employed.

We have never experienced any difficulty in arriving at a settlement by mutual agree­ ment. 18. When a loss is notified, a representative of the

Company at once goes out to the place, and if only small, an assessment of the damage is made, and an agreement come to with the in­ sured. In cases of, stores and mercantile

risks, where larger values exist, an assessor is appointed, who goes the books

with the insured, and a'<;esses the loss.

20. 2I .

22.

28.

zg.

31.

32.

33·

34·

35·

37·

40.

E 2

1303

We place practical! y all our losses in the hands oJ a competent and independent adjuster, with an adequate knowledge of values. See reply to Question No. 43· If buildings, we obtain estimates from two or

more leetding builders. If contents, we employ persons well acquainted with the value of such contents. Where large amounts are ·at stake, we employ

experienced adjusters. Generally by an approved adjuster or assessor. Methods would differ so much 'according to the risk, i. e., the property insured. Do you

mean as regards a dwelling, warehouse, merchant's stock, up country hotel, or what? It wi ll be seen at once the methods must

differ. We usually employ an adjuster. Adjustment made by independent valuer. I n the majority of cases by the employment

of an independent expert adjuster to arrange settlement mutually between the insured and the society. It rarely happens that any

difficulty is experienced in arriving at a

mutual settlement. The small losses hitherto experienced .have been settled by agreement with the assured. In larger cases, we should employ a recognised

adjuster. A competent assessor is employed by the Com-pany to adjust claims. The employment of a qualified adjuster.

Dealt with by skilled adjusters. Employment of recognised average adjuster in important cases; settlement with the assured direct in small claims. The method depends upon circumstances. The

official s of an insurance office not being, as a rule, skilled valuers, ·an adjuster not con­ nected either with the insured or the Com­ pany is employed. Special adjusters are engaged to adjust on in­

surance principles. Place the assessment in the hands of · an inde­ pendent fire loss· assessor, who is paid by the Company. Usually appoint an independent adjuster who

has the confidence alike of ourselves and the assured. In serious cases the settlement is placed in the hands of expert adjusters; in minor cases

there is usually no difficulty in settling the matter at once, either by a cash payment, or the Company doing the necessary repairs. If any such difficulty arises, provision is made

for settlement by arbitration. Condition No. r8 of the Company's policy provides, inter alia, as follows :-' ' If any difference arise as to the

amount of any loss or damage, such

difference shall independently of all other questions be referred to the decision of an arbitrator to be appointed in writing by the parties in difference, or if they cannot agree

upon a single arbitrator, to the decision of two disinterested persons as arqitrators, of whom one shall be appointed in writing by each of the parties within two calendar

months after having been required so to do in writing by the other party." A practical adjuster is appointed. We usu ally appoint a highly trained assessor

who endeavours to arrive at the extent of loss by 8greement with 1-ht> im;nred.

EmploymPnt of '[Wlliti Pd ::tssessor,

ss

41. Should a serious difficulty arise, either' friendly or' formal arbitration is resorted seldom the latter. 43· Mutual agreement as to loss and liability be­

tween the assured and the Company respec­ tively.

SECTION XVL- PROOF OF Loss.

Question 45·

Within what period a fter the occurrence of a fire must proof of loss be furnished to your

Company?

Replies.

I. F ourteen days, but it is extended if time is not sufficient in application of assured. 2. Fifteen days. 3· Fifteen days, but if a longer time is required,

we are always willing to grant it. 4· Fifteen days, or such further time as the Com­ pany may, in writing, allow. 5· Notice to be given forthwith. Claim in writ­

ing within fifteen days, or such further time as Company may, in writing, allow. (Con­ dition II.)* 6. Fifteen days. Condition No It of the Com­

pany's policy is as follows:-Or: the happening of any loss or damage, _msured must forthwith give notice in

wntmg thereof to the Company, and must within fifteen days after the loss or damage, or such further time as the Company may, in writing, allow, in that behalf, deliver to the

Company a claim in writing for the loss and damage, containing as particular an account as is reasonably practicable of all the articles or items of property damaged or destroyed, and of the amount of the loss m damage

thereto respectively, and of any other insur­ ances ; and must at all times at his own ex­ pense produce and give to the Company all such books, vouchers, and other evidence as may be reasonably required by or on behalf of the Company, togetller with a declara­

tion on oath, or in other legal form, of the truth of the claim, and of any matters con­ nected therewith ; and if the· insurance is subject to average, the insured must, within the afores.aid fifteen days, or such further time as the Company may in writing allow in that behalf, deliver to the Company an account of all the property insured, with the estimated value thereof at the breaking out of the fire.

No amount shall be payable under this policy unless the terms of this condition have been complied with. 7· Fifteen days as per condition No. n.* 8 . See condition No. II, enclosed form of policy.* 9· As soon as practicable. 10. Within fifteen days of the date of happening

of the fire, but the policy conditions pro­ vide for an extension being granted upon pro)Ji'or representation bei ng made. See policy condition 1 r. * i I. No period stipulated. r 2. Fifteen days specified, but every latitude given

to the insured 13. As per clause I I of policy conditions.* 14. Fifteen days . ts. Fifteen days, as per condition 11.*

• See reply No. 6 to this qu estion .

I 6. Attached is policy condition :No. I i on the sub­

ject.*

I 7. Condition No. I I of the policy.* Fifteen

days, or such further time as the Company may in writing allow in that behalf. 18. Fifteen days, but on application this term can be extended. See clause u, policy condi-

tions.*

19 Our policy condition No. I r stipulates that par­ ticulars of loss be furnished within fifteen days, "or such further time as the Com­ pany may in. writing allow.'' 20. Fifteen days. 2 I. Within fifteen days, or such further time as

the Company may allow. n. Fifteen days.. 23. Fifteen days is. the usual period, but in the

case of intricate adjustments, it is frequently e:lttended. :q. Fifteen days. is the specified time, but this is readily extended for the convenience of the

insured, if desired. zs. See condition No. rr.* z6. Fifteen days, as per condition No .. u. * 27 . Fifteen days, or such further time as we may

allow for the purpose. 28. Fifteen days is specified, but every latitude is allowed to the claimant. 29. See policy condition No. r1.* 30. Fifteen days, or such furthef tilDe as the

Company may allow in Wl'iting. 31. Fifteen days. 32. is no fix.ed period withi-n which u proof "

must be furnished to the Company, but a statement of claims must Qe made within fifteen days. In most cases a loss is settled long befo.re the expiration of those fifteen days j but the-re are many Cas€.1> where no di.s.pute whatever exists in which this is not the case, and in which "proofs " are re­

ql.lired and received subseq1.1ent to the lodg­ ing of the claim. I do not think it is within

my experience that any Company has re­ jected a claim merely because "proof " (or a claim) was not furnished within fifteen days. (But payment has S(Wletimes been mad e. " e:r; gr:atia. ") 33· Fourteen days, notice of loss irrupediately

after ·

34· See coudi.tion rr, enclosed form of policy.* 35 · Fifteen days. 36. Condition No, 'rr of the Company's policy.* 37. Fifteen days. See condition No. of the

Company's policy.* This period, however,, is always extended by the offices on request of the insured, unless such request be palp-ably unreasonable. ·

38 . Fitteen days; but an extension of time is

granted whenever asked for. 39· Fifteen days, or longer 1n speciaL cases. See condition No. u. * 40. Fifteen days, unless extended by the Com­

pany.

4\. Fiftee)l days, or such. other time as the Com­ p.any may in writing aUo,w. 5,tle condition No. II of policy.* 43· We do not insist upon any defined !imit of time.

Question 46.

Does this period vary in different countries in which your Company transacts fire insurance business'

• · See raply No. 6 above.

•

Replies.

1. No; generally the same form of policy is used. 2. We understand so, but have no information upon the subject in this office. 3· No information on the point. 4· We have no definite information on the point

but the period does not materially differ. ' 5· Not with this Company's policies. 6. My society does not transact business outside New South Wales. 8. I cannot say.

9· I do not know.

ro. No.

I I. See reply to question No. 4·

12. Am unable to answer this question. IJ. Not to my knowledge. 14. I think not.

15. I do not know.

16. I am unable to say without reference to the

head office, but I should say it is about the same unless where there is a statute to the contrary on the subject, and I have no know­ ledge as to whether such exists in any coun­ try. 17. We do not know.

r8. Cannot say. 19. I am unable to say.

20. No.

22. No.

23. Without going through all our forms, I should say from memory that the fifteen days is our uniform clause. 24. Probably; I cannot speak for other countries. 2 5. Believe it does not.

26. I have no knowledge at this branch. 27. I cannot say. 28. Have no information on this point. 29. Not to my knowledge. 30. Do not know. 31. No.

32. I am not exactly informed, but having for

many years had charge of the fire depart­ ment of my Company, 1 may safely say

that substantially the provision in this respect is world-wide. 33· Do not know. 34· I cannot say.

35· No. 36. No; it is the 'same in the Commonwealth of Australia and Dominion of New Zealand. 37. Fifteen days is the usual time. We understand

that in some countries the period varies from that in others, but we do not know exactly what the differences are. If the Commis­ sioners so desire we will ascertain the par­

ticulars from head office. 38. Cannot say. 39· I do not know, bnt suppose it is much the

same.

40. No. 41. No. 43· Cannot say.

Question 47·

What do vou consider is a reasonable time to allow between occurrence of a fire, apd the

elate on which proof of loss is furnished?

Replies.

r. Fourteen days. 2. Fifteen days. 3· Fifteen days, but answer to question 45·

• Se$ reply No.6 to Queotion No, 45,

1305

4· Fifteen days. The insured can always obtain an extension. 5. Depends upon the nature of the risk and loss j usually a few days. 6. Fifteen days is a very reasonable time. 7· Time varies according to circumstances. We

always give the assured reasonable latitude in this respect. •

8. Fifteen days, or such further reasonable time as the . Company may allow in special cases. See condition No. 1 r of enclosed form of

,policy.* ·

9· depends on the means of communication. ro. What is a reasonable time must be determined by the circumstances ot each case. r r. Fifteen days, unless in exceptional cases. r 2. In the majority of cases a few days, but it

entirely depends upon circumstances. Some claims are complicated, and require extended time, which is never refused. 13. See clause It of policy conditions,* which I

consider reasonable. 14-· A fortnight. r 5. Time varies according to circtup.stahces, but 'ffe always give the assured teasortable latitude

in this respect. , r 6. I consider the conditi6n (No. t t )* quoted in answer to the question No. 45 a reasonable one under Ol'dinary circumstances. It will

be noticed that the condition provides 1or an extension of the contract time. r7. Fifteen days, or such further time as the Com­ pany rna y in writing allow in that behalf. 18. In most cases a period of days is ample

time, but when the ins11red requires an ex­ tended period and a·pplies !or same it is, if the '6ona fides of the claimant are satisfac­ tory, specially granted. r9. It is quite impossible to make any general

statement. For a small loss, i.e., dwelling house or shop, a week would be ample time. For a "bond " loss, a month might not be too much. I have not known any incon­

venience arising to insured on a point like this. 20. Fifteen days. 2 r. Fifteen days.

22. Fifteen days. May be extended in particular cases if circumstances require. 23. It all depends on circumstances. In case of a small dwelling two or three days ought to

be 8mple. In regard to stock of a large

warehouse, more time would of course be required. 24. In most cases a fortnight is enough. h com­ nlicated cases more time may be required.

There is never any difficulty in this respect. 2 5. Different magrtitudes of risk render reply im­

possible.

26. Fifteen days. 2 7. Fifteen days should be sufficient in all ordi­ nary cases. 28. In most cases a few days will suffice, but c6tn­

plicated clitims occasionally requite extended time, which has never been refused by the Company. 29. The time as provided in policy condition No.

II.*

30. Generally speaking, fifteen days. :,r. A maximum of fifteen days. If reasonable cause is shown, however, why an extension should be granted an extension is invariably

given.

* Sec reply No.G to Questioh Xo, 45,

70

33·

34·

35· 36.

37·

39·

40. 4I.

43·

See replies to Questions 45 and 46. " Reason­ able time '' is very difficult to define. I have known more than one case where · a fire has happened amongst clothing. In one case, I think a whole cupboard of silk dresses, etc:, was burnt out, and the debris was thrown out, and the place cleaned up before infor­ mation was given to the Company. Fourteen days ample in many instances. In

cases where books and accounts are destroyed probably twice that time would not suffice to ascertain actual loss . Fifteen days, or such further reasonable time

as the Company may allow in special cases See condition I I of enclosed form of policy.* Fifteen days. ·

Consider own policy conditions reasonable. See clause II of policy.* Impossibl e to fix any definite time; some losses can be proved within a few. hours, some not

for months. The present condition in the policy does not act adversely to the insured, and we have never had any trouble in the matter. . It is to the interest of the insured and the companies also that claims should be made as early as possible, so that they can be paid promptly also. From a day to several weeks (as in the case of

Anthony Hordern and Sons' fire). Fifteen days, unless the circumstances are unusual. Depends upon circumstances. It depends upon the extent of damage done

:md extent of business affected. On a small loss fifteen days ·would be ample; on a very large loss three rponths may be required. Depends upon circumstances entirely, varying

from one hour to perhaps three months.

Question 48.

I s it the •. practice of your Company to require the production of the books immediately on the occurrence of a fire?

Replies.

I. Yes, in support of assured's claim . 2 . No ; reasonable ti me is given.

-'· No.

4· In certain cases as, · for instance, losses on

stocks, where the books form the main guide as to actual loss, assessor would ask the in­ sured to give him access to the books. S· No.

6. As soon after a fire as is reasonably possiblt 7· Yes, as a rule, but the assured is alwavs al-

lowed access to his books. ·

8. If reasonably practicable. 9· T he hooks must. naturi! ll y, be produced, as an assistance to the ad juster, the latter decides when they should be so produced. Io. If loss is on merchandise the production of

books is usuallv necessarv to enable the in­ sured to verify his claim. · I r. P rodurtion r eq uired . when claim made is being

verified.

I2 . No, the adjuster may require them during pro­ cess of adjustment, but in many cases it is not necessary. 13. No.

r4. No. The insurance adjuster requires to see

them.

I6.

I7 • I8.

20.

2I. 22.

Yes, as a rule, but the assured is always al­

lowed access to his books. It is a matter which is left to the judgment

of the adjuster. No. No, but within a reasonable time. Only in accordance with clause II of our policy

conditions.* No, but when merchandise is insured the pro­ duction of the assured's books in support of the claim is usually required. No. D epends on adjuster's requirements. Yes, if any are available, but not necessarily

that the Company takes possession of them. The adjuster acting for us requires to see the books in certain cases. In many it is quite unnecessary. 25. No. 26. No. 27. The policy gives us the right to demand pro­

duction of the assured's books at any time after a fire. 28. No . . Never. The books may be subsequently required by the adjuster, but in a great

many cases it is unnecessary. ·

29. No. 30. Left in the hands of the adjuster settling the loss. 3 I. No, everv assistance is given to the assured in

preparing his claim ; an Insurance Com. pany is only interested in finding out the actual value at time of fire , how the fire

occurred, and the value of the salvage. , 32. It is neither the practice, nor have we the

power to do so.

.33· This is left to the adjuster. The Company

has the right to demand same. 34· If reasonably practicable. 35· No. 36. Yes, within a reasonable time if required. See

clause II.*

37· No, not immediately, unless the fire is of a

suspicious nature or there is any probability of the insured delaying their production for doubtful purposes. An independent fire adjuster usu ally, in fact almost always acts between the insured and the Company, (l.nd these matters are left to his discretion. .) 8. As soon as possible after a fire. 39· No. 40. Yes, if necessary. 4 r. No, but during the adjustment of the claim. 43· Not in all cases; only where. equitable adjust-

ment demands such evidence to arrive at same.

Question 49·

Would it be possible for such a demand to seriousl y retard the insured in preparing his statement of cl aims?

Replies.

I. No, both work together at them. 2. We do not think so .

3· It might. 4· k is not conceivable that such a demand woulcl seriously retard the insured. The sole object of for production of the books would

be to ascertain without delay the loss occa ­ sioned by the fire. We have never heard of a case where investigation of the h ook<; hindered th e preparation of a claim.

• See reply No. 6 to Question No; 45,

'1l

5· If the books are properly kept, I think it would · not. 6. No.

7. See reply to question No. 48. 8. May be possible, but not probable. 9· No, on the contrary materially assists. IO. On the contrary, it is of great assistance. II. No.

I2. No.

I3. No.

14. I think not.

IS. See reply to question No. 48. I6. I do not see how it possibly could. I 7. In our opinion, a demand for production of

books could not retard the insured in pre­ paring his statement of claim. 18. Yes, if the books were taken from him; but in many cases it is desirable to sight the books

promptly after a loss, and every considera­ tion is given to the insured to enable him to make up his claim fairly and honestly. 19. Certainly not. So far from the Companies do­

ing anything to retard payment, it is by no means am thing for amounts to be

paid on account, where losses of great magni­ tude involve long and complicated settle­ ment. 20. No.

21. Yes. 22. Furnishing all possible information hastens the settlement of a fair claim. 23. I don't think so. In the course of a long ex­

perience, I don't ever recollect such a case. The insured would of course be allowed reasonable access to the books for the pur­ pose of preparing his claim. 24. No.

25. Cannot say. 26. No. The assured is always permitted to have access to his books, in order to prepare his claim, even where fraud is suspected.

27. Competition is too keen to make it likely that any office would resort to such tactics. I

imagine that if an office did so the assured would be able to obtain redress in equity. 28. No.

29. Yes. 30. Have never heard of such a case ansmg. 31. Question No. 48 is not sufficiently explicit; does it mean that the assured is called upon to

hand over his books entirely to his Companv without having access to them, if so, it would certainly retard the assured in preparing his statement of claim. I cannot, however, be­

lieve that any adjuster or Company would do such a thing, and cannot trace any legal authority giving them power so to do. 32. No doubt this would be the case. 33· Yes. 34· May be possible, but not probable. 35· No. ·

36. Certainly not. 37 · We have never heard of such an instance.

Companies are always glad to every

assistance to help the insured in cla1m mat­ ters, and to promote all reasonable despatch in ascertaining the amount of the loss. 38. No. d

39· It might be, if common sense were not use · 40. It need not do so.

41. Such a demand may seriously retard the .in­ sured in preparing his statement of c!am;., but to make the demand after the clarm rs made out would not cause any inconvenience. 43· No •.

1B07

Question so.

Has it, in the case of your Company, ever so re­ tarded the preparation of statement of

claim?

Replies.

r . No.

2. We do not know of such a case.

3· No.

4· No.

5· I have never heard of such a case. 6. No.

7· No.

8. Not to my knowledge. 9 · Never. ro. I cannot recall a case of a bona fide claim

being prejudiced by the production of books. I r. Not to my know ledge.

12. No.

13. No. 14. I cannot recollect any instance. 15. No. 16 . I do not know of a case.

17. No.

18. Not to my knowledge. 19. Not to my knowledge. 20. No.

21. Not that I am aware of.

22. Cannot say. 23. I cannot recollect any such case. 24. No.

25 . No. 26. I know of no case.

2 7 . Certain I y not. We are here to do business on

business lines, and not to cheat our policy-holders. '

28. No.

29. No.

30. Not to my knowledge. 3r. No.

32. I have never known such a case with my own or any other Company. 33· No.

34· Not to my knowledge. 35· No. 36. Not that I am aware of. Have had many

years' experience. 37· No. 38. No.

Not to my knowledge.

40. Not to any serious extent. 41. No. 43· .Not that I am aware of.

Question 51.

Are there any provisions in the Act, charter, or , articles of association of your Company rc· lating to this matter?

Replies.

I. No.

2. Not to our knowledge.

3· No.

4· Not to our knowledge. 5· No.

6. No.

7. No.

8. Not to my knowledge. 9· Not to my knowledge. IO . No.

II. No. fz. No. r 3· No,

I 4 In claim form enclosed, proviSion is made for

forwarding with statement of loss by fire, certificates, books of account, vouchers, and documents in proof thereof. ·

(3· Seven days. 14. Fourteen days. 15. In most cases small claims are adjusted in a few days after the matter is put in the ad­

juster's hands; large claims, of course, take longer to adjust.

15. No. r6. No.

17. No. r8. Only in so far as the directors under clause 86 (ii.) by the articles of association have power to determine the form of the Company's

policies of insurance.

r6. The actual average time between the dates of the fires which occurred in r 907 , and the payment therefor was twenty-two days. Some fires are not advised us within the fif­ teen days required, and delay in settlement

19. No. 20. No. 21. No. 22. No.

is not our fault; in fact, we are only too

glad to effect a speedy settlement. 17. For the year 1907, eight days.

23. Not in our articles of association, and I am

not aware of any such provision in the Com­ panies Acts if that is what is meant. The

provision is made in the policy conditions. 24. No.

r8. In the Commonwealth I should estimate that the rna jority of the losses are settled within a week after adjustment, say, within ten days after a fire. r 9. One to two weeks.

25. No. 26. No. 27. No. 28. No. 29. T he proposal and policy form the contract. 30. Not to my knowledge. 31. No. 32. No. 33· In the policy. 34· Not to my knowledge. 35· No. 36. No. 37· No. J8. Only conditions printed on policy. 39· I do not think so.

40. T he articles of association provide that the directors shall frame the conditions under which business is to be transacted. 41. No. 43· Not to my knowledge.

SECTION XVII.-PERIOD ELAPSING BEFORE SETTLEMENT.

Question 52.

What is , approximately, the average period at pre­ sent elapsing in your Company between the date of a fire and that on which a settle­

ment is effected ?

Replies.

r. Average about twenty days, some settled within twenty-four hours. , 2. Say fourteen days. 3· A few days.

4· Three or four days. 5· A few days. 6. About fiv e. days. It all depends on the situation of the risk, if in the city, suburbs, or coun­

try.

7. In most cases small claims are adjusted in a few days after the matter is put in the adjuster's hands, large claims, of course, take longer to adjust. 8. Within seven days. 9· Cannot give any average period. We pay im­

mediately the assured and adjuster have agreed upon the amount. rc Impossible to furnish this. Losses are paid

daily, and immediately upon presentation of loss papers in order. II. One week. rz Impossible to say. Some claims are settled

within twenty-four hours, some reqt;Iire ari extended period.

20. A few days. 21. A week or a fortnight. If claim be in order, it is passed for payment at first (weekly) meet­ ing of

22. Varies according to circumstances. We prefer prompt settlement. 23. Without examining a mass of documents for many years, I could only make a guess.

Probably two weeks, or, perhaps, three. If the Commission cares to pay for a staff of clerks to investigate, I could find out. Our rule is to pay at once, as soon as the amount of loss has been ascertained. 24. Difficult to say. Many cases are settled in a

day or two, others may require weeks. 2 5. Cannot quote this. Losses are settled with liberality and promptitude. 26. From one to two weeks. 27. A few days only. We do our best to settle

promptly.

28. Impossible to say, as some are settled the day after the fire ; while other claims of a com­ plicated character require longer periods of time. 29. Three to four days. 30. From date available, 3.69 weeks. -. 3r. One week generally. 32. Taking town and country into consideration, I

think about seven days. 33· From a week to three months. 34· Within seven days. 35. A fortnight. 36. Prefer speedy settlements. Have not the neces­

sary information to answer this question. 37. The actual average for the last eight years is nineteen days (in New South Wales), but this includes one case of eighty-five days (A.

H ordern and Sons, Sydney), where there were complicated and larg-e accounts and matters of salvage and building contracts in­ volved. Other similar cases, though for shorter periods, are. also included. The approximate average for ordinary class of insurance is much less than fifteen days. Some­

times fires occur at great distances, involving considerable time in travelling and in getting estimates of damage. In some cases the in­ sured is away, and settlements are thus de­ layed. 38. Some are settled within a few hours , but a

week would be a fair average. 3? About a week. 40. Impossibl e to state average period. In many cases hour suffices . ·

.1 1. One week.

15· Cannot say, do not keep record; at any rate, it "'ould not exceed seven days.

Question 53·

What were the maximum a nd minimum periods so elapsing in the Commonwealth in the latest financial year of your Company ?

Replies.

2. In Victoria :-Maximum, six months, nineteen days; minimum, two days. 3· New South Wales and Queensland :-Maximum, 12 6 days (no claim made by the assured,

through an oversight, until expiry of 125 days); minimum, one day. 4· Maximum period, 105 days; .minimum period, · one day.

5· Maximum, 145 days; minimum, three days. 6. Fifteen days, and one d ay. 7. Ffty days, and twenty d ays. 8. Maxi mum (one only), five months (assurer com­

mitted for trial by coroner); minimum, with­ in twenty-four hours. 9· Maximum, fourteen days; minimum, twenty­ four hours. to. Maximum, two months (one case); minimum,

frequently same day ; generally, except in complicated cases, within a week. Number of losses paid for year, 161. 11 . Maximum, four months (due to the insured not

collecting until he had reinstated the

damage); minimum, one day. 12 . Cannot say. r 3 Maximum, fourteen days; minimum, three days. 14. Cannot say, but not long.

r 5 Thirty-six days, and three days. 16 . Maximum, 133 days; minimum, two days. r7 . We cannot answer for the Commonwealth. In Victoria the periods were :-Maximum, forty­

one days ; minimum, one d ay. r8. Maximum, six months (owing to illness of in­ sured and arbitration); minimum, one day. 19. Six months. A complicated loss, and payments

made on account. :10 Most claims are settled within one week, many

within two days; the maximum period, 1.')5 days, was due to the absence of the assured ; the amount was · small, and was paid imme­ diately the claim was made. ZI. About a ' month, and a week. n. No information. 23 . To replv to this exactlv wol!!d mean the critical

examination of a m;ss of proofs of loss. T o what purpose? Probably many were settle(] wi.thin a day or two, or even less time than that. Looking over our records. the longest

appear to have been not over. three months, and these were only for trifling amounts. In such cnses, probably, the insured found dif­ ficulty in ascertaining the loss. 24. Eirrhty davs, and two davs. respectively. z <: . Information not easilv available. -20. Rii!hty-seven days (reinstatement at request of

the insured); one day. ?? . Cannot say. 29 . Maximum, six weeks (bond risk ) : minimum, two days. .

30. Maximum, sixteen and f our-seventh weeks ; minimum, one day. ,)I. Maximum. information not available, depends on attending the loss, and value

and nature of interest ; minimum period, six hours.

33·

N ine months, to a f ew hours. In the lon g case settlement was delaved owing to the absence of the insured f rom the State; it was a small loss of £8o. No record, say, four months, and three weeks .

1309

73

34· Maximum (one only), five months (assured com­ mitted for trial by coroner); minimum, with­ in twenty-four hours. 35·

36. 37 -

43-

Maximum, six months (suspicious circum· stances); minimum, one day. Have not the information. We are only agents for New South Wales, so

cannot reply. Will ascertain from head

office if the Commissioners so desire. A month to a few hours, in New South Wales. Maximum, II9 days; minimum, same day . See reply to question No. 52. When a claim is not referred to arbitration, the

maximum period would be, say, three

months, due to the insured not complying with the conditions of the policy. The

minimum period is a f ew liours. Can only answer for New South Wales, as in question No. 52.

Question 54·

Has your Company ever declined to effect a settlement on the grounds of­ (a) Fraud; (b) Misrepresentation;

(c) Breach of contract.

RePlies.

r. (a) Yes, one case.

(b) No. (c) No. z. Yes.

3· (a) No. ) Cannot ·answer for other

(b) No. ,- branches.

(c) Yes, one case. J 4- (a) Yes, once in 1896. (b) Yes, once in 1904. (c) No. 5. The Company has no record of any such, and

I cannot remember any. 6. (a) Yes. (b) No. (c) No.

7. Not in the Commonwealth. 8. (a) Yes.

(b) Yes. (c) Yes. 9· Not to my knowledge. ro. Fraud and misrepresentation, yes; but only

in glaring cases, say, six in 30 years. Breach of contract, no ; as unless there are

grave reasons to suspect fraud, the policy conditions are not used by the Company. I I. Yes.

rz. Not to my knowledge. 1 3. No. r4. Not of late vears.

r _'). Not in the Commonwealth. r6. I cannot recall a case in the Commonwealth. See reply to question No. 93 · q . Not at this agency.

r8. (a) Yes. (b) Yes. (c) Yes. 19. I have no particulars, but have no doubt that

the Company has refused to pay for the

reasons above indicated. It would cer­ tainly be acting contrary to public policy :1nd to the interests of its shareholders, it to condone fraud . zo . (a) Yes.

(b) No. (c) No.

21. (a) No. (b) Yes. (c) No. 22. Seldom. 23. (a) Yes.

(b) Yes.

74

2 1. None iri Tasmania.

22. No knowledge of any. 23. Really I cannot say. Quite likely none at all. . If there were any, unless the amounts were large they might not be reported to this

office at all, being left to local officers to handle. (c) I do not recollect it, but possibly so. 24. No, so far as the Commonwealth is concerned. z 5. Cannot remember an instance. 26. Not during my term of management, but it is

quite possible that since the society's estab­ lishment in this State, some 40 years ago, it may have declined settlement of claims under each of the above headingi.

24. None. zs. None. z6. None. 27. None.

:z7. Not in the fire department, so far. 28. Not to my knowledge. 29. No. 30. Yes. 31. Yes. 32. (a) Yes.

(b) and (c) Yes. ·

z8. None that I am aware of. 29. None. 30. Nil. 31. £4oo. One. 32. None. 33· No knowledge. 34· Not one to my knowledge. 35· Nil. 36. None.

NoTE.-The questions (b) and (c) seem to me practically the same in effect. 33· Not in Queensland.

37 · We reply as per No. 3 reply to question No. 54· 38. None.

34· Yes. 35· (a) Yes. {b) Yes. (c) No. 36. Of rare occurrence. Only one case occurs to

me just now as having occurred within the last two or three years. 37· Not in New South Wales. As regards the

Company as a whole we are unable to reply as we only act as agents for New South

Wales, but if the Commissioners so desire we will ascertain particulars from head office. 38. Not in New South Wales. 39· Yes. 40. Yes. 41. (b) Yes, once many years ago. 43· (a) Yes.

(b) No. (c) No.

This refers to New South Wales only.

Question 55 ·

What was the total amount (if any) and the number of claims, so declined in the Commonwealth by your Company during its latest financial year?

Replies.

1. None. 2. In Victoria, nil. 3· None at this branch. 4· Nil.

5· See reply to question No. 54· 6. £350. One claim. The claimant was sen­ tenced to eighteen months imprisonment for arson. 7· None. 8. Not one to my knowledge. 9· Nil.

ro. Nil. II. Nil. rz. Cannot say. I3. Nil. I4· None. IS · None. r6. None. Ij. None at this agency. We have no information

as to ·claims in other States. r8. One under misrepresentation for £zoo. I9. Nil. 20. None.

39· None. 40. Breach of contract (iri two instances) amount involved under £300. 41. None. 43· Cannot say.

SECTION XVIII.-ARBITRATION.

Question s6.

What, in your Company, is the approximate pro­ rortion of cl aims referred to arbitration?

Replies.

1. None. 2 . We have not, in Victoria, ha,d an arbitration

case for years. 3· This branch has never referred a claim to arbi­ tration, and never been sued in the Courts. 4· In the past five years one case was referred to

arbitration, and as over z,ooo losses were paid in that time the proportion would be approximately as I is to z.,ooo. 5· This Company has only had occasion to refer

a claim to arbitration three or four times in my experience of 36 years. 6. About I in 4,000.

7. Have not referred any to arbitration in t!-:e · Commonwe!lth. .8. I have no information on this subject, but in Australia, I should say, not r in 8oo claims. 9· In the Commonwealth, about I in 300. ro. Not h alf-a-dozen since the establishment of the

Company.

II. One in I,ooo. rz. Practically nil. IJ. Nil.

14. None. IS· Have not referred any to arbitration in the Commonwealth. _ ·

r6. So far as I can recollect only one case has

occurred in Australia during the time I have been in charge of the Company's business -fourteen years. _

r7. We have not had occasion to refer a claim to arbitration. r8. Under I per cent. in the Commonwealth. 19. Say, one per annum in Commonwealth. I

cannot say as to other parts of the world. zo . Two in 31 years. zr. I believe we have had one claim referred to arbitration since inception of Company. 2 2. Arbitration very rare. 23. Cannot really say . . Hardly an appreciab!R

percentage at all.

24. Very few claims go to arbitration, probably not I in 1,000.

zs. Exceedingly small.

75

26. Impossible to state. Arbitration is very rarely resorted to. 2 7. None so far in the fire department.

Practically there are none.

29. None. 30. Practically nil. 31. 4·3 per cent. 32. About I in 2,ooo.

33· Cannot say, no knowledge. 34· I have no information on the subject, but in

Australia I should say not I in Soo claims. '35. One in ten at the outside. 36. Claims are rarely submitted to arbitration; proportion small.

37 · (i.) None in New South Wales. (ii.) We reply as per No. 2 to question No. 54· 38 . Have only once gone to arbitration and paid, subsequently the assured got three years im­

prisonment.

39· Impossible to say, a very trifling proportion. 40. For some time, none. 4I. Three claims have been referred to formal

arbitration during the last 30 years. 43·. Cannot say.

Question 57.

What is the usual procedure in connection with such reference? Replies. I . Goveme.d by local conditions and laws.

2. Policy condition No. 18 attached hereto, pro­ vides as follows :-" If any difference arises as to the amount of any loss or damage, such difference shall independently of all other questions be re­ ferred to the decision of an arbitrator to be

appointed · in writing by the parties in

difference, or if they cannot agree upon a single arbitrator, to the decision of two dis­ interested persons as arbitrators, of whom one shall be appointed in writing by each of

the parties within two calendar months after having been required so to do in writing by the other party. In case either party shall refuse or fail to appoint an arbitrator within

two calendar months after receipt of notice in writing 'requiring an appointment, the other party shall be at liberty to appoint a sole arbitrator; and in case of disagreement

between the arbitrators the difference shall be referred to the decision of the umpire who shall h ave been appointed by them in writing before entering on the reference. and who

shall sit with the arbitrators, and preside at their meetings: The death of any party

shall not revoke or affect the authority or powers of the arbitrator, arbitrators, or um­ pire respectively ; and in the event of the death of an arbitrator or umpire, another shall in each case be appointed in his ste::td by the party or arbitrators (as the may

be), by whom the arbitrator or umpne so dving was appointed. Each party shall pay his. her, or their own costs of the and a moiety of the costs of the .aw,ard (m­ duding the arbitrators' and umpire s fees).

And it is herebv exoressly stipulated and de­ clared that it shall be a condition precede':'t to any right of action or suit thts

policv that the award by such arbitrator. or umpire. of the amount of the

loss or damage, lf ilisputed. shall be first obtained:''

1311

3· Fully set out in the accompanying policy con-ditions. See condition No. 18.* 4· Vide condition 18 of our policy form.* 5· See policy, cl ause 18.*

6. As set out in condition No. r8 in policy.* 7. See copy of arbitration clause attached.* 8. See condition No. I8 on policy form enclosed.* 9 · See clause XVIII. of policy attached.* ro. See policy condition I8.* The intention and

effect of the . clause is to render expensive litigation unnecessary, and it is in the in­ terests of the Company and the insured alike. r r. As per clause 18 of conditions of policy as per

copy attached hereto.* 12. See No. 18 of accompanying conditions.* 13. Nil. 14. See condition 18 of policy attached hereto.*

r 5. See copy of arbitration clause attached.* r6. Attached is the policy condition No. 18 on the subject.* q. See condition No. I 8 of the policy.*

r8. In items of clavse r8 of policy conditions.* 19. See clause r8 of our policy conditions.* 20. Each side appointed arbitrators. 21. Vide condition r8, policy conditions.*

22. One or two arbitrators. They appoint an um­ pire. 23. The insured would select one arbitrator, the Company another. These two would ap-

point an umpire. 24. See printed condition No. r8 on back of policy form.* 25. Refer to condition No. r8.* z6. As per policy condition No. r 8.*

z8. See clause r8 of policy conditions as per copy attached hereto.* 29. See condition No. r8.* 30. Left in the hands of the adjuster to arrange.

31. Appointment of an arbitrator agreed to by

both parties to decide the amount of loss or damage. If no agreement can be arrived at, two arbitrators and an umpire are ap­ pointed. See arbitration clause, No. r8 on Company's policy.* 32. See policy condition No. 18.*

33· Arbitrators are chosen whose award is to be fin al. 34· See condition No. r8 on form of policy en- closed.* per clause attacherl.*

36. See condition No. r8 attached.* 37. See condition No. r8 of the Company's policy. 38. Each side appoints an arbitrator; and they choose an umpire usually a barrister.

39· See condition No. r8.* 40. See condition No. r8 of policy herewith.* 41. See condition No. r8 of policy.* 43· As provided for in conditions of contract.*

SECTION XIX.-CLASSIFICATION OF RISKS.

Question 58.

Is there any simple classification of fire risks under­ taken by your Company?

Replies.

r. Yes ; but only private information at head

office.

2. No.

3· No.

4· Yes.

• S-.e reply No. 2 o.bove.

. ...

5· No.

6. No.

7· No.

8. Not to my knowledge. 9· We have a clasisfication. ro. Yes. r r. No.

12. No. 13 . Yes. 14. These are clasisfied under the tariff of different States by the Fire Associations. r5. 'No. r6. Yes. r 7. It is the common practice, and we presume it

is undertaken by our Company, but it is

not done at this agency. r8. No.

19 . Yes. 20. Yes. 21. No.

22. Yes. 2,). No simple classification. 24. Yes. 2.5. Not meantime in the Commonwealth. 26. No.

27. Roughly speaking, risks are divided into four classes, as shown in the reply to the follow­ ing question. 28. No. 29. Yes. 30. No. 31. No; statistics are taken out on hazardous busi­

ness from time to time, but these cover a small proportion of the b usiness, and are only taken out when the underwriter con­ siders that the business shows a ,very heavy loss ratio; it would be impracticable to take . out statistics of all classes of business. 32 . No. 33· Wood and brick, 34· Not to my knowledge. 35 · No. 36. Yes. 37· Yes. 38. Yes. 39· Yes, at the head office. 40. No. 41. No; the' losses on different classes of risks vary

so much th at we attach very little (if any) importance to classification. 43 · Yes; a classification is undertaken.

Question 59 ·

If so, pl ease specify. R eplies.

r. We have not any data. 4· We attach a list of the groups into which our premiums and losses are divided. CLASSIFICATION OF PREMIUMS AND LOSSES.

Divide into two principal classes :­ (a) Brick or stone walls. (b) Inferior construction. Classify brick risks on separate sheets from risks of inferior construction, g1vmg . the class Nos., the letters (a) and (b) as

above. of mixed constructio:1 to be classi­

fied (a) or (b) according to !he proportion of inferior construction, and note mxd." made in remarks column.

76

Divide localities into three (r) City and suburbs. (z) Country towns with water supply and fire brigades. (3) Unprotected areas. and against each entry in classification lists mark in remarks column number of district in which the risk is situated .

Class No. Class of Risk.

1. Dwellings including private

boarding houses. 2. Churches and schools, banks, and offices. 3· Public buildings, including town

halls, but excluding theatres and other places of public

amusement. 4· Hotels, restaurants, and public boarding-houses. 5· Storage warehouses.

Abbreviations-Bond (b), free store (f), wool and hide stores (w), and machinery ware­

house (mchy.). 6. Wholesale warehouses. Abbreviations - Grocers (gr.), hardware (h.), drapers (d.),

fancy goods (f.g.). 7. Retail stores (show as in No. 6) and auctioneers. 8. Hay and produce stores, and

wool and coal sheds. · 9· Factories. Abbreviations-Boots (b), chemi­ cal (ch.), colour (col.), glass

(gl.), hat (h.), tobacco (tob.); rope works (r.w. ). ro. Breweries (b.), malt houses

(m.h.), and distilleries (d.). rr. Sawmills and woodworkers gene­ rally. r2. Iron foundries and pattern mak­

ing shops.

13. Mills, corn, oil, paper, sugar,

and woollen mills. 14. Meat curing and refrigerating works. 15. Farming risks and station pro-

perty . .

16. Hay stacks and standing crops. I 7. Timber and coal yards.

r8. Printers and lithographers, news­ papers (n.), job printing (j.), including manufacturing sta­ tioners. 19. Mining risks. 20. Liverv stables, including trade

stables.

21. 22. Electric light and power stations. 23. Floating and ambulant. 24. Theatres and other places of

amusement.

25. Miscellaneous. 26. Sprinklered risks.

7· See No. 58. o. Based on Company's experience of underwrit­ ing. 10. We classify our risks under various classes, and

also classify the losses under same . 13. As per Fire Association tariff book. r5. See reply to.Question No. 58 . 16. We divide our business in fifty- six classes,

crediting the premiums received for each class, and debiting the losses.

Non-hazardous, e.g., dwellings,. churches, offices.

20.

22.

28. 29.

3I. 33·

:r-.;edium hazard, e.g., warehouses. Hazardous, e.g., stores, certain manufacturing nsks. Extra-hazardous, e.g., special manufacturing

risks, stores for inflammable goods. Risks in the city, suburbs, and country are

placed under headings of the different occu­ pations, &c. Construction and occupation. See form attached.

CLASS OF RISK..

I. Dwelling houses. 2. General stores. 3· Hotels, wine shops, and restaurants. 4· Station buildings (including home-

steads).

5. Retail shops. 6. Mercantile warehouses (bond and

free).

7· Warehouses (wool and grain). 8. ·warehouses (soft goods). 9· Warehouses (grocers, hardware and general). Io. Retail drapers. I I. Banks, offices, churches, and public

buildings.

12. Workers in .wood (cabinet makers, coachbuilders, &c.). I3. Sawmills. 14. Manufactories (breweries, boot fDc-

tories, &c.) .•

I 5. Manufactories (extra hazardous).

r6. Flour mills and mill stores. 17. J?rinters, publishers, and bookbinders. 18. and music halls.

I 9· Timber storDge yards.

20. Mining plant. Each of these classes is further sub­ divided into (a) Brick and (or) stone.

(b) Wood and (or) iron.

Class Private dwellings, churches, schools, banks, bonded warehouses, and first-class office . _

Class 2. Bmldmgs m cours.e of erection, hotels, non-h2.zardous wholesale warehouses, stores, and factories. Class 3· Medium hazardous wholesale ware-

houses, stores, factories, and retail shops. Class 4· Extra hazardous risks of all kinds. See reply to Question No. 58. We classify according to occupation and

locality. See reply to Question No. 58. Risks classified by Fire Association, Queens­ land, according to occupation, and contiguity

and situation. We classify the different risks covered j such information is completely useless, however, if conflagration hazard is taken into ac­

count.

37' Dwellings, public buildings, offices, etc. Wholesale and storage warehouses (including bonds).-No hazardous goods. Wholesale and stmage.-Containing hazardous

goods. Hotels, cafes, clubs, etc. :Retail stores, shops, hazardous

Retail stores, shEJ.ps, etc.-Contammg goods.

Industrial and manufacturing­ hazardous goods.

hazardous goods .

...

38. About twenty-five sheets of printed matter. 39· A list is enclosed.

CLASSIFICATION LIST.

r. Bakeries. 2. Barracks. 3· Boot and shoe factories. 4· Breweries. 5. Brick works. 6. Canneries.

7. Cement works. 8. Chemical works. 9· Cigarette factories. Io. Coal.

I r. Cotton mills. I2. Cotton gins. I 3· Cotton presses. I4. Cotton in godowns,, shoonahs, and

zarbiehs.

I 5. Cotton in open.

r 6. Cold stares. I7. Confectionery works. I8. Country stores. I9. Distilleries. 20. Drapers.

2 I. Dwellings, churches, schools, public offices, banks, offices, etc. 22. Native dwellings. 23. Electric light power stations. 24. Farms. 25. Flour mills.

26. Flour and grain stores. 27. Foundries and other metal working risks. 28. Hotels. 29. Ice factories. 30. Jute mills.

31. Jute godowns. 32. Jute presses. 33· Mining risks. 34· Oil stJrage depots---warehouses. 35. Oil storage depots-tank installations. 36. Paper mills.

37· Potteries and glass works. 38. Printers, bookbinders, and litho-

graphers.

39· Railways. 40. Retail stores, non-hazardous. 4I. Retail stores, hazardous drapers). 42. Rice mills, European. 43· Rice mills, native.

44· Saw mills. 45· Soap works. 46. Stables. 47. Sugar mills.

48. Sugar refiners. 49· Sugar warehouses. so. Tanneries and leather works. sr. mills ( cotton and jute).

52. Theatres and music halls. 53· Timber. 54· Tobacco and cigar factories. 55· Tobacco warehouses. 56. 'Varehouses, non-hazardous. 57. Warehouses, hazardous. 58. Woodworkers. 59· Buildings in course of erection. 6o. Industrial risks (not otherwise pro-

vided for).

6r. Silent risks. 62. Motor garages. 63. Floating insurances. 64. Motor cars, floating. 65. Clothing factories. 66. Chaff mills and stores. 67. Bars and billiard saloons (public).

1

i

i

• ' I

I

I

I

43·

68. Ships and steamers in harbor, &c; 69. Grain in bags in operi. 70. Station risks. Bonds and free stores to be classed

as warehouses (non-hazardous). Occupation ( r so classifications). Attachment or detachment. Construction (brick, stone, wood, iron, mixed

construction). Situation. Water supply available. Fire brigade service. Fire appliances installed. Remoteness of district, etc., etc.

SEcTION XX.-LossEs CovERED BY FIRE PoLICIEs.

Question 6o.

(a) Are losses by lightning or explosion regarded by your Company as being covered by a fire policy? (b) If so, is such fact explicitly mentioned in your

contracts?

Replies.

I. (a) Yes.

(b) Yes. 2. (a) Lightning covered, also explosion of coal gas. Other " explosions " not covered. (b) Yes. 3· (a) Losses by lightning and explosion by gas

used for illuminating or domestic pur­ poses are covered. (b) Yes. 4· (a) Yes.

(b) Yes. 5· (a) See policy, condition 7 (h) as follows:-Unless otherwise expressly stated in the policy, the insurance does not cover loss or

damage occasioned by explosi,on ; but loss or damage by explosion of gas used for· illuminating or domestic purpose in a building in which gas is not generated, and which does not form part of any gas

works will be deemed to be loss by fire within the meaning of this policy. (b) Yes. 6. (a) Yes.

(b) Yes. 7. (a) Risk not covered unless specially included. See clause attached.* (b) See above. ·

8. (a) Yes, lightning; as regards explosion, see condition No. 7 on enclosed policy form.* (b) Not lighting; as regards explosion, see

condition No. 7 on enclosed policy form.* 9· (a) See clauses 5, 6, 7 of policy attached.* (b) See above. ro. (a) Re lightning. See wording on face of

policy.

Re explosion. See policy condition No. 7 (h).* .

(b) See above.

78

12. (a) Losses by lightning or explosion of gas are

(b)

IJ. (a)

(b)

covered. Explosion of gas, yes; and lightning, yes, freely advertised that we cover the

latter.

Yes. See clause 7 of policy conditions.* 14· (a) Lightning .and explosion by coal gas, yes. (b) Yes, see condition 7 (h)* of policy. rs. (a) Risk not covered unless specially included.

See condition No. 7 (h) attached.* (b) See above. r6. (a) Loss by lightning is; but with regard to

explosion, only loss or damage by ex­ plosion of gas used for illuminating or domestic purposes in a building in which gas is not generated, and which does not form part of any gas works is deemed to be loss by fire within the meaning of the policy. See policy condition 7

(h).*

(b) The above are both explicitly set forth in the policy. 17. (a) Yes, as per the face of the policy and con­ dition No. 7 (h)* thereof.

(b) Yes, as per the face of the policy and con­ dition No. 7 (h)* thereof. r8. (a) By lightning, yes. By explosion under certain conditions. See

clause 7 (h)* policy conditions. (b) Yes. 19. (a) As regards lightning (a) Yes.; (b) Yes, see front of policy.

(a and b) As regards explosion, only in case of explosion caused by illuminating gas. See clause 7 (h) policy conditions.* The Company is, however, liable for result­ ant damage by fire. 20. (a) Yes.

(b) Yes. 2r. (a) See condition 7, policy conditions.* (b) Yes. 22. (a) Yes, explosion of gas used for illuminating.

(b) Policy with conditions herewith.* 23. (a) Lightning, yes.

@

Explosion, no, except by illuminating gas, in a building not forming part of gas­ works. Yes. q. (a) Yes.

(b) Yes. 25. (a) See condition No. 7·* (b) Yes. 26. (a) See policy condition No. 7 (h).*

(b) Yes. 27. (a) All losses by lightning are covered. Explosion of gas used for domestic purposes or illumination in a building in which

gas is not generated, and which does not form part of a gas works is covered. Otherwise explosions are not covered

(b)

28. (a) (b)

unless fire results therefrom. Yes. Yes. Yes. Losses caused by lightning and gas

explosion are specifically included in our policies.

rr. (a) Losses by lightning covered. Losses by explosion. See clause 7 (h)* of conditions of policy as per copy at­ tached hereto.

29. (a) Yes.

(b) As to lightning, no.

• See reply No. 5 (a) aboTe.

(b) Explosions of gas used for illuminating purposes, etc., will be aeemed to be loss by fire. See policy condition No. 7 (h).*

• See reply No. 5 (a) above.

30. (a) (i.) Lighting, yes. (ii.) Explosion, conditionally. See 7 (/z) of policy conditions herewith.* (b) Yes. 31. (a) Yes.

(b) Yes. 32. (a) Lightning, Explosion. stances.

(h).*

(b) Yes.

yes. Under certain defined circum­ (See policy condition No. 7

33· (a) Explosion, no. Lightning, yes. (b) Yes. 34· (a) Yes, lightning; as regards explosion see con­

dition No. 7 on form of policy en­

closed.*

(b) Not lightning. See condition No. 7 on form of policy

enclosed.*

35· (a) Lightning and gas explosion are covered. (b) Yes. 36. (a) See policy condition No. 7 (/z).* (b) See above. 37. (a) I. Lightning, yes.

2. Explosion, by illuminating gas, yes. Other explosion conditionally as per condition No. 7 (/z)* of the Com­ pany's ,policy. (b) Lightning, yes.

Explosion. See above. 38. (a) Yes. (b) Yes. 39· (a) Losses by lightning and ordinary gas ex-

plosion are covered. See condition 7 (h).* (b) Yes. 40. (a) Yes, in terms of printed policy form here­

with.*

(b) See above. 41. (a) Lightning, yes. Explosion of gas for illuminating purposes, yes. ·

(b) Yes, see policy form condition No. 7*, and also face of policy. 43· (a) Yes. (b) Yes.

Question 6x.

Is damage by water used for fire extinguishing pur­ poses considered by your Company as part of the risk covered by a fire insurance

policy?

1. Yes. 2. Yes. 3· Yes. 4· Yes., 5· Yes. 6. Yes.

7· Yes. 8. Yes.

Replies.

9· See reply to question No. 6o (a). ro. Yes. II. Yes. 12. Yes.

13. Yes. 14· 'Yes. 15. Yes. r6. Yes.

17. Yes. r8. Yes, when used for extinguishing fire.

• reply No.5 (a) above.

r9. Yes. 20. Yes . 2r. Yes 22. Yes. 23. Yes. 24. Yes. 25. Yes. 26. Yes. 27. Yes. :z8. YliiS. 29. Yes. 30. Yes. JI. Yes.

1315

32. Yes. (This is also generally provided by law when there is a Fire Brigade Act). 33· Yes. 34· Yes 35· Yes.

36. Yes. 37· Yes. 38. Yes. 39· Yes.

40. Yes. 41. Yes. 43· Yes.

Question 62.

Js damage by smoke or heat (other than actual fire) considered by your Company as being covered by a fire insurance policy?

Replies.

r. Yes. 2. Yes, if caused by fire. 3· Yes. 4· Yes, if occasioned by other than natural heat­

ing of the property or its undergoing any heating or drying process. 5. Yes, if caused by a fire. 6. Yes.

7. Yes, provided such is caused as the result of fire. 8. Yes. 9· See reply to question No. 6o (a). ro. If the damage is the result of an outbreak of

fire, yes; but otherwise, see policy condition 5 (b) as follows :-The insurance does not, under any circumstances, cover loss or damage to property occasioned by its own fermentation or natural heating (except as may be pro­ vided in accordance with condition 7 (f) or

by its undergoing any heating or drying process. 7 (f) Unless otherwise expressly stated in the policy the insurance does not cover coal

loss or occasioned by its own

spontaneous combustion. rr. Yes. r2. Yes. r3. No. There must be actual ignition.

r4. Actual fire or the consequence of it. Smoky chimneys would not be considered to cause a claim. rs. Yes, provided such is caused as the result of

fire.

r6. Damage by mere heat or smoke where there has been no actual ignition, such as from an ordinary fireplace is not covered. Where there has been ignition of an article, or part of the premises, then smoke or heat damage

would come within the policy. r7. Yes. r8. Yes, when the result of fire.

19. Yes, ' if damage resulting from a fire; but the Cop1pany is not liable for damage arising from an increased temperature from natural causes. See clause 5 (b) policy conditions.* zo. Yes. zr. Yes, when it is the result of accidental fire. n. Yes. 23. Smoke damage is. Spontaneous heating is not. 24. Smoke and heat damage, the consequences of a

fire, are covered under our policies. zs. Yes. But answer might need qualification

under certain exceptional conditions. 26. Yes. Provided such is caused as a result of

the burning of the premises or the contents thereof. ·

27. Yes. 28. Yes. 29. Yes. 30. Yes. 31. Yes, if caused by an outbreak of fire. 32. Yes, if the smoke or heat arises from a fire

within the meaning of a fire policy. 33 · Yes. 34· Yes. 35· Yes, if resulting from fire.

36. Yes, if occasioned bv fire. 3 7. Yes, if consequent upon or the result of iire. 38. Yes. 39· Yes.

40. Yes. 41. Yes. 43· Yes.

Question 63.

Is damage resulting from spontaneous combustion (e.g., in the case of a hay stack, &c.) con­ sidered by your Company as being covered by a fire insurance policy ?

Reflies.

1. Yes, if fire results. ... No.

3· No.

4· No.

5· Yes. 6. No. See condition No. 5. *

7. Policy ·excludes loss or damage to property oc­ casioned by its own fermentation or natural heating, or by its undergoing any heating · or drying process. 8. No. See condition No. 5 of enclosed policy

form.*

9· See reply to question No. 6o (a). ro. No.

II. Yes . 12. See attached clause 5·* We have never to my knowledge disputed a . claim arising from spontaneous combustion. I3. Yes. I4. We have paid claims so resulting that we

were fairly certain were caused from spon­ taneous combustion. Spontaneous combustion is difficult to prove. IS. Policy excludes loss or damage to property

occasioned by its own fermentation or

heating, Qr by its undergoing any

heating or drying process. I6. Yes, but not to the articles in which the spon­ taneous combustion originates. Policy con­ dition (No. 5) reads:-" The insurance

does not under any circumstances cover . lo_ss or damage to property occa-

SlOned . Its own natural heating . "

17. See cond1hon No. 5 of the policy.*

• See reply No. 10 to Queation No. 62.

I8. No. See clause 5 (b) policy conditions. I9. No.

20. Yes. 21. No. See clause s, policy conditions.* 22. Have not known tl1e question raised over a hay­ stack, and do not see how it could be j

exceptions are named in policy conditions. 2.3. No. 24. Policy condition No. 5 (b), exempts us from " loss or damage to property occasioned by •

its own fermentation or natural heating." Spontaneous combustion is provable,

and is continually being )Jaid for. In any case the liability in respect of other pro­ perty to which such a fire may extend re­ mains. 2 5. See conditions Nos. 5 and 7. * 26. No. See policy condition No. 5 (b).*

27. No. 28. See Policy condition No. 5·* So far as I am a ware, no claim for loss caused by spontaneous combustion has ever been

disputed by the Company. 29. Yes. 30. No, but like all other causes of fire proof is

difficult, especially so in the case of . hay­ stacks. 31. Yes. 32. No, but it is nearly always paid when it goes

so far as to actually cause a fire to break

out. Mere heating, which is '' combustion '' in a chemical sense, is not paid for.

33· Yes, but Company declines haystack risks. 34· No. See condition No. 5 of enclosed form of policy.* 35· No. 36. Yes, in the case of a haystack. 3 7. Not if spontaneous combustion can be proved.

The onus of proof is, however, on the Com­ pany, and consequently claims for damage or loss to haystacks are almost invariably paid. 38. Not if it can be proved that it arises tram

spontaneous combustion. 39· See condition No. 5·* 40. Not covered, though such cause is difficult to determine. 41. Yes. 43· Depends upon circumstances.

Question 64.

Does your Company give, in its policies, a general cover over buildings and contents, or does it require a specific statement of risk incurred in respect of detailed items ?

Replies.

I. with an average clause,. or we require

specific amounts. 2. Specific sums required, unless policy is made subject to average. 3· Specific sums required. 4· Buildh1gs and contents are rarely, if ever, in­

sured in one sum. It is usual to require

separate amounts to be insured on certain groups of articles. If the policy is not sub­ ject to average, the separation of amoumts is to be more

5 Bmldmgs and contents are insured separately. 6. Specific statement of amounts on buildings, and also contents, is required, but if either build­ ings or contents are separately subject to con­

dition of average, detailed statements need not be given.

• See raply Ne. :W to Qlwitioll No. 62.

1317

St

7. We require separate amounts upon each item covered. 8. Want a separate amount on building. 9· Specific statement. ro. It is usual to insure buildings and contents m

separate amounts. r I. Specific statement required. 12. Separate. amounts are required. 13. Require detailed items.

14· No, such a policy is called a " bl anket policy." We require separate amounts on buildings, and separate on contents. In cases of ma­ chinery risks, we require a separate sum on

eaGh machine. 13. We require separate amounts upon each item covered. r6. I understand this question is put in order to

ascertain whether we insure buildings and contents in one sum ; if this assumption be correct, the answer is " No." Further, I do not think it is the practice of any Company

in any part of the world to give such a gene­ ral cover as that described. r 7. Separate amotlnts are required on buildings and

r8. No; but always a specific amount on building and on contents, detailed items. 19 We require separate amounts on building

and contents. 20. Separate valUes must be placed on buildings and on contents. 2r. No. Buildings and contents must have separate

values placed upon them. (Vide proposal.) 22. Separate amounts on each. 23. A specific statement of risk in detailed items is the almost invariable. rule. Now and ag:1in

stocks in t.wo or more buildings may be

covered in one amount, under average clause conditions. 24. We require "Separate amounts on buildings and contents.

2 5. Gives either under certain conditions, but it is

customary to ask for separate sums. 26. Separate amounts are required on building and contents. 27. We require separate amounts to be placed on

building and contents. 28. Separate amounts are required. 29. No, it requires a specific statement of risk in­ curred in respect of detailed items.

30 Usually separate amounts on each building, and similarly on contents. If separate buildings, or contents of separate buildings, are covered in one affiGlunt, for obvious reasons, the

average clause is applied. 3 I. A specific statement is required. 32. This question is not very intelligible; but I

think the information sciUght can be supplied as follows separate building is in­

S·utied in a separate sum. Contents are sepa­ r&te!y insured, apart from buildings, and are Uremselves subdivided into different classes, as, for houst>hold furniture separate

from stock-in-trade1 machinery separate from stock"in-trade, and so oo. A specification for general Use Will be found on the front acrompan-png form, but in s?ecial

cases speci:a;l; subdivisions, or separate msur­ ance, may be demanded. 3J .htildings separate. Each buildi';g a separ.ate risk. Contents separate. Wtth factones,

machinery, plant, etc., is scheduled. 34· Wants a separate amount on building. 35. Specific amounts are required on building and contents.

36. Separate amounts ate required.

F.l4377.

37. Buildings are alWays covered separately from contents, and are also generally sep.arately . insured themselves. Contents are msured both under general covers and also

cally-where possible, the Company insurances to be specified as fully as poss1ble (in detailed items). This is to the advan­ tage of both parties to the contract.

F

39·

4r ..

4f·

Buildings must be specifically insured-also contents. Separate amounts are required on buildings iii1d contents.

Both ways; but building and contents are not insured in one item. Specific statement required. Requirements vary according to circumstances.

Question 65.

\\.hat is the practice of your Company in regard to floating insurance on goods transferred from place to place?

Replies.

r. Seldom taken in Australia. z. To indorse the policy with each removal, unless · the policy be made subject to average. 3· Each transfer must be allowed by indorsement,

unless the policy is subject to the condition of average. ,j . The policy covering such must be subject to

average.

3. The Company has none. Insurances transferred ftotn one place to another may be allowed by indorsement on the policy, or they may be refused, and unearned premiilln returned. 6 Do not encourage this class of business, as it

interferes with our limits. A specific .rate per cent. is charged. 1 Insured under policy colditions subject to con­ ditions of average.

8. The risk is covered. 9 . When proposal is acceptedl receipt and policy are issued. 1c. To insure. 1 1 . When accepted, same are made subject to the

average clause. .

12 . We occasionally grant such policies, but with reluctance. 1 3. Have no floating insurances. r 5. Insured under policy conditions, subject to con­

ditions of average. 1 6. I understand that the purport of this question is to ascertain whether we issue floating poli­ cies, i.e., policies covering in one sum mer­

chandise or other movable property in moro than one place, and, if so, under what spe­ cial conditions, if any. If my assumption be cOl'rect, the reply is that we do, but busi­

ness of this character is, as compared witlol mercantile towns in other parts of the world -particularly in the United Kingdom-prac­ tically non-existent. When such insuranceg

are granted, they are always subject to

aveage. (See policy conditlon No. 17.)* 17. We grant floating insurances on goods with per­ mission to transfer from place to place. Such insurances are s\ibject to average. 18. To grant floating or blanket policie•;.

19 We issue policies accordingly 20. Floating policies are not iss1ted by this Com­ pany. z I . Special rates charged for flo;;.ting

..

22.

25. z6.

27.

Insure subject to average. l don't clearly understand the question. Goods may be transferred from place to place by consent ot the Company, and sometimes we

insure in both places during course of trans­ fer, by arrangement with the insured. Such insurances are occasionally granted, but we do not encourage them, and they carry

high rates of premium. To cover them under average. The society grants floating insurances, allowing transfer ot goods from place to place, the

only condition imposed being that the policy is made subject to average. We do not transact this particular class of busi-ness. 28. Floating insurances

undesirable, but such contracts.

Ol " blanket policies '' are we occasionally undertake

:29. We do not write this class of business. 3'. The policy of insurance would be made subject to conditions of average. 51. Policy to cover, wherever the goods may be. 32. ,See to question No. 42. A1so, this ques-

tion not very intelligible, inasmuch as a

" ihnting policy " does not require declara­ tion of transfer of property from place to place. 33 Do not insure. 34· The risk is covered. 35· Verv little of this has been done in the Com­

monwealth.

All floating insurances are subject to average.

3 7. These insurances are undertaken by the Com­ pany. 38. Under a floating policy we do not require notice nf any removal. 39· The Company accepts such insurances. 6,o. To insure same if required. 1.1. Allowed, subject to notice of transfer being

· given to office and extra premium (if any)

being paid to tecure continuance of policy. 43· We grant such covers- as occasion demands.

SECTION XXI.-VARIATIONS IN PROPERTY INSURED.

Question 66.

are the provisions of your Company with re­ ference to notification by a policy-holder of any alteration in the insured property, or_ in any property adjoining it?

Replies.

I. See policy conditions.* 2. That notification thereof be given to the Com­ pany in writing. 3· Notification must be given.

4· Alterations affecting the property insured in such a way as to increase the risk of loss or damage by fire must be notified and sanc­ tioned by indorsement on the policy. Vide condition 9 of policy form.* 5· See policy, clause 9·* 6, Condition 9 of the policy requires the sanction

of the Company for alterations, as mentioned therein.* 7· See policy. condition No. 9·* 8. See condition No. 9 of enclosed policy form.* 9. See clause ix. of policy attached.*

See clause 9 of policy conditions.* !C. II.

82

12. Clause 9 of the policy contlitions provides as follows :-Under any of tfie following cir­ cumstances the insurance ceases to attach as regards the property affected, unless the in­ sured, before the occurrence of any loss or damage, obtains the sanction of the Com­ pany, signified by indorsement upop the policy by or on behalf of the Company :-(a) If the trade or manufacture carried on be altered, or if the nature of the bccupation of, or other circumstances affecting the build­ ing insured, or containing the insured pro­ perty, be changed in such a way as to in­

crease the risk of loss or daillage by tire.

(b) If the building insured or containing the insured property become unoccupied, and so remain for a period of more than thirty con­ secutive days. (c) If property insured be removed to any building or place other than that in which it is herein stated to be in­

sured. (d) If the interest in the property in­ sured, pass from the insured otherwise than by will or operation of law. r 3 _ See clause 9 of policy conditions.* r 4· See condition 9 of policy, and on renewal

notices.*

15. See policy condition No. 9. * r6. See policy condition No. 9·* In addition,

particulars as to . the existence and nature Of property adjoining, if any, are required to be given in the proposal signed by the as­ sured, and this proposal contains a dP.dara­ tion that it is the basis of the rontract. q. See condition 9 of the policy.* 18. Vide clause 9 of policy conditions.*

1 9. See clause 9 of policy conditions.*

20. Notice has to be given, and tjle alteration must be allowed by indorsement on this policy. 2r. The property would be inspected. If, in con­ sequence of any such alteration lessening the

degree of risk, the rate of premium would be reduced, but if risk were increased by such alteration, the rate of premium would be increased. 22. Insured to give notice of material alteration in

property insured. ?3· Any material alteration must be notified. 24. The usual provision as per policy condition No.9·* 25. See condition No. 9·* 26. See policy conditions No. 9· * 27 Alterations in, the assured property must be

notified by the policy-holder, otherwise the insurance ceases. Alterations in the adjoin­ ing property do not affect the insurance dur­ ing the current contract year. 28. See policy condition No. 9 (a).* 29. See policy condition No. 9· * ,)C. See policy condition No. 9·* 31. Sanction given by indorsement of policy for any

material alteration, such sanction not neces­ sarily indorsed on policy in reference to ad­ joining property. ,32. See policy condition No. 9·* 33· Assured must notify Company of any altera­

tions that would affect the risk, these agreed to, by indorsement, with Company's option to decline and cancel policy. 34· See condition No. 9 of enclosed form of

policy.*

35. Any alterations or circumstances adversely affecting the risk must be notified to the

Company. See clause 9 of conditions of policy, as per copy attached hereto.* 36. See policy condition No. 9 (a).*

• See reply No. 12. • See reply No. 12

37 . See condition No. 9 of the Company' s policy and its sub-section.* 38. \Ve indorse the assured policy. 39· See condition No. 9·*

4c. Notice required to be given. "1 I. See policy condition 9· *

43· According to terms of the contract.

Question 67.

Does failure to duly notify invalidate the policy?

Replies.

83

r. Depends on circumstances, and whether assured knew or not. 2. Yes, under some circumstances. 3· Legally, yes.

4· Yes. 5· Yes. See policy, clause 9·* 6. Yes. See condition No. 9·*

7. See reply to question No. 66. * 8. Yes. See condition No. 9 of enclosed policy form.* 9· See reply to question No. 66. * Ic. For the actual legal position see clause 9 of

policy conditions.* 11. See reply to question No. 66.* 12. Yes. 13. See No. 9 of policy conditions.* 14. Yes.

15. See reply to question No. 66.* 1 6. It does not necessarily invalidate the policy,

but it would preclude the assured from re­ covering thereunder. 17. See reply to question No. 66.* r8. Yes.

19. See clause 9 of policy conditions.* zo. Not necessarily. 2 r. See clause 9 of policy conditions.*

22. Yes. 23. It might. 24. Yes. 25 . See condition No. 9·*

26. Yes. As per policy condition No. 9 in pre·

vious question.* 27. See repty to question No. 66. 28. Yes. 29. See policy condition 9· *

30. Yes, although every case is considered on own merits. 31. Yes, but it is very rarelv used, technical objec­ tions are not taken ' by Companies unless

fraud is suspected. 32. This would be a question for a lawyer, not for a layman. 33· Yes, but if trivial it would probably be over­

looked.

34· Yes. See condition No. 9 of enclosed form of policy.* 35· Yes, it might. 36. Yes. 37· See condition No. 9 of the Company's policy.* 38. Not always, but under certain circumstances it

might.

39· Yes, according to the conditions. 40. Not necessarily, but it may do so. 41. See reply to question No. 66 43- Not necessarily.

SECTION XXII.-PERIOD CovERED.

Question 68.

What is the usual period for which Fire Insurance contracts are entered into by your Company?

• See reply Xo. 12 to Question No. 66.

1319

Replies.

r. Twelve months. z. Twelve months. Polic.i-::= c.-. ,;;horter periods are frequent! y issued. 3· '1\relve mont11s, occasionally shorter term poli-

cies are issued. 4· Twel ve mQnths. 5· One year. 6 . Not exceeding twelve months.

7 . One year, occasionally shorter period::. . 8. One year, or shorter periods. 9· Twelve months. ;c. Usually any period up to twelve months. rr One year.

12. In Victoria, not more than t\VO years. 13. Annual. I 4· Twelve months for building and contents; on

hay and grain-agricultural risks-varies; usually short periods. .

15. One year, occasionally shorter Pfriods. 16. Twelve months. r 7. Twelve months. r8. Twelve months, as regards the Commonwealth.

19. Twelve months or less. 20. One year. 2 I. One yt?ar. 22 . One year.

23. One year, or any less term, as desired by the

insured.

24 . One year. 25. T welve months. Shorter periods covered, how-26 . 27. 28.

29· 30. 31. 32.

3-3 ·

40.

41-43·

ever. Twelve months. Twelve months. Yearly contracts as a general rule. Twelve months.

Twelve months. T welve months. As required by proposer ; most frequently one year, but not exceeding one year and 364

days. Yearly, but often short periods, from one week upwards. One year, or shorter periods.

One year, or lesser perioas. Twelve months. In Australia, twelve months. One year.

The us_ual period is twelve months, except for speoal classes such as wool, hay, or grain, &c. Yearly, but msurances are also effected for

shorter periods. Twelve months. Twelve months.

Questi;n 6g.

Does the period vary in different countries in which your Company transacts business ?

Replies.

r. Usually twelve months. 2. Yes. 3 No information; but believe the practice to be as replied to in preceding question. 4· Yes, in certain countries policies are taken out

fo_r periods, in some cases the pre­

mmm bemg payable annually, and, in some countries, in advance. By far the more

general practice is for the contracts to be entered into for twelve months only. 5· No, excepting in Western Australia. where three years' contracts were entered , into at

one time.

6. Our business is confined to N ew South Wales. 7. Do not know. 0. I cannot sav. Have no infottnatiorl.

. g. I do not kr{ow. ro . No.

r t . See l"eply to question No. 4· I z. Am un2J.Jle to answer this question.

13. No. 14 . Not to my knowledge. J :; . D o not know.

10 . As to that; I c!thf10t say; but I do i1ot think it

does . 1 should add thnt November,

19o6, contracts up to five yeurs have been entered i11ttJ in Western Australia. This was very exceptional, and the practice ha3 now ceased. 17. We do not know.

t8. Do Hot krtow. 1 s; . I arrt unable to say, but Uhtletshi.nd that, for

certain classes of in the United

States and Cami.do. three years ii! the usual term. zo No.

2 ••

33· 34· 35· 36.

No. Slightly. Cannot speak for countries other than Austra . lia.. Not much. I no knmvleoge.

I cannot sa v. H ave no information. N:ot to my knowledge. • D o not know. No.

Same practice almost universal. Do not kfidw. I cannot say; have no infmm:Hion. No. No. 37· Yes: believe so; b\.it Will obhtil1 definite par-

ticulars ftom lieatl offite, if the Commis­ sioners so desire. 38 Cannot sa.y. 3?· I do not know, but believe that for ordinary

insurance twdve months is the usual period everywhere. 40 . We do not msure beyond Australia and New Zealand.

4r. No. 43· Cannot say.

SECTION XXIII.-AssrGNMENt oF PoLICtts.

Question 70.

vVhat are made by your Company for the

ass1gnment of insurance policies?

Replies.

r. See policy 2. That the sanction of the Company thereto be obtained. 3 · Notice must be given and the assignment

allowed.

4· The interest mider a policy hiay be transferred from one person to another, provided the agrees to accept the latter as its

lnguted by lheans of al'i indorsement on the policy. $· See policy clause tl . No . . 9 allows assignment on obtain­

mg the sanct10n of the Company.

' See reply No. 12 to Qn cst.lon No. 00.

S4

1 . See policy condition No. 9· * b. See condition No. 9, enclosed polity form.* 9· The assured indorses assignh1erit on policy, which must be registered by the Company. J:'. Noti ce to be given and transfer of interest

allowed by indorsement upon policy. r r. See cl ause 9 of of policy, as per copy

attached hereto.* •

Assignments must be advised to the Company

and recorded. I,1· Ass ignments of ititete.st lHe dealt with by in­ dorsement of policies on tequest. 1 1 . Can be made by indorsement entered at this

office, if approved of by the manager (for 'l'asmai1ia), or irt. Sydney and

Melbourne.

15. See policy condition No. g."" 1 e. There is no provision in the policy for Msign­

ment of interest, but a transfer of the in­

terest by will or operation of law will not invalidate the coi1tract, even thoUgh 110t noti­ fi ed to the Cori:iparty. (See policy condition No . 9(d). Applicatiol15 fur registration of transfer are each dealt with separately on their a fee bf 25. 6d. being charged

fot eaeh registtation; except In the case of heirs, executors, and other

successors b)l operatidfi :bf law. r7. See condition 9(d) of the policy (answer to

question M). * . .

IS . Policy can be transferred and assigned by one person to il.hothf.lr, j:)tovided notification of such tmnsfer is given to the Company, and duly allowecl aM tegi.ueted by thmrt. I 9 . The Company makes no ptt:lVisitll1; bUt in the

event of an iflSlired wishing to transfer his policy to a third party, he must notify the Company; whose l:fiUst be in­

dorsed in writing. zc. The policy must be sent for registration of an assignment. z r. See clause (d), condition 9, policy tooditions. * z::: . We register an approved indorsement.

23 Policies may be'. assigned by to be

approved Of by the Cothpany. 24. Assignments of policies need to be recognised by the Company. 25. See condition No . . 9. * 26 . policy condition 9 (d.)."*

27. '!'hey can be assigned at any time, on payment of a fee of 2s. 6d.

Notincation must be given to the Company, and

the assignment registered at the office. Zy Assignments are usually made at the Written request of the insured. JCl. See policy condition No. 9·*

31. Assignment must be made on polity; and noted irt books of the Compatly. 32. See policy condition No. 9(d).*-.) 3· May be agreed to by indorsements on policy.

34· See condition No. 9, copy of policy enclosed.* .35· See policy condition No. 9 (d}-copy at-tached .* 36. The policy may be transferred subject to the

approval of the Company. 31' · The sanction of the Company has to be obtained by indorsement on the policy. · See condition No. 9 and its subsection (d).* 3S . Indorsement. 39 may be ttansferted. subject to registra­

twn of the transfer by the Company. 40. Notice to be given, andl if approved1 indotsed on the policy.

• See reply Qtillstlmt l'fO, 68.

4r. Extract from policy form:-" The in

this policy rna y be transferred by indorse­ ment made and entered in the office of this Company, if the directors approve thereof, but not otherwise.'' 43· are allowed, provided the assignee

1s approved of, and the same registered in the books of the Company.

Question 7 I.

In tbe event of a. fire occurring in a property sub­ sequently to the date of its sale, would a

claim made on the vendor's unexpired policv be admitted by your Company? "

Replies.

I. bepends whether vendor had interest or not. 2. If there were no suspicious circmnstances, the Company would probably pay. 3· Possibly, but would depend on the circum­

stances. Such an event as set forth in the

question very rarely happens. 4· If made by the insured as unpaid vendor, yes. The purchaser would have no claim unless Company had agreed by means of an

mdorsement to continue the insurance in his favour. The contract is ·purely a personal agreement, and does not attach to the realty. We undertake to indemnify the individual mentioned in the policy as the insured, and him only. 5. Yes ; if the vendor retained an insurable in­

terest in the policy. 6. If the interest of the insured has passed away from him then the policy ceases to attach. See condition 9, sub-section (d)*, but each

case would, as a matter of practice, be dealt with on its merits. 7. Yes; if policy has been transferred as per

clause given above j* in special cases ex:

gratia payments are made. 8. Not unless allowed before fire. See condition No. 9 of enclosed policy form.* 9· The vendor would be entitled to the amount

of his insurable interest. See declaration of loss form attached.* 10. See clause 9 (d) of policy conditions.* I 1. Yes j if Company was notified and sanctioned

same. 1

I2. Not if his interest thereunder had ceased, and no assignment registered in the Company's books. 13. See clause 9 (d) of policy conditions.* 14. If the vendor's interest in the policy (property)

has ceased, the policy is void. r 5. Yes ; if policy has been transferred, as per

clause given above j* in special cases ex

gratia payments are made. r6. While we do not consider ourselves legally

liable, it is possible that an ex gratia pay· ment would be made in such a case. But,

of <:ourse, a great deal would depend upon the circumstances in each individual case. We have never had to deal with the point

in Australia. It very rarely occurs in prac­ tice. r 7. The matter is gDverned by condition 9 of the policy.* If the condition had not com­

plied with, an ex gratia payment might be made. Not if the vendor being the insured had no 111·

terest in the property destroyed. He would have sustained no loss j ergo,

would have no claim under his insurance po1icy. -= .. : •see reply No. 12J o Question No; 66.lJ

f9.

20.

2!.

22.

2J.

25. 26.

28.

30. 3I.

1321

See clause 9 (d} policy conditions.* It has been the custom to admit such a claim when the surrounding circumstances are satisfactory. No j unless sale were notified. See clause (d)

condition 9, policy conditions.* It is the practice for the vendor to indorse his policy to the buyer, and for the transfer to be registered by the Company if the buyer is

approved. If the vendor's interest had ceased, the claim would not be admitted, unless an indorse­ ment to the purchaser had been accepted by

the Company. That is the rule, but cases arise where, under special circumstances, as an act of grace, the rule is varied by the

Company. If the vendor were fully paid, he would have no further interest in the policyj if not fully paid, he would be entitled to recover to an

extent not exceeding the balance of purchase money remaining due to him. See condition No. · 9·* Yes ; if policy has been transferred (as per

policy condition No. 9 (d)).* The Society does not always stand upon its legal rights, and if satisfied that no. fraud existed, we might be prepared to make an ex gratia payment. No j not unless the transfer of interest had been

registered, and the req\liied fee paid. N ot if his interest thereunder had ceased, and no assignment had been registeJ;ecl in the Company's books.

It would depend on the contract of sale, and · the rights and liabilities of the vendor. _ N ot necessarily so. Yes j if transfer has been duly registered.

Registration is necessary owing to the sihle difference in the moral hazard. See policy condition No. 9·* good deal depends upon

the circumstances. The contract is with the vendor, and not transferable without the consent of the Company, and I believe, as a matter of fact, that, upon a contract of sale

being signed, all responsibility passes to the purchaser, who becomes liabl e to carry out his contract, and which can be enforced by the vendor. As an abstract question the

vendor's right to recover from the insurance company would have ceased, and if the pur­ chaser fails to carry out his contract, the

Insurance Company's policy does not guaran­ tee the debt of a purchaser, who, indeed, mav be obnoxious to the Insurance Com·' It is difficult to answer the question

directly, because in a very large proportion of cases, I suppose, while the Company would probably not admit the claim, they would pay ex gratia. The personal element

i<; very essential in the Fire insurance con­

tract.

33· Not unless the insured had an interest in ,the property insured. .34· Not unless allowed before fire. See condition No. 9 on enclosed policy form.*

35. Not unless the sale had been notified us, and our willingness to transfer th e policy to the obtained.

36. A policy being a co:1tract of ir.demnity to the person insured, it does not pass from. vendor to purchaser without the Company's sent.

37·

J8. 39·

40.

43·

If . the property had legally passed from the vendor to the purchaser, no, unless the

Company had transferred, or agreed to

transfer, the policy to the purchaser. If the vendor be still unpaid, and in possession, the claim would be admitted by the Com­ pany. If the vendor sustained any loss, it would. In my opinion, the policy would stand for the

vendor's benefit to the extent of the unpaid purchase money, but I would very likely con­ sult the Company's solicitors. Not if he has parted with his interest without

notice to, and allowed by, the Company. ln the absence of a policy by the purchaser, yes, provided the vendor had an interest in the property.

Would be decided by surrounding circum­ stances. ·

Question 72.

Are there any circumstances under which your Com­ pany would decline to admit such a claim?

Replies.

I. Yes. 2. Yes; if there were any suspicwus circum-

stances pointing to wrong-doing. 3· Yes, in case of fraud.

4· See reply to question No. 7 r. 5. Yes, if the vendor did not retai n an insurable ; interest in the property. 6. See reply to questitln No. 71-7. See· reply to question No. 7I.

8. ·Yes. See condition No. 9 of enclosed polic1· form.* 9· Yes, in case of fraud.

ro. Yes . . The Company is entitled to be consulted,. and its approval secured, before the insur. ance is transferred to another party whom the Company might have reason to distrust. The contract is a personal one, arid only

transferable by co ns ent of the Company. 1 r. See reply to question 7 r.

1 2. Dealt II' ith in rep! y to question 7 I.

IJ. I cannot conceive of anv. rs. See reply to question No. 7I.

16. See reply to question No. 7 r. 17. See rep! y to question No. 7 r. 18. Yes, if insured had no interest in the propert:; destroyed, and the policy had not been trans­

,ferred to the new owner. 19. \Ve regard notification of a transfer of interest as of tbe utmost importance, because the character of the insured is one of the essen­

tials of a fi;·e insurance contract. In the event, therefore, of transfer of interest to an undesirable character without notice to the Company (from the Company's

point), and loss ensuing, payment would probably be refused. 20. In the case of fraud, or of the vendor or pur­ chaser having effected an insurance with an­

other Company. 21. Yes. See reply to que.;tion 7I. ·

22. Everv case stands on its o·wn merits. Strong evidence of fraud would be a bar. 23. See reply to question No. 7 r. 24. See reply to question No. 7r. 25. Cannot say. 26. See reply to question No. 7 r.

27. See reply· to question No. 71. 28, See reply to question No. 71.

• See reply No. to Quco;;t ion No. oa.

86

;. ·· v ..

29. No. jO. Probably ' yes. 3 L Yes, if very serious suspiciOns were entertained as to the bona fides of the owner, and strong

suspicions of arson. 32. See answer to question No. 7I; and, no doubt there are circumstances under which we would decline to admit such a claim; for

instance, if the purchaser were convicted of setting fire to the property, or had been con­ victed of setting fire to property previously. 33· Yes; when assured became not interested. 34· Yes. See condition No. 9 on enclosed policy

form.*

35· Possibly. 36. Every case of this sort can only be considered on its own merits. :n. Rep! y hereto is embraced in replies to ques­

tions No. 70 and 7 I.

38 . We would decline to pay vendor if he suffered no loss. .

39· I have not experienced any, so far. 40. It would entirely depend upon the nature of the circumstances. 41. Where the vendor's interest had ceased. 43· There might be.

SECTION XXIV.-GOVERNMENT SUPERVISION.

Question 7 3·

(a) Do you consider that, in the interests of the

public, Fire insurance business should be subject to Government supervision? (h) What objections, if any, exist from the stand­ point of your Company to Government

supervision?

r. (a)

(b)

2. (a)

(b)

3· (a) (b) 4· (a)

(b)

Replies.

Yes; to prevent any· wild-cat Companies starting, .or Company, person, or firm not issuing a proper balance-sheet. None. No. That the cos t would be out of all propm-

tion to the benefit to be secured. Cannot see the necessi ty . Unnecessary cost. No necessity has been shewn for such. It has been found to be highly objection­

in other countries. America, for

instance.

Such supervision would lead to no inconsider­ able expenditure, which would presum­ ably fall on the Insurance Companies in one way or another. We do not see what

useful purpose could be served by super­ vising the business of a branch office, for we have no information here as to the

rese rves, etc., etc., of our Company, ex­ cept as i:1dicated by the annual balance­ sheet. :>· (a) I do not see any need f or this.

(b) I think it would be a needless expense. 6. (a) No.

(b) The directors and shareholders . are, in my opinion, the best judges of their own

business, and do not require any super­ vision under this head by the Govern­ ment. , . (a) No, as I do not think the interests of the

public would be served by such super­ vision. (b) I think head office takes the same view of the question.

• See r•ply No. I 2 to Question No. 66.

8. (a) No.

(b) Unnecessary, costly to Company, gives a lot of work not of any use, and delays

office work.

9· (tS) No.

(b) It is unnecessary. Io. (a) No. The only essentials a re those pro­

vided by statute, viz:-Registration and publication of accounts at regular intervals ; in a · word,

publicity.

(b) It is unnecessary. It would be useless. I r. (a) No.

(b) None. 12. (a) No apparent advantage to be gained by

such a step.

(b) Have none to offer. 13. (a) Not more so than any other business. (b) Consider 1t unnecessary. 14. (a) No. ·

(b) None. 15. (a) No; as I do not think the interests of the

puJ;>lic would be served by such super­ vision. (b) I think head office takes the same view of the question. 16. (a) No; I cofifess I cannot see how it would

benefit the public. (b) Supervision would, I take it, be accom­

panied by publication, and while the

Company . always publishes its accounts annually, and is willing to give all rea­ sonable information, we should most strongly object to the publication of the

details of our business, or of any section thereof, which would disclose to our

competitors information as to the charac­ ter of our business. We claim the right accorded · to all other traders and mercan­ tile concerns of keeping the details of

our business to ourselves. q. (a) No. . .

(b) We are not acquainted with the Company's views on the subject. 18. (a) Not further than that Companies should file copies of their balance-sheets and

show each branch of their business

separately in form or a return to prove their stability. (b) There is no more necessity for general Go­ vernment supervision in Fire insurance

business than there is in any other com­ mercial businesses. Besides, there is

nothing to show that such supervision is necessary.

87

rg. (a) We are not aware of any circumstances con­ nected with the conduct of Fire insur­ ance business in Austrolia, which makes it expedient that there should be Govern­ ment supervision. We do not recall any

case where a British Fire Company has f ailed to meet its obligations. There is. in my judgment, no class of the com·

munity which can show such a _clean re­ cord. Banks have closed theu doors.

firms have. failed, but Fire Insura:'ce Compames have gone steadily on rreetmg their losses. ( 7;) (i.) It is unnecessary. .

(ii.) It would increase the cost of wo:kmg the business, which would me::tn h1gher rates. (iii.) It would be of little pmctical value. be.

cause the public themselves judgF: from the published reports of the

zo. (a) No.

1323 :_,...

Companies and . the general experienc" of loss settlements much more accu­ rately than any academic supervision could.

Circumstances do not point to the need of

any such thing.

zr. (a) No.

(b) None. 22. (a) No; Companies have an established repu­ tation. (b) Unnecessarily harassing, and would increase

working charges.

23. (a) I do not see that any advantage to the

public would accrue from Government supervision. That is my experience of American business. (b) 1Jsually conditions are imposed which only

h amper business.

24. (a) It does not appear to me that anything

would be gained thereby. (b) I am not offering any.

25. (a) No. Simple publication of accounts suffi· cient for all purposes. (b) None ; except that supervision is regarded as a work of supererogation . 26. (a) No; as I do not think the interests of the

public woul.d be served by a Government supervision. (b) I cannot say what the objections of

h ead office of the society are on the sub­ ject. :!.7. (a) Yes. (b) Noi1e whatever.

28. (a) N o advantage "·ould appear to· be gained. by such action. (b) None. 29. (a) No.

(b) It is not necessary. 30. (a) No.

(b) No more necessity than for any other class of business or trade, 3 r. (a) To a very limited extent.

(b) Briefly, that as each Company (although under a Government D epartment would file the same returns) manages its internal workings differently, and ,probably no two Companies will have the same ideas as to underwriting, for the Government

to interfere in matters such as this would simply mean to hamper the business, and not be productive of good to any one:

Fire underwriters' opinions differ so materially on important points in the Fire business and it is very improbable that any official appointed by the Govern­ ment would have sufficient knowledge or standing to decide many important

points.

,'\2· (a) I consider generally that as a Fire in­

surance contract is an annual one, and the balance-sheets of all Companies are there is no more necessity for

Government supervision over Fire In­ surance Companies than there should be over any othE.r business (!, ) A great de;c l depends upon what the super­

vision proposed consisted of; hut. what­ it might be, I do not that it

could possiblv be effectual unless Govern­ ment servants were stationed to view the busim:ss in every insurance office.

Government sen·ants in Victoria are nor supposed to have any prior knowledge of :he Department to which they are al­ as I believe th ev a re simply trans­

ferred from one to another by seniority

:.'

with.)ut regard to experience or difference of work. I do not know how this may

be in the Commonwealth, or in the ser­ vkes of other States. They are neces­ sarily ignorant of Fire insurance busi­ ness, and unless thoroughly trained to it any " supervision," which probably

means " interference," would be not only useless, but mischievous and obstruc­ tive. Even in different branches of what comes under the designation of '' in­

surance " business, it would be foiTy to place supervision of one branch under the charge of a man who was brought up under another j for instance, to place a

'' Fire '' insurance man in charge of a

" Life," " Marine," or " Accident "

Company, and vice versa. All Com­ panies have to make certain returns to the Government, and, speaking for our­ selves, we have to make the returns for different Departments which cover in many respects the same particulars. 33- (a) Yes j to a certain extent.

(b) Cannot answer for the Company. From our own views, none . .34· (a) No. (b) Unnecessary, costly to Company, gives a

lot of work not of any use, and delays

office work.

, .> (a) No.

(b) Quite unnecessary in my opinion. ;:o. (a) Quite unnecessary. Companies must, and do, so conduct business as to· secure and retain the confidence of the public, or

they would soon lose their connexion. (:'1) See above.

3/'. (a) No. Except as regards the solvency of

the Company doing business. The Go­ vernment should have powers to prevent unstable Companies doing business. (i';), Cannot reply without knowledge as to the nature of such Goverinnent supervision. J3. (a) No.

(b) Unnecessary. 39· (a) I do not think it is necessary.

(b) I cannot say generally. It would depend on the nature of the supervision. 40. (a) No. (b) Do not consider it is required. 41. (a) No.

(b) Interference with public enterprise. 43- (a) So long as steps are taken to ensure the

ability of the Company to pay its liabili­ ties by proper provision of reserve funds, further supervision would be unnecessary. (b) None, provided it is not unduly harassing.

Question 74·

What do you consider should be the nature of the supervision (if any) exercised by the Go­ vernment?

Replies.

T. Every Company and every underwriter' should

be licensed by the Government annually. 2. To see that the balance-sheet shows the posses­ sion of substantial funds, and that a fair

proportion is held in liquid form. .). Lodging of the balance-sheet every year, and before registration to transact business is granted, care to be taken that the Company

is sound financially. 4· See reply to question No. 73 (b). 5· See reply to question No. 73·

as

6. Do not consider there should be any. 7· None. '

8. None, beyond the registration of the last

balance-sheet to see the Company is solvent. 9· See reply to question 73 (a), (b). ro. Nil.

II. See reply to question 73 (a).

rz. Unable to say. I 3· Nil.

rs. None. r 8. Supervision of returns, by which proper finan­ cial stability is assured, or the Company to cease business. I9- Nil.

20. See reply to question No. 73· 22. See reply to question No. 73· 23. See reply to question No. 73· 24. I cannot say.

25. See reply to question No. 73· 2 7. I have no specia 1 suggestions to make. My

corporation will be satisfied with any rea­ sonable measure of Government supervision and control. 28. Cannot make any suggestion. 29. None. 3 r. Filing of returns showing the total paid-up

capital and reserve fund of the Company compared with its net premium income. 32. See replies to question No. 73· I can make no suggestions whereby Govern­

ment supervision would be of use to the

companies or to the public. 33· Examination of liabilities and assets. 34- None, beyond the registration of the last

balance-sheet to see the Company is solvent. 37- See reply to question No. 73 (a). ,

39· I think it a good thing for the Government

to see that only respectable and solvent

companies are allowed to transact business in Australia. 40. See reply to question No. 73· 4.3· Supervision as to-

(i.) Assets sufficient to meet liabilities. (ii.) Overtrading. (iii.) Protection to policy-holders by reserve of proper proportion for l)nexpired

risks.

Question 75·

Do you consider that, if exercised, such supervision should be by the Commonwealth or by the State Government?

Replz'es..

r. Commonwealth, one law to apply to all States. 2. By the Commonwealth. 3· Immaterial. 4- By .the Commonwealth. 5· See reply to question No: 73· 6. The Commonwealth. 7. If exercised, prefer Commonwealth. 8. By the Commonwealth. 9· If done, should be Federal. ro. Neither is necessary, but if enforced it would

be desirable that the legislation should be uniform. rr. See reply to question No. 73 (a). 12. Unable to say. r3. As above. q. State . 1 s. T f 0xercised, prefer Commonwealth.

r6. By the Commonwealth Government. r7. Bv the Commonwealth. r 8. Commonwealth Government. r9. Uniform legislation would be an advantage to

companies.

20. 2!. 22.

26. 27. 28. 29· 31• 32.

33· 34· 37· 39·

40· 43·

By the Commonwealth Government. State. See reply to question No. 73· If any at aU, the Commonwealth would be the

lesser of two evils. I cannot answer this question.

89

Length of residence in the colony does not

justify answer from me. I only came from Home about six years since. Commonwealth Government. By the Federal Government. Cannot say.

The former. State Government. I do not think it matters whether it be by the

?tate or . except that if

1t were wfhcted 1t should be uniform in

character, which may perhaps point to the Commonwealth. At present in the Life In­ surance branch there is diverse legislation m almost every State. State. By the Commonwealth. The Commonwealth. Commonwealth.

See reply to question No. 73· Either.

Question 76.

Would it, in your opinion, be desirable to require the publication of details· of business of

Fire Insurance Companies on' similar lines to the details required from Life Assurance Companies?

Replies.

r. No.

2. No.

3· No.

4· No, the nature of the business is so widely

divergent. The only advantage which, it might be urged, would be secured would possibly be a pub­ lished evidence of the adequacy of the

reserves of a 90mpany. Companies are

already required to publicly display their annual · balance-sheets, and to make a

declaration as to the assets. 5· Not practicable, so far as I can judge. 6. No.

7· No.

8. No.

9· No.

10. No. The publication of balance-sheets as

now practised is practically all that is

nece33ary for the protection of the public. 11. No. ·

I 2. Cannot offer an opinion.

13. No.

I 4· I have no opinion.

rs. No. r6. No.

17. No.

18. No.

19. N o. 'l,'he essential conditions of life and fire are so different that any comparison

is misleading. In Life Insurance a man is, in effect, saving money for his old age or death, and it . is

necessary he, should know how, over a senes of ye-an;, his investment is likely to run. In Fire Insurance a man simply pays a certain sum for protection aaainst fire for a certain

period. -After the of that

he has no further interest, and can transfer his business without loss to himself.

1325

zo . Not on. lines required by Life Companies, but ! tl:mk Fire Insurance Companies doing Dusmess m the Commonwealth should be re­ . to publish and file complete returns

of busmess transacted in each State. 2 I. No necessity. Fire contracts, as a rule, are

for twelve months. Life contracts are

usually indefinite. 22 . No, a_udited balance-sheets sufficient for the in- · sunng public. 23. No. •

24. I cannot see that anything would be gained

thereby.

25. No. z6. No.

? '7

- '. I can see no good purpose

served by so Cannot say. -

No.

30 . No. JI. No.

which would be

Certainly not; it is the private business of the

companies. See also answers to questions Nos. zs, 26, and 27 .

33· Do not knovr what is required of Life As­

surance Comp anies; cannot therefore answer. 34· No.

35· No, a Company's bal:!.nce-sheet discloses all that is essential or necessary for the public to know. '

36., No, the annual audited accounts should sufficient. .

37 . I t woul d be impossible to obtain details of

F ire business on the same 1ines as Life busi­ ness. Almost every fire risk is different in detail to others, _and involves special

m creases or decreases m rate accordingly. The business must therefore be dealt with as a whole. A point to be borne in mind

is that all policies involve the final pay­

ment of the msurance, while in Fire busi­ nes.s it is only the minority under which

claims occur, the business being done on the principle of the many paying for the few. 38. No, do not see in what way public can be

benefited.

39· I do not know what the details required from Life Companies are. 40. I do not think so.

4 I. No, because the put4shed returns of Com­ panies give the public all the information they require. 43· No objection.

Question 7 7.

\Vh::t objections, if any, co uld be urged against such publication i

Replies.

r. Impossible to give anything reliable. 2. That owing to the varying nature of the busi­ ness the returns would be practically value­ less. Disclos ure of our methods to our competitors.

4· It appears to us to be useless, and would lead to _increased labour and expense in pre­ panng valueless statistics , with no advantage to 6e public. 5· Fire Insurance operations could not be sche­

duled on the same lines as Life, owing to the great variety in detail of fire risks and owing to the element of moral hazard. 6. Not practicable to publish the details. 7. I do not see th at such publication would benefit

the public.

8. Disclos ing prin .te information.

DO

9· The result would be useless., IO. It is unnecessary. It would be useless. It

might be misleading, and it certainty would be unfair as it would place the details of

our business i:o the hands of competitors. I 1. Think the information should be confidential.

12. See reply to question No. 76. 13. I consider it unnecessary. '14. None. IS· I do not see that such publication would benefit

the public. - •

16. See reply to question No. 73 (b). 17· \Ve cannot see any reason why the details of a Fire Insurance Company's business should be published. 18. Such information would do no good to any

one, and would be useless for any purpose, other than disclosing the trading details of a Company. 19. (i.) It would serve no useful purpose.

(ii.) It might have the effect of misleading the · public as to the relative merits of vari­

ous Companies.

(iii.) It would add to the cost of running the

business.

(iv.) It might place in the hands of unscrupulous competition valuable information. 20. I have no objection to publication of complete returns of business done. 21. It gives competitors too much knowledge of

your business. 22. Not necessarv. Fire contracts run for one vt.ar • •

23. No particul::.r advantage would be gained, ard it would on1y create more work and expen­ sive returns. My answer is inrreased ex· penses. z 4 I am not urging any.

25. The cost as contrasted with the extremely pro­ blem'ltical advantages to be derived. z6. I do not see that any benefit to the public

would be served by vublication of

details.

27. Fire policies are annual contracts, and there is no future liability to be provided against such as exists in Life Insurance, which

would warrant the Government in saddling the Companies with the inevitable cost of compiling such returns. z8. Cannot say. •

29. Quite unnecessary work, which would add to the expense of the business. 30. Object on principle to the workings of the

office being divulged . to competitors and others. The publication of balance-sheets as is done at present should be sufficient. 31. I de not think it would be of any advantage

Fire Companies returns being unduly made out in detail, and certainly not such minute details which appear to be much more neces­ sary in the case of Life Assurance, where Companies are trustees in the rna jority of cases for the life time of the insured, and where naturally the more control is necessary. 32. It is, as stated in reply to question No, 76, the

private business of Insurance Companies, and the results are, and can only be obtained, not from statistical tables or facts available to every orie, but from the exercise of the personal judgment and business farulties of those who conduct it, brought to bear bv means of the experience they have achieved,

often times at the cost of a life's labour;

all of which constitute tools of trade, and have been paid for by the Company in pre­ cisely .the same w:1y

useless for any public purpose, even if they were not private property, and are totally distinct from any definite mathematical con­ clusions which might Le arrived at upon de­

finite data, such as mortality and interest tables from which Life Insurance 'tables are deduced. Life Insurance tables and prac­ tice are very crude as compared with the in­ finite variety of conditions affecting Fire Insurance. 34· Disclosing private information. 35· Unnecessary. 36. It would increase working expenses, and such

information is of no use to the general

public.

39· I am not urging any. 40. Companies do not care that their competitors should obtain information as· to the inner working of their business. 4r. No objection, but consider such pubJication

unnecessary.

43· None_

Question 78.

At what intervals, if at all, do you consider such details should be published ?

Replies.

1. Not necessary. z. See reply to question No. 76. 3· See reply to question No. 76. 4· Vide reply to question No. 76. 5. See reply to question 77.

6. Not at all.

·7. See reply to question No. 77· 8. Not required. 9· See replies to questions Nos. 76 and 77· 10. See reply to question No. 77· II. See replies to questions Nos. 76 and 77.1

rz. See reply to question No. 76. 13. See reply to question No. 77 rs. See reply to question No. 77·. 18. Not at all.

20. Every year. 2 r. Annuaiiy.

22. See reply to question No. 77· 23. See reply to question No. 76. 24. I cannot say. 25. Preceding answers make reply unnecessary. 27. Not at all.

z8. Cannot say. 29. No. ,)I. See reply to question No. 77· ,)2. See reply to question No. 77· .H- Not required.

39 I do not know. No statistics of value could be obtained, except over a lengthy period. 40. See answers to previous questions. 42i· Each year.

SECTION XXV.-DEPOSrTs WITH GovERNMENT.

Question 79·

What is your opinion as to the desirability of re quiring a Company to lodge a deposit wit!: the Government prior to commencing Fire Insurance business in the Commonwealth?

Replies.

r. No objections to this, any Company, person, or firm to be included, and required to makl? deposits on similar terms. 2. Think it unnecessary, if the Company is one ot

standing; but a substantial deposit would keep out " wild cat ,., Companies.

\

3· Consider _every Company should have tangible assets m the Commonwealth, not necessarily Government deposits.

91

4· The only benefit to the public would be to pre­ vent the establishment, or entry of small

Companies with insufficient reserve funds and capital. No necessity has been shown for such a deposit. Proper measures in this connexion could be included in a Companies

Act.·

5· As the Fire Insurance contract is almost invari­ ably for only .one year, I see no need for any such deposit. 6. Think it is very necessary that a Company

should lodge a deposit with the Government prior to commencing fire to estab·

lish their bona fides. 7. Do not think such a deposit desirable, 8 Not required, provided it has a paid-up capital sufficient for the business it is going to start.

9· If the Company be one which has investments in Commonwealth securities, I do not think a deposit necessary. 10. I do not think it is necessary, and it certainly '

is undesirable. A Fire Insurance Company should have its funds unencumbered and in­ vested in liquid securities readily available for the payment of losses. To tie up any

portion of its funds is to impair its stability. I 1. Think very desirable.

I 2. The idea is a practicable one.

1 3· Consider undesirable to fetter Companies any

more than at present necessary under the Companies Act. I 4· I do not see any necessity for this.

15. Do not think such a deposit desirable. 16. I have no information as to the opinions of mv directors on the subject of lodging a de­ posit, but it can readily be seen that if the

Government of each State in which the Com­ pany carries on business were to require a substantial deposit, a very large part of the Company's funds would be thereby locked

up, and this might have the effect of ously retarding the operations of the Com­ pany. I have no doubt that this view is

shared by the directors. At the same time, I am free to admit that it might be desir­

able to require a deposit from Companies whose financial' standing is, after inquiry, found to be unsatisfactory. I note that this question refers only to Companies commenc­

ing ·business.

I7. The only ground on which such depositS could be considered desirable is that their presence might afford a proof of stability. Such

proof is given by the published accounts of the various Companies. 18. This is certainly desirable, and would be a

safeguard to the public against " wild cat '' insurance concerns such as were rampant at one time in the United States of America. I9. See reply to question No. is no rea­

son whatever for requiring such a deposit. zo. I advocate such a proposal. ·

2 r. Companies whose head offices are not situated

in the Commonwealth should be so required. 22. Undesirable. Deposits in every State or coun­ try wpuld so split up a Company's funds that prompt of losses by a con·

fiagration of magnitude would be impossible. In the public interest funds should he free to be diverted in any particular directiou. 23. Not desirable. ·

1327

2 4· There are objections to such a course. A Com­

pany doing a world-wide business should have funds, accumulated at some centre, available in· any emergency. Such, for in­ stance, as the San Francisco fire. Scatter­ ing a Company's funds all over the wor1', 11> not good policy.

z 5. Distinct! y unfavorable to such requiremeJ}t. :16. I think it would be desirable under certain con­ ditionli. 27. I consider it highly desirable from all points

of view.

z8. Practicable, but unnecessary. 29. I do not think it desirable.

30. Do not think it desirable. 31. I consider it eminently desirable that Com­ panies having their head offices outside the Commonwealth should lodge a deposit with

the Commonwealth. It is not necessary in the case of local offices, as all their assets are invested within the Commonwealth. 32. The whole system of Fire Insurance is based

upon average results, not upon the· result in any particular place, and, in so far as the

assets may be locked up in any particular place so as to. be unavailable for use else­ where, the general security of the Company is diminished. It is a case of the old fable

of a bundle of sticks; and may also be

Jikened to the case of an army spread abroad over a vast area with concentration pro­ hibited ; the collective strength of that army might be sufficient to repel any enemy, but if

it is prohibited from acting together, an

enemy (such, for instance, as a fire) operat­ ing with strong force at one of the points, may overwhelm the whole force in succession. The theory of insurance is that in the case

of a properly managed Company the pro­ bable loss 3Ustained in any one place shall be very largely indeed wit1fin the resources of the Company available to meet it ; and ·whenever special deposit is required in anv

one place the ability of the Company to its engagements in an emergency is to that extent weakened. Take the case of the re­ cent San Francisco disaster. My Company

has large investments in the United States, quite apart from any obligatory require­ ments. It paid £I,JSo,ooo sterling for its share of the loss. It paid this without

diminishing any of its funds in the United States, for the simple reason that (indepen­ dent of other funds) it had upwards of three millions of money free of obligations, which

it could concentrate in any one case. If

that money had been tied up and ear-marked -so much applicable to Australia, so much to New Zealand, so :nuch to France, so much to Scotland, and so on, that concentration

would have been impossible, the San Fran­ cisco losses would have gone unpaid, and the Company would have become insolvent as regards the State of California, although

perfectly solvent and with large surpluses as regards the rest of the world. No de­

posit that could, in practice, be demanded as adequate to meet possible loss in every place, could ever be forthcoming. In fact, it will be seen that legislation that requires separate deposits in each country would, if carried out to its logical conclusion, destroy

the whole principle of insurance ; because if a portion of ·· the funds should be ear­

:narked for, say, the Commonwealth, then

it is reasonable that each State should re­ quire a part of that separate sum to be ear­ marked for it, and the same with each town and village, and so on down to each indi­ vidual risk. In each case there would be no

possibility of paying any 19ss in excess of the separate deposit, unless the Company possessed surplus funds in excess oJ the de­ posit, in which case the deposit -would be

superfluous as security. As regards my

Company, we have made deposits where they have been required by law, in some

cases . and in other cases we have retired

from' business rather than do so; and our surplus funds are so large that probably any deposit that was required in the Comroon­ __ weal th would make very little difference ;

and, as a matter of fact, we already h ave

investments here which would no doubt manv times exceed what was required. But there are some cases of perfectly sound Come panies, who, not being on so large a

as this one, would probably prefer to which might be an . to

competitors, but would give no pubhc

advantage. A large number of Unite.d

States Companies f ailed to meet their

San Francisco obligations simply be­

cause large proportions o_f their funds

were locked up in the different States.

My Company took over the entire business of one of them because, being unable to pay its losses in the State of California, it became urohibited from doing business there (as if

insolvent), and then was, consequently, pro­ hibited from doing business in other States where it had plenty of money deposited. 33· Yes but not necessarily with the Government,

the Government paid il}terest on de-

posit. . .

34· Not required, provided it has a paid-up capital sufficient for the business it is going to start. 35· Do not believe in deposits at ali. If the public are such fools as to require protection Com­

panies with funds less £roo,ooo might

be made to lodge secunty to the extent of, sav, £ro,ooo. 36. A C;mpany should be to. show ade­

quate capital before obtammg a hcence. The principle of deposits I do not approve; a

Company's funds should be free, so as to enable it to meet losses, in event of a confla­ gration of magnitude, prompt! y. 37. If the Government had powers to prevent an

unstable Company from doing business, . and only authorized such offices as are financrally strong and sound, there would be no neces­ sity for any such deposit. 38. Very desirable. 39· I do not think it is necessary, provided care is

taken that only solvent and respectable Com­ panies are allowed to operate, and there. objections to it, inasmuch as the reserves of Insurance Companies should be, as f ar as possible, in easily realizable fo::m, so as to meet readily such calamities as the San

Francisco conflagration. 40. Unnecessary for duly constitutec1 Companies when there is an opportunity of ascertaining their stability. 41. Think this is desirable. 4,)· Cannot see any advantage if the Company is

sound and assets otherwise inve ted sufficient to meet its liabilities. ·

92

Question 8o.

1 n your opmwn, should such deposit remain with the Government so long as Fire Insurance business is transacted by the Company in the Commonwealth. ·

Replies.

r. Yes. 2. Yes, if a deposit is made compulsory. 3 The above mentioned assets should. 4· If required at all, yes.

5· See reply to question No. 79· 6. Yes. 7. See reply to question No. 79· 8 . Not required.

9· If made, should remain. Jo. See reply to question No. 79· II. Yes. \

r z . Impossible to give any opinion. 13 . See reply to question No. 79· 15 See reply to question No. 79· 16. If made, yes-until the Company's financial

standing was satisfactory. ,17. No. r8. Yes. 19 . See reply to question No. 79·

20 . Yes. ·

zr. Yes. 22. See {eply to question No. 79· z_; . See reply to question No. 79· 24. I think the foregoing is all I have to say on

this subject. See reply to question No. 79· zs. See reply to question No. 79· J6. Depends entirely upon circumstances, and the manner in which the Company conducts its

business and carries out its obligations. 2 7 . Yes, and until such time thereafter as the F ede­

ral Commissioner shall be satisfied that all contracts have expired or been fulfilled, or have been underwritten by another Company licensed to do business in the Commonwealth. z8. Cannot ·!9. No. 3 r. Yes. .32. See reply to question No. 79·

Yes, subject to reply to question No. 79·

34· Not required. :,6. See r eply to question No. 79 · 37· No deposit is necessary. See reply to question No. 79· 38. Yes. 39· Yes. 4!. Yes.

43· If deposit made, it should remain.

Question Sr.

Do you consider that a deposit should be required from all existing Companies as well as from those commencing business ?

Replies.

r. Yes. z. Yes, if a deposit be decided upon. 3· All Companies should be on the same footing. 4· If required at all, yes. 5· If a deposit be determined upon it should be

a deposit of approved securities, with power to substitute other approved securities, and one such deposit for the Commonwealth. In that case I see no reason why existing Companies should be exempted. 6. Yes , excepting those Companies having their

head offices in the Commonwealth. 7. No. 8. No.

9· All Companies should be upon the same basis. ro. See reply to question No. 79· u: Yes. r 2. If required, all should deposit.

13. See reply to question No. 79· rs. No. r6. See first part of reply to question No. 79·

q. No.

r8. Yes. HJ. See reply to question No. 79 · 20. Yes. 2r. Yes, from all Companies where head offices

are outside the Commonwealth. :2. See reply to question No. 79· 23. Not desirable to call for deposits from any

Company.

24. If from any, then from all.

25. No. z6. Nn. Unlegs any particular Company's finan-cial standing is open to question. 2 7. Certain! y.

28. Distinctions should not be made. If deposit is required, every Company should con· tribute.

29. Yes. 3r. Yes, fro:n all Companies having their head

offices outside the Commonwealth. 32. See reply to question No. 79 · 33· Yes. 34· No.

36. See reply to question No. 79· 37· See reply to question No. 8o. 38. Yes. 39· I think it should be required from foreign

companies, i.e., Companies whose countries might be at war with E11gland or Australia. 4r. Yes. 43· Yes.

Question 82.

Do you consider that such deposit should bear a definite ratio to the amount of risk carried by the Company in the Commonwealth?

Replies.

I. No.

2. No, as same would lead to an annual change of amount of deposit. 3· No, the amount at risk is always varying. 4- No, this would lead to difficulties of adjust­

ment, as the amount at risk constantly varies from year to year. 5· No. '

6. No.

7· See reply to question No, 79· 8. No.

9· No.

IO. II.

12. 13. I 5·

!6.

17. 18.

See reply to question No. 79· No. No. See reply to qilestion No. 79·

See reply to question No. 79 · .

No. See also answer to question r8 with

regard to the formation of a reserve fund. No. No, as it might in the case of some ?ffices tie up such a large proportion of the1r funds,

that they would be unable to carry on

business.

24. zs. z6. 7.

Sec reply to question No. 79· See reply to question No. 81. No. No. No.

1329

No. I think a fluctuating reserve is undesir­ able. I should prefer to see a fixed scale

of deposits arranged in accordance with the numlJe r of departments of business under­ taken. No. No. No, the suggested b;csis is an incorrect one;

the deposit should bear a definite ratio to the net premium income of the Company within the Commonwealth, and not to the amount at risk ; the amount at risk might be on

private dwellings or saw-mills, the difference in the risk is practical! y as I to 40 ; the

premium, hmYever, indicates the hazard. See reply to question No. 79· ./\. rninin1um, £5,ooo, then a ratio. No.

See repl y to q uestion No. 79· See reply to question No. So. No. No.

Not necessarily. Yes, but easier arrived at by ratio to premiums gathered ; the end achieved would be the same.

Question 83 .

D o vou consider that Companies having their head · offices in Australia should receive preferen­ tial treatment as regards deposits or other ma tters?

Replies.

r. No.

2. No, a ll should be upon the same footing. 3· No.

4· No. Public advantage accrues from the fact that a number of wealthy British Com­

panies, possessing large funds, and offering undoubted security, supply the amount of cover requ ired. Any disuimination might reduce the facilities offered for insuring large

risks and groups of risks. In the event of a large conflagration in any

Austraiian centre'" the native companies wou ld much more heavily involved in re­ lation to their total business, and their re­ se rves (while bearing a sufficiently large ratio

to the premium income) would be less likely to con tain an adequate amount of liquid assets than would the reserves of the British Companies. 5· No.

6. Ves. All my society 's funds are invested in

the State. ·

1 . :·;o. Think all should be on equal footing. 8. No.

9· See reply to question No. 81. ro. Certainly not; all Companies should be on the same footing. r r. Yes.

rz. No. 13. Am not prepared to answer. rs. No, think all should be on equal footing.

I 9·

20. See reply to question No. 18. .

Not with regard to the at .nsk, but

perhaps in regard to the premmm mcome.

r6. No. And if I may venture to express the

opinion, I do not think that the local Com­ panies would either ask for or expect pre­ ferential treatment. 2!. No.

Ij .

18 . No, as the public should be protected just as much f rom a local concern wh ich might be 1mstable as .from a foreign office. 19. We are not ;nvare of any reasons f or discrimi­

nation . British offices meet their liabilities as promptly as Colonial offices, and offer much greater security. :::o . Yes. 2 1. Yes.

zz . See ref iy to question No. i 9·

23 . No.

24. I submit respec1 fully that this is hardly a f air

ques tion to put to the representative of a Bri­ tish Company having establishments and ::: mp le funds in the Commonwealth.

:!5. 26. No. No. 2 j . P os sibly i t might not be necessary for them

to m.ake so large a deposit, but they should certain! y be called upon to make some sub­ st:mtial deposit. No. No. 30. No.

. 3 r. Most certain! y, on the grounds tha t their assets . ate in the Common wealth, and also that the shareholders of the local Companies are citize ns of the Common wealth, their moneys a re invested locally, and they are subject to State and Municipal t axation, and any profi ts made by local Companies are ex­ p ended in the Commonwealth; in my opinion

they have very special claims for considera­ tion by the Commonwealth and State Go­ vernments. 32 . See reply to ques tion No. 79·

No, I do not. They could not with safety

do all the business here that is required to be done. I believe all the (not

N ew Zealand) Companies confine. their fire b usiness to Australia and New Zealand, and they certainly are not able to carry enough Fire Insurance to supply anything approach­ ing the wants of the community with any certainty that the losses wa.id be paid if a serious disaster took place. I think all the

fund s of the whole of them would be more than absorbed by a loss such as that which occurred in Melbourne some years ago. 3:) · Reply subject to question No. 79 ·

Deposits, no. Other matters, probably yes. 34· No.

35 ·

36. 37·

Believe in pref erence to no Company in any country. See repl y to question No. 79 · No. In view of the present day conditions

QuestioN 84.

ym: :· COiilp :tny, in any of the States of the Commonwealth, been required to ma ke a ·<.le· posit with the State Treas urer?

• R eplies. r. No. 2 . None in Victoria. 3. N ot at this branch j States. cannot answer for other 4- No. 5· Not 6 . No. for Fire Insurance. 7· No. 8. No. 9 · No. IO . I I. I 2. 13. 14. I5 . r6. If· 18 . 19 . 20. 21. 22 . 2j . 24. zs. 26. 27. z8. 29 . 30 . 3 1. 32. No.

Not in connexion with Fire Insurance business. No. No. No. No. No.

Not in Victoria. As regards other States we do not know. Yes . No. No. No. No.

F or fire business, no. No. No. N ot to my knowledge. Not in connexion with Fire Insurance. No. No. No. Not in respect to Fire Insurance. No. 33· Not to my knowledge. 34 No.

35· Not for fir e business . 36 No.

37· No.

38 Cannot say. 39· No. 40. No.

41. No. 43· Cannot say.

Question 85.

If so, give particulars as to States and amounts. Replies. r. No.

7. See reply to question No. 84.

8. None.

of F ire Insurance, viz., the world-wide f ac­ tor, it is to the best interests of the public

that large sound should be given

equal and free opportunity to do business in Australia, even if their head-quarters a re outside the Commonwealth.

I O . See reply to question No. 84.

See answer to question No. 84. See 'reply to question No. 84. Nil.

38. 39· No. No. 40 . It is entirely a ques tion of policy. 4 r. Yes. 43· I cannot see why they should, as in previous

America, - it was the local

offic:s def aulted, and the English Com­ p;tmes m all cases met their liabilities.

Loc;al institutions through local influence in­ vanably trade beyond their means. ·

II.

I 2.

IJ.

rs. 18. I 9. 2 0.

22 .

34-

See reply to question No. 84. Wes tern Australia, £ro,ooo. None. See reply to question No. 84 . See reply to ques tion No. 84. See reply to question No. 84. See reply to question No. 84. None.

SECTION XXVL-STATE AND MuNICIPAL INSURANCE.

Question 86.

\V auld it, m your opm10n, be-(i.) practicable; or (ii.) desirable, for Fire Insurance business to be undertaken

by-(a) The Commonwealth Government · (b) A State Government· or '

(c) Municipal authorities'?

1. (i.) No.

(ii.l No.

Replies.

2. We consider it would be neither practicable nor desirable. J. I have never heard of any attempt at such in­ surance turning out a success, therefore it is

neither practicable nor desirable. '

4· Practicable, yes. But I question if ever it

be successful by either (a), (b), or (c).

1 he in New Zealand is not resulting

auspiciously for the State Government. We this business as one eminently un­

smted for Government undertaking. The personal and peculiar nature of the contract which fixes the price of insurance without knowing the cost; the sudden and unex­ pected conflagrations which arise, and are

becoming more prevalent as the aggregation values increases ; and the necessity for a

":"Ide area of operations to obtain the requi­ Site average, renders it undesirable that the State or Commonwealth should undertake the business. Political influence as to the ' policy, etc., of such a State Department

would be likely to result disastrously. 5. I think insurance business should be carried on only by Joint Stock Companies established for the purpose, unless mutual Companies

are found to be safe and satisfactory to the insured, in regard to which I have had no

means of forming an opinion. 6. In my opinion, such insurance could be under­ taken, but it would be highly undesirable. 7· (i.) Yes.

(ii.) No. 8. Can be done, but do not think it would be

to the good of the Commonwealth, State, or Municipality. 9· Practicable, but not desirable. ro. No. Experience elsewhere has shown it to be

impracticable and undesirable. Fire Insur­ ance indemnity can only be properly and safely afforded by a number of Companies which spread their risks over an extensive

area, and so secure an average. No State

can afford to face a liability such as has fre­ quently been met by the Fire Insurance Com­ panies with perfect equanimity. r r. (i.) Yes.

(ii.) No. 12. (i.) Yes.

(ii.) No. 13. No. I4· No opinion. 15. (i.) Yes.

(ii.) No. 16. As to (i.), yes, under certain conditions, par­ ticularly as to capital and funds. As to (ii.), no. 17. (i.) Yes.

(ii.) No.

I8.

1331

It may be practic.able, but is certainly not desir­ abie for the Commonwealth or State Govern­ or Municipal authorities, to .undertake

1· ne Insurance, as there is no public demand

ior . and previous experiences in that '

duectwn have been far from satisfactory. The experience of the New Zealand Govern­ ment shows that Government Fire Insurance is impracticable without extensive re-insurance

facilities. These facilities they secured with " Lloyd's " Underwriters, so that for large risks the Government department

tutle more than brokers, passing the

busmess on to an unknown body, without ad_equate security, who paid no taxes, fire bngades' charges, and gave no employment m the Dominion.

vy e regard any of the above proposals un­ desirable-1. Because no necessitv has arisen for

competition with private enterprise. z. Because such a department would pro­ bably be filled with political nominees. .3· settlements of losses might be

mfluenced by political reasons, which would tend to create a moral hazard. / 4. Because the area is too limited to form an average distribution of risks. For

a loss of, say, £s,ooo,ooo,

IS. borne by the. Insurance Companies w1thout undue financial disturbance; but such a loss would be a serious

matter for the City of Melbourne

CounciL the State of Victoria, or even the Commonwealth Government. zo. No.

21. (i.) Yes.

(ii.) No. z 2. Undesirable, and I think not like! y to succeed. Insurance risk must be spread. The ·Nor­ :vegian Insurance Department lost £336,ooo

m r 904 by the Aalesund fire. There was

no money to meel the loss, and they issued per cent. bonds, repay;:tble in five to

seven years. An extra premium was levied on all property insured in the country, to

cover the loss. This was a comparatively small conflagration. 23. As to it being practicable, I suppose a Govern­ ment can do anything, as long as it has

a_vaila?le; as to the desirability, my

opm10n Is qmte to the contrary. 24. Practicable, yes; desirable, no. zs. Experience would go to show that the useful transaction of such business by bodies of the

kind is both impracticable and undesirable. Copy of paper read to Insurance Institute of New South Wales, June, 1905, attached may be of interest. '

z6. (i.) Yes.

(ii.) No. 27. (i.) I doubt it.

(ii.) No. 28. (i.) Yes. (ii.) No. 29. No. 3c. No. 31. (i.) No.

(ii.) No. 32. I think it is perfectly "practicable " for the

Commonwealth Government, the State Go­ vernment, or Municipal authorities, or any other body-corporate or unincorporate-to take up Fire Insurance business, but I do not think it would be done prudently, or

\vith profitable results by either the Corn­ monweaith, the State, or the Municipal

authontles as regards general business. I believe it is already done by the Common­ and the State Governments to the ex­

tent that their buildings and property are

(as a rule) uninsured; but this is purely

gambling, and not insurance, which is based upon averages. There is ri6 Insurance Com­ pany, for instance, that would run the whole risk on such a building as the new railway station in Flinders-street, the Newpon

workslwps, the Parliament Houses in Mel­ bourne, o;- Town Hall in Melbourne, for experience shows that there is no reason why one or the other should not oe entirely de­ stroyed, and, indee d, in the event of a

severe conflagration.. there is no reason why a large number of Government buildings' should not be des troyed at one and the same time; and, of course, the date of such an

could not be foretold; it might as

<'asily happen in the first year as in roo

years.. If there were a f avorable experience for roo it would be one thing, if it

h

future premiums required by Companies for the Government insurances. Tt would be just the same if the Melbourne Municipality went uninsmcd, and their Town Hall were burnt. But I imagine that the question is

not confined to the point of the insurance b y · these bodies of their own properties, but goes further, and assumes that they will enter upon the insurance business in general. In that

case, I can only say that the same principles would have to be adopted as are adopted as the outcome of centuries of experience by the F ire Insurance Companies, unless a heaven­ born genius should arise in the Government service who was able to do something else. A system of charging a municipal rate on all buildings has been advocated, but it woul d be both inequitable and absurd. The risk of fire is twenty or thirty times as great in some big buildings as it is in others, and the non­ hazardous ones might be municipally rated very much more highly than the hazardous ones , and it would be a monstrous thing to compel tbe non-hazardous section of the rate­ payers to pay municipal rates for Fire In­ .surance in excess of what was due to the

hazard of theh own property to protect more cheaply the property of the more members of the community. The only equit­ able plan is . to fall back upon the system

adopted by the fir e underwriters of en­

deavouring to charge equitable rates for each property insured, according to its own par­ ticular hazard, whether internal or from

the surroundings, or due to insufficient fire appliances and water supply. I am quite satisfied, from all the experi­ ence I have had in connexion with Govern­ me:1t offices, that it is impossible to intro­ duce any system by which the same prompt a_nd elastic means can be afforded to the pub­ lic to meet their constantly varying require­ ments as is afforded by private enterprises, and I think that is inherent to Government administration. I am not going to say that Government systems are never efficient but I think at the best they can never made ,

equal to private business systems, · becau.ose

96

is not that personal responsibility and

pe;.;onal incentive to employer or employe which exists m private business. I see no

reawn why Fire lnsurance business should be carried on by the Government more than a!1Y other business. That business is called iato existence by the wants of the commu­ nity, in precisely the same way as bakers, drapers, and grocers are called into exist­ ence, and the enterprise of bakers, grocers, and dr

regulatioas which embarrass Government operations, could possibly do.

'l'he Insurance Companies, from. time to tirne, deciine r15ks ot an extra hazardous nature, or nsks m wllicl1 carelessness is re­ veaieel on mspectmn, or in cases where, in tne1r opmion, tlle proposer 1s not a desirable one to nave on thelt bOoks. This would be

practiCallY imDossible in the case of a Go­ \-ernrnent- Der;attment, ·because political in­ iiuence would be brought to bear, and the member for the district w011ld consider tn.,,

a voter was entitled to insurance, whether he meant to burn down his place or not, or

whether he had burnt it down before, ana tl1ere would always be very good reasons (political) tor his coming to that conclusion. Further, every butcher would want to be in­ sured at the same rate; and every grocer at

the · same rate, instead of at the rate appro­ priate to his individual risk; or he would 1;ant it varied accmding to his political com­ plexion and influence, - or his political per­ tinacity; and for the latter class of reasons he wo.uid want to be paid a large in

exct'3S of his loss, as I believe is usually the case in oonnexion with claims ·made upon the Government in anv direction in which it is thought that influence can be brought

to h ;ar, even if the attempts are not success­ ful. The positiun, in some is well

illustrated by a recent matter in connexion with ' ' accident '' insurance u1 New Zealand in the case of employers' liability insurance, where pressure was brought to bear upon the Govemment to include amongst many thing-s for which compensation had fo be paid, a disease known as pneumoconiosis, or miners' ('onsumption. In consequence .of its indu­ >;ion , the Companies doing Em:p!oyers' Lia­ bility business necessarily had to insist upon a medical inspection of every employe to :;how that he was not, at the ti.me of the

undertaking of the insurance, already suffer­ ing from that disease. The miners have

objected to this, and have struck work, and the Government have been practically forced t0 come in, and, pending reconsideration of that liability, to get the New Ze;tland "Acci­

dent '' D epartment to cover that liability witb::m t e\tra premium, Government paying them a certain overriding consideration for doing so. It is obvious no sound principle of insurJnce could undertake insurances covering incapacity or disability from a par­ ticular class of disease, unless satisfied that at the time of undertaking such liability the man was not actually suffering from it-but the State cmv was milked.

33· (i .) Yes. (ii.) No. (a), (b), (c) Not outside their own

1333

97

34· Can be done, but do not think it would be to

the good of the Commonwealth, State, or Municipality. 35. Yes, in the same sense that it would be prac­ ticable for the Government to undertake any

kind of trading business if it so decided. lt is, however, undesirable, because it is en­ tirely outside the proper functions of the

Government.

36. Undesirable for either State or Municipal autho­ rities. 37· (i.) Yes. (ii.) No.

Experience has shown that the best results are obtained by general fire business being done by Insurance Companies. 38. (i.) No.

(ii.) No. 39· (i.) It might be.

(ii.) No. 40. It may be practicable, but I do not think it

desirable.

41. I consider it practicable, but not desirable. 43· Previous experiments have not proved to advan­ tage to either the individual or the State or Municipality ..

SECTION PREVENTION.

Question 87.

Should there, in your opinion, be compulsory con­ tribution by Fire Insurance Companies to­ wards the maintenance of Fire Brigades?

Replies.

r. Yes, to a small extent.

2. No. It is not the business of a Fire Insurance

Company to put out fires. 3· Theoretically it is not the business of Insurance Companies to put out fires. It is their

business to assess the rate for the risk run. 4· No. In no place in the world except Aus-

tralia and London is any contribution ex­ acted. In this connexion I append a state­ ment embodying some of the arguments against compulsory contribution as put for­

ward on behalf of certain Fire offiees in

connexion with a proposal to increase the Companies' proportion of the expense of maintaining the Melbourne Metropolitan Fire Brigades Board. 5· In thoory, Insurance Companies do not consider

that they have anything to do with fire

brigades and their cost, their business

being to rate risks as they find them. In

practice, however, fire brigades enable Com­ panies to take larger and a greater number of risks in a locality, and therefore it is fair that they should contribute the cost, which

I think should be compulsory, as otherwise some Companies might refuse to contribute. 6. No., 7. No. As in my opinion Fire Insurance Com­

panies f'.hould not be liable for the main­ tenance of fire 8. No.

9· No. 10. No. Quite the contrary.

n. Yes. 12. No. 13. Yes. 14. No.

15. No. in my op1mon Fire Insurance Com-

panies should not be liable for the main­ tenance of fire brigades. F 14377.

r6. No. It is the duty of the municipal author.i-

ties to provide the public with protection from fire just the same as from other dan­ gers. The Life and Accident Companies are not taxed for the upkeep of preventive

measures in regard to health, nor for hos­ pitals; and I venture to say that no one

would ever suggest taxing Burglary In­ surance Companies for police or for the

m.aintenance of burglars in gaol. Yet the Fire Companies in Australia are actually taxed for the cost and upkeep of life-saving appliances at fires. The Companies do not offer protection from

fire; they only sell indemnity against loss therefrom, and we do business in places

where there is no brigade. 1t is only in

Australia, and quite recently in New Zea­ land (and to a very limited extent in Lon­ don) that such a tax is imposed on offices. J7. No. The existence of fire brigades is inde-

G

pendent altogether of the question of the exist·:once of Fire Insurance Companies. They are a greater necessity to the public where Insurance Companies do not exist, as the public then have no other means of pro­ tection against pecuniary loss by fire. Fire

brigades are not deemed necessary in scat­ tered districts, and their constitution is

purely a municipal duty arising from the aggregation of the community in such num­ bers as to create a necessity for municipali­ ties. Fire Insurance Companies undertake

just as freely in places where no fire brigade exists. 18. Whilst opposed to the principle of Insurance Companies contributing to cost of fire

brigades ; yet in Australia it has become a recognised custom for Insurance Companies to contribute. Jg. No. Fire brigades are in the interests of the

community just as much as sanitary inspec­ tion, etc. :

n. Yes. ;z:z. No. The State might with equal justice charge Marine Insurance Companies for the main­ tenance of lighthouses, and Life Insurance

Companies for the cost of drainage and sani­ tation. :ZJ. Absolutely no. It is unfair and illogical.

24. No.

:25. No. 26. No; as the existence of :fire brigades is inde­ pendent altogether of the question of ex­ istence of Fire Insurance Companies, and

where Insurance Companies do not exist they are a greater necessity to the public as the .only means to rely upon for protecting them from pecuniary loss in event of the outbreak

of fire. The constitution of fire brigades is purely a Municipal duty caused by the aggre­ gation of the cornmunity in such numbers as to constitute a necessity for Municipali­ ties, and the cost of maintaining brigades could be added to the Municipal rate. In

the event of Fire Insurance Companies being relieved of brigade taxation, rates could be reduced in the cities and districts served by brigades. I believe I am correct in saying that, except in

the Commonwealth, to a limited extent in London, and recently in New Zealand, In­ surance Companies are nowhere compelled bv law to contribute towards the cost of the m:aintenance of brigades.

98

27. Certainly not. The business of a Fire In­

surance Company is to insure risks, as they

Replies.

stand, making every allowance for existing I. One-third each. fire protection. Compulsory contributions 2. The whole should be paid by the municipali-towards the maintenance of fire brigades turn ties.

the Insurance Company into a tax collecting 3· Entirely by the Municipalities. agency, which it is not intended to be, and 4· The Municipalities should bear the whole, but moreover it is not ,fair to the assured, who if by law the three bodies must contribute

are thereby taxed for the protection of un- the proportions should not exceed one-third

insured property. for either the State or the Insurance Com-

28. No. panies.

29. There is at present. 5· One-third each, with proportionate control of

30. No. the brigades and disposition of funds.

31. No; it penalizes the man who insures, as he 6. The whole by the State.

has to pay not only as a citizen of the State, 7. By the Municipalities or by the State. but also under his premiums to the Insurance 8. The Municipalities should pay all cost. Companies. 9· Wholly by the separate Municipalities.

32. Certainly not. For reasons see accompanying Io. The whole by the State. exhibit marked 2.* II. One-third each.

The Metropolitan Board of Works contend I2. (i.) Nil.

that they should not supply water for fire (ii.) The whole cost.

extinction, that not being a " domestic '' (iii.) Nil.

purpose. But it is "domestic" for the I3· Have not considered the matter.

purposes of the district they supply as much 14. One-third each. as street watering, the watering of public r 5. By the MuniCipalities or by the State. parks and gardens, fountains, and manufac- turing purposes; also railway supplies for 16· Wholly by the Municipalities. engines, and free water to Charitable Insti- I 7 · The whole by the Municipalities. tutions for washing carried on as a trade. 18. (i.) One-third, protection of lives of citizens. 33· Yes. (ii.) One-third, for uninsured properties.

34· No. (iii.) One-third, for insured properties.

35· No. r9. All by State.

36. No. If such is made, it must ultimately 20. The full cost should be borne by the State and

fall on the insured. the Municipalities.

3 7. No. The putting out and prevention of fires 2 r. One-third each. is not part of a Fire Company's business. zz. Altogether by Municipalities, the State being Their business is to pay for loss and dam- charged as a ratepayer would be.

age from fire, and rates are increased or S

decreased according to the conditions exist- 2 3 · ee replY to question N °· 87 · ing for fire prevention. Why not charge 2 4· (i.) Nil.

Life Companies with a direct share of the (ii.) The whole.

sanitation department, or Marine Companies (iii.) Nil. with a share of the expenses for lighthouses, 25. The whole by the Municipalities for the pro- and so on? tection of insured and uninsured ratepayers

38. Consider that fire brigades should be supported alike.

by local authorities. At present making In- 26. Wholly by the Municipalities. surance Companies pay for upkeep of fire 27. (i.) One-half. brigades to extinguish fires on uninsured pro- (ii.) One-half. perties is unjust. (iii.) Nil.

39· No. The principle is wrong, and it would be 28 (" ) N • 1. one. just as right to ask Life Companies to con- (ii.) The whole.

tribute to the cost of sewage and hospitals, (iii.) None. etc., or Accident Companies to ambulance 29. The Insurqnce Companies should not be asked · societies. The Companies fix rates for risks to contribute more than one-third. as they are, and consideration is allowed for Wholly by State.

fire brigade protection. In practice, I do 30 ·

not seriously object to such a contribution, 31. The whole should be borne by the Munici-but I think the principle quite wrong. palities.

40. No. _Fire brigades are necessary for the pro- 32. See reply to question No. 87. tectwn of life and property of all citizens. 33· (i.) One-third. 41. No. (ii.) One-third.

43· No. It is no part of the functions of Fire (iii.) One-third.

Insurance Companies to support brigades. 34· The Municipalities should pay all cost. Their functions are to assess the risk as they 35. Wholly by the Municipalities. find it, and charge premium accordingly. 36. Altogether by the State and Municipal authori-

Question 88.

In what proportions do you consider that the of such brigades should be borne by­ (i.) The State? (ii.) The Municipalities?

(iii.) The Fire Insurance Companies?

cost

* Pamphlet entitled " .Fjre Brigades Act." Statement of the Fire Insu.rance Companies in reference to the proposal to increase their pro­ portiOn of expense of the Metropolitan Fire Brigades

Board. Pubhshect by :Mason, Firth, and McCutcheon, [Printers, Bank· place, Collins-street, Melbourne. _

ties, the State paying in proportion to the value of State-owned property. 37· One-third each, i.e., if it be compulsory for Insurance Companies to contribute directly. 38. By Municipal taxation. 39· It should be borne by Municipalities, which

should also control the water supply. 40. See reply to question No. 87. 4r. No proportion by Insurance Companies. 43· (i.) Nil.

(ii.) Total cost. (iii.) Nil.

99

Question 89.

under what system of fire brigades' organization do you consider that the best results are

obtainable?

Replies.

I. Similar to Metropolitan brigades in Sydney. z. Under properly constituted fire boards. 3· Fire Brigades Board. 4· Fully paid men in the Metropolitan area. Par­

tially paid in Country town and Districts, assisted by volunteers in smaller places; the whole brigade organizations to be under the control of a Board or Boards, the members of which should be unpaid. Members to be representative of the contribut­

ing parties. 5· Prior to the Victorian Fire Brigades Act I89o being enacted, all Victorian fire brigades were supported by the public, the Municipalities,

and the Insurance Companies. I think the existing system preferable. 6. Permanent men, with one controlling superin­ tendent.

7. A permanent brigade with ample funds, as the brigades to give the best results must be well supported financially. 8. By the Municipalities working the brigades in

their districts. 9· I cannot give an opinion. IO. Permanent and partially paid men assisted by volunteers where available. I r. Under Boards constituted similarly to that of

the Metropolitan Fire Brigades Board and Country Fire Brigades Board of Melbourne. 12. Fire brigades and water supply should both be under the control of the Municipalities,

whose duty it is to safeguard the property and lives within their boundaries. If in­

surance companies never existed the councils would still be bound to supply proper fire extinguishing appliances. I3. Have not considered.

q. Representatives from the­ (i.) State; (ii.) Municipalities; (iii.) Fire Insurance Companies. I 5. A permanent brigade with ample funds, as the

brigades to give the best results must be well supported financially. 16. A permanent, thoroughly qualified, and efficient brigade of trained officers and men, havipg

ample funds at its disposal in order to mam­ tain its strength and efficiency in accordance with the needs of the town. Although a water supply is not an integral part

of the equipment or organization of a

brigade, it is obvious that its work could

not be carried on properly without an ample and constant supply of water from. sources commensurate with the reqmrements of the town for this purpose. I 7. A permanent brigade of trained men.

18. By a general central control by a .con­

sisting of representatives of rg. Municipal organization as is the practice m

Great Britain United States, Canada, etc. 20. By paid or paid and partially paid officers and

2I. 22. 23.

. 24.

men.

Paid system. Paid. The fire brigades should be managed and sus­ tained bv the Municipalities.

Fire brigades should be organized by the Muni­ cipalities, who should also control the water supply. Fire Insurance Companies might maintain a salvage corps if they like.

2 5. As to the control of tire brigades by Muni­

cipalitie:s for the benefit of the insured and uninsured ratepayers of such Corporations alike. Where communities are small they might group themselves together in declared centres under the law by an arrangement

for the purpose of joint and separate protec­ tion from the results of outbreaks of fire. z6. A permanent brigade of thoroughly trained men, with ample funds to keep up a stan­

dard of the highest efficiency. 27. I regret that I am not able to reply to this

question.

28. Water supply and fire brigades are entirely matters that should be dealt with by the

Municipalities, whose duty it is to protect the property of its ratepayers from fire or any other cause. 29. The Metropolitan Fire Brigade Board is a good

system, but better provision should be made as to water supply. 3I. I consider the fire brigades should be entirely controlled by the State; t.he Municipalities

having power to make recommendations. 32. A system of wholly paid fire brigades where such could be reasonably maintained; then partially paid brigades, as for instance, one

or more men on the station constantly; down to a purely volunteer brigade in very small places. 33· Cannot offer an opinion. 34· By the Municipalities working the brigades in

their districts. .1S. Municipal. 36. A paid brigade. 37. Thi.s is too large a question to reply to on such

short notice. Will give a· reply later if the Commissioners still require same, and will you give us sufficient notice· to make a full examination of the matter? 38. As at present. 39· Such a system as the Metropolitan in Mel­

bourne or Sydney works very well. A full equipment is necessary, and well trained per­ manent men. 40. Similar to that of the existing Metropolitan

Fire Brigade in Sydney. 4I. The present system of Boards we consider the best. 43. Proper department under a Commissioner or

Commissioners, the Municipalities collecting a rate for upkeep.

Question go.

What effect, if any, on the mte of premium has been produced by the extended use of sprink­ lers or other appliances for fire prevention in the erection of new buildings?

Replies.

I. Considerable reductions are made in rates in consequence.

G2

2. An allowance of 20 per cent. is made for

sprinklers, and other allowances made for sundry fire appliances. 3· 20 per cent. allowance for sprinklers, and fur­ ther allowance for other fire-fighting appli­

ances.

4· A discount of 20 per cent. is allowed for stan­ dard sprinkler installations, and further discounts of from 2! per cent. to 7! per cent. for other appliances. 5. A reduction in rate up to 32l per cent. 6. Tendency to reduce.

100

7. Reduction allowed, ranging from 10 per cent. to 2 5 per cent.

8. About 30 per cent. 9· Roughly, 30 per cent. deduction. IO. Reduction.

water available to command the risk; together with a trained fire brigade of not less than eight men, 5 per cent. dis­ count off net premium.

11. .From 20 per cent., for sprinkler installations, downwards, according to the merit of the appliances.

(b) If there be a steam fire engine or fire

pump located in an approved building, or an fire engine or fire pump

with the wires conveying the current be­ tween the source of supply and the

engine unconnected externally or intern­ ally with any building not perfectly

separated from the building which is, or the contents of which are, the subject uf insurance; and fire plugs with a

sufficient quantity of hose capable of being connected with the appliances of the local fire brigade, and sufficient

water available to command the risk; together with a trained fire brigade of not less than eight men, and with an

installation of sprinklers as per I (a)

or (b). Cumulative on I (a) or (b),

per cent. discount off net premium.

12. Premiums largely reduced by effective sprinkler installations, minor appliances also carry a reduction in rates. 13- Anything that will lessen. the risk of fire should

reduce the rate of premium in some degree. A reduction of 20 per cent. is made in the rate if sprinklers are installed. Reduction allowed, ranging from 10 per cent.

to 25 per cent.

On the assumption that the appliances referred to are for the extinction of fire, I enclose a copy of the list of discounts at present in

force in Victoria. These apply to all build­ ings and their contents, although the ques­ tion refers only to new buildings.

DISCOUNT FOR FIRE APPLIANCES.

The following allowances may be made for fire appliances conforming to the several definitions hereinafter specified, but shall not be cumulative unless expressly so stated.

I. Sprinklers-( a) In the case of a risk fitted with an arJ­

proved installation of automatic

sprinklers and external fire alarm signal. (See sub-section (c.) 20 per cent. dis­ count off net premium. (b) ln the case of a risk fitted with an aJ-1·

proved installation ot automatic

sprinklers and external fire alarm signal, and with other appliances, as per sub­ section 3 (c), or (d), or (e), or (f),

per cent. discount off net premium. (c) In cases where only an approved single water supply is provided one-half only of the above allowances respectively

may be made. (d) If there be in addition to the provisions as per I (a) or (b) an alarm signal con­

nexion with any fire brigade station at which not less than three permanent paid firemen are constantly in attend­ ance, such station being in telephonic rommunication with the head station. Cumulative on I (a), or' (b), or (c), 2! per cent. discount off net premium. 2. Automatic Fire Alarm Installations-

If there be an approved installation of auto­ matic thermostatic or pneumatic system of fire alarm signals. Cumulative on r (a), or (b), or (c), 5 per cent. discount off net premium.

3· Other Appliances-(a) If there be a steam fire engine or fire

pump located in an approved building, or an electric fire engine or fire pump with the wires conveying the current be­ tween the source of supply and the

engine unconnected external! y or intern­ ally with any building not perfectly

separated from the building which is, or the contents of which are, the sub­ ject of insurance; and fire plugs with a sufficient quantity of hose capable ot being connected with the appliances of the local fire brigade, and sufficient

(c) If there be at least one hydrant on each

floor, with a sufficient quantity of hose capable of being connected with the ap­ pliances of the local fire' brigade, at­ tached thereto to command any part of such floor and with connexion outside the building to fit the local fire brigade appliances, and water available at such a minimum pressure as to command the risk, 2! per cent. discount off net

premium.

(dj Tf there be one portable chemical extin­ guisher of approved design and of not less than five gallons water capacity to each 500 superficial square yards or any part thereof of floor area, and not less than two on each floor, z! per cent. dis­ count off net premium. (e 1 If there be two portable chemical extin­

guishers of approved design each of not less than three gallons water capacity to each sao superficial. square yards or any part thereof of floor area, and not less than two on each floor, z! per cent. dis­ count off net premium. (f) If there be an efficient portable fire pump

with not. less than five gallons water capacity to each soo superficial square yards or any part thereof of floor area, and not less than one to each floor ; to­ gether with buckets or cans painted red and with round bottoms, each of not less than gallons capacity marked

" Fire '' and always filled with water, and not less than six such buckets or

cans to each floor, and on every floor the superficial area of which exceeds 500 yards three additional buckets or cans for each 2 so square yards or part thereof after the first sao yards,

per cent. discount off net premium.

NOTE.-Warranties providing for ample and con­ stant water supplies and the maintenance in efficient working order of the respective appli­ ances for which allowance is made are to be inserted in all policies and all stoppage of

water supplies, and also alterations and/ or additions in connexion therewith, are to be sub­ ject to the permission in writing of the Com­ pany ; and the requirements are subject to re­ vision from time to time.

101

I7. A reduction of up to per cent.

r 8. When sprinklers are installed in accordance with our requirements, a special discount up to zo per cent., is allowed. '

19. A discount off the rates ranging from 20 per

to per cent., which will probably be

mcreased shortly to 35 per cent. or 40 per

cent.

20. Allo:vances of from 20 to 32! per cent. off pre­ mmms. 21. Sprinklers, zo per cent. reduction. 2 2. A reduction of 20 per cent. is allowed for

sprinklers, ro per cent. for May Oatway fire alarm. 23. About 20 to 30 per cent. off ordinary rates. 24. been greatly reduced for sprinkler

mstallatwns, and slightly reduced for minor fire prevention appliances. 2 5. An appreciable reduction.

26 . Considerable reduction-up to per cent. 27. are allowed for sprinkler

mstallatwns and other fire appliances. 28. Very_ material redt;ctions _are made in the pre­ mmms for spnnkler mstallations and fire appliances in buildings, whether old or new.

29. 20 per cent. to per cent., according to the

extent of same. 30. Discounts being allowed off premium in pro­ portion to the protection afforded. · 3 r. Reduction in rates. 32. Various reductions for fire appliances are

by the Companies ; the question of

mcreasmg them is now under consideration. 33· Reduction in rate. 34· About 30 per cent. 35· A special reduction of 20 per cent. upwards.

36. A reduction of 20 per cent. is made f or sprink-lers. 37. In New S_outh Wales, in the case of specially rated nsks, where approved sprinklers are

discounts are allowed off the pre­

mnim up to 22! per cent., and discounts

varying from per cent. to r2! per cent. are allowed for other approved appliances for fire prevention. 38. 20 per cent. to 30 per cent.

39· Reductions are allowed up to per cent. in

the Commonwealth. 40. A liberal allowance has been made. 41. A reduction of rate of premium up to 20 per

cent. in the case of sprinklers, and a fur­

ther reduction for use of other appliances. 43· Premiums have been reduced according to re-duced hazard.

Question 91.

Has the rate of premium been reduced in conse­ quence of the use of fireproof m aterials in the erection of buildings?

Replies.

r. Yes, to some extent, but our experience is that a fireproof building is an impossibility. 2. Yes.

3· Yes. 4· Yes, at varying rates, according to the degree of fir eproofing. Up to about 40 per cent.

reduction is made. 5· In some cases it may have been, but I am not

certain. I have never seen an ins1,1rance risk that was actually fireproof. 6. Yes. 7· Yes •

8. Yes. 9· Yes.

1337

ro. Yes, materially. ri. Yes. r 2. To a certain extent where fireproofing has been effectively carried out.

IJ. Yes. q.. In some cases of so-called fireproof materials a reduction is made: 15. Yes.

r6. In my opinion there is no material used in the construction of buildings which can be callect fireproof, i .e. , which will not suffer damage by fi re. Many materia ls and forms of· con­

struction are capable of resisting fire up to a. certain point, and a copy of the scale of

d1scounts at present in force in Victoria for these is enclosed. ·

FIRE-RESISTING CONSTRUCTION. A building to be deemed fire-resisting must be ('Onstructect as follows:-T. External Wails shall be not less than 14

inches thick in any part, and of brick,

stone, terra-cotta, and for cement concrete composed of broken brick, burnt ballast, furnace slag, clinker or other similar hard and burnt materials with protected metal

work as per No. 4 ; and having parapets not less than 3 feet above the highest por­ tion of the roof, on every side where there is any other building within 30 feet.

N OTE. - As regards buildings, or addi­ tions to buildings, commenced prior to 3oth September, r 907, if the " External

\Valls '' be of bri.ck, stone, or concrete they shall be deemed equivalent to construction as per No. 1.

2. Floors shall be either of:-(a) Brick, terra-cotta, and/or cement con­ crete composed of broken brick, burnt ballast, furnace slag, clinker or other

similar hard and burnt materials

(asphalt being permitted for the

ground floor only); -with protected metal work as per No. 4 ; the floors being in no part less than 6 inches

in thickness· and carried on metal joists, girders and columns, protected as in No. 4, or on brick or reinforced­ concrete . walls or piers. (A wooden

flo oring laid on the concrete is allowed provided that there is no space be­ tween the wood and the concrete, and wooden fillets, not exceeding 2 inches deep are permitted if bedded flush in the concrete.) Or of-(b) Wood not less than 9 inches thick, ceiled

with plaster on metal lathing, and with the floor-bo ards laid on the

bearers without intervening space. 3· Roofs shall be entirely of brick arches,

terra-cotta or fir e-clay ; or of concrete com­ posed of broken brick. burnt ballast, fur­ nace slag, clinker or other similar hard and burnt materials ; or of asphalt; and· not

less than 4 inches in thickness ; and shall be carried on metal joists, girders and

columns, protected as per No. 4, or on

brick or reinforced-concrete, walls or piers. NoTE .-Above such roofs there may be etected shelters or roofs over outlets, if constructed entirely of incombustible

I ·I I I I !

102

materials both within and without, and not occupied for domestic or trade pur­ poses. Outlets on to roofs rendered neces­ sary to satisfy requirements of the Fac­ tones and Workshops Acts are permitted, provided that all doors and frames be of metal, or cased in metal at least one-eighth of an inch thick, and that_ they be self­

closing.

4. Structural Metal Work.-All columns or stanchions to be covered with brick work or porous terra-cotta or with cement, con­ crete, or plaster keyed into metal sup­

ports, and protected by a metal guard up to a height of not less than 4 feet from

the floor, where cement, concrete or plaster only must be used. Girders, joists, lintels, and all structural metal work (other than columns and stanchions but including framework of roofs), where not covered with brickwork, to be completely encased in porous terra-cotta, securely anchored, br cement, concrete or plaster keyed into metal supports. Space must be left at th8 ends of girders and joists to permit of

expansion.

5· Scuppers, graded to carry off water, shall be provided at every floor level above the •ground story, in every external wall abutt­ ing on the open air ; the opening of each

shall not be less in area than 2 I superficial inches ; and the scuppers shall not be more than I 2 feet distant from one another and at ]east one to every I 2 feet or fraction

of I .2 feet.

6 . Floor or Wall Openings.-No openings through any floors or wa1Is are allowed except as follows :-(a) Stair cases, lifts or other openings in

floors, the enclosures of which are constructed entirely of brick or other material as mentioned in Section 2 (a) at least 9 inches thick and with a fire-

resisting door, in accordance with the fire-resisting doors, etc. Agreement, to every opening into the building. [Shafting, shaft-holes, pipes, and tubes; see sub-section (c).] (b) .Every door, window, or other opening

in the external walls, any portion of which doors, etc., is more than 8 feet above the ground level and is over­ looking or facing, directly or at an

angle, within 30 feet of any door,

etc. (whether protected or not) in an­ other building, or within .Jo feet of any roof not Of fire-resisting construc­ tion as per No. 3, or of any building of wood or iron or any wooden or

iron portion of a building, must be

protected in one or other of the

manners prescribed in the specifica­ tions for fire-resisting doors, etc.

(c) Shafting, Shaft-holes, Pipes, or Tubes.­ Shaft-holes in floors must fit closely in metal collars ; and in walls must

fit closely into wall, or have wall-box closed with iron plates , not less than :1. quarter of an inch thick leaving no

open space. All pipes and tubes for electric wires or other purposes must be of metal or earthenware and he

cemented ail round the full thickness of the floor. (No wooden casings to be used for enclosing electric con­ ductors.)

N.B .. -These requirements are subject to revision from time to time.

7· Deductions from Rate.-The following al­ lowances may be made for construction conforming to the several definitions here­ inafter specified. Such allowances shaH be

upon the net premiums after deduction of all discounts or other allowances made to the insured under the agreements, except those permissible under the Fire 'Appli­ ances Agreement:-

Buildings b:win g Ground Floor only, and having External Walls as per No. I. (a and bare cumulative.) w %

X %

y z

% %

(Floors.)

(a) If all the Floors be entirely of brick, 8tone, iron, concrete, · asphalt, or earth .•• ·

(b) If the Roof be constructed e11tirely as per No. 3. (Only allowable when the risk is rated under Regulation 3) ... Buildings having morP. than Ground Floor, and having External Walls as per No. l. [These de'ductions may only be allowed when the

risk is rated under Regulation 3. (c to g) are cumulative.]

(Floors.)

(Height.)

(Openinl(s in Floors. )

(Roof.) (Openings in Walls.)

(c) If all the Floors be as per No. 2

(d) If ail the be as per No. 2 ; and an "Addition to

Basis Rate" under 2 (d) of "Brick General Rating Scale " has beeu mede ;_:_deduct for each Floor so charged (e) If all the Floors be as per No. 2 ; a.nd there be no openings in the Floors ; or, if all openings be protected as

per No.6

(f) If the R oo f be constructed entirely as per 3

(g) If there l•e no door. window or other opening as described in 6 (b), in the Exte:-nal Walls; or if every such door, etc, be proteeted as provided in 6 (b). [Only allowable

6d. 1/- 1/- I/-

7l 7t 7t

{

6d.} and

6d. 6d. 6d. 6d.

5

when the deduetion under (c) or (f) is applicable.] 5 5 5 5

8. Basement or Ground Floor only being Fire- wooden floor may be laid over, or a metal

R esisting.-If the basement, or ground ceiling be fixed under, such material), or

floor .if there be no basement, of a build- if a compartment of such basement or

ing be separated from the superstructure ground floor be so separated and cut off

by an unbroken floor constructed of brick, by complete partition walls of brick or

stone, concrete, or other similar incom- other similar incombustible material from

hnstible Material (provided always that a the remainder, or have every opening in

1339

103

such walls protected by fire-resisting door or doors constructed and warranted closed as per Fire-Resisting Doors, etc., Agree­ ment ; then the rate for the entire building

shall be that for the portion other than

such separated basement, ground floor, or compartment rated as if it were a separate building; and the rates for the contents of such portion and of every such separated

basement, ground floor, or compartment shall be determined as if each of them

were a separate building. 9· Minimum Aggregate Annual Rate and

Minimum Total Premium for Policy.­ The minimum aggregate rate for any in­ surance subject to deduction under 7 (a) shall be as per " Brick " Genera.l Rating

Scale 4; and for any insurance subject to deduction under 7 (b, c, d, e, /, or g) it

shall (after allowing every deduction per­ missible under all agreements except Clause 4 of the Discount, Brokerage and Agency Agreement) be in no case less than three­

fifths of the basis or minimum rates as

fi xed by the classification list, general

rating scales, or special tariffs, as the case may be; and the aggregate premium for any insurance after the like allowances shall in no case be less than 5s.

ro. Averaae Clause.-All insurances subject to any under (e) are to be subject

to average; except separate insurances on contents of each. floor, and insurances on buildings for an amount equal. to not than IS. for every cubic foot of capacity,

reckoning ro feet in height to each floor. q . Yes.

r8. Yes. ry.' Fireproof roof, 7! per cent. deduction;

fireproof floors, 7J per cent. deduction; without openings m external walls, or if

openings protected, 5 per cent. deduction. 20. Yes. 2r. Yes. 22. Yes. 23.

25.

27. 28.

29. 30.

3I.

J2.

33·

Yes, materials of construction always affect the rate. Not easy to answer this question. The use _of a certain proportion . of fireproof

might not involve any reduction in premium. On the other hand, the use of fireproof

material, under certain conditions, would do so. Provision for reduction of rate with fire resist­ ing construction provided in modern rating

schedules. .

There are no actually fireproof

buildings, but for buildings With fi:e

resisting material, a reductiOn m rates IS made. Yes, materially. .

Yes, if the fireproofing has bee!l out m

accordance with certain speCificatiOns. Yes. Yes, where the buildings are up to the required standard. Yes· it must not be overlooked that extra

nullify to a large extent so-called

improvements in use ?f . fireproof

materials in the erectiOn of bmldmgs. The rate of premium has been very largely de­ creased in consequence of the use of fire­ proof materials, subject to certain regula­

tions. Yes, where iron doors have been substituted for wood, or stone or concrete, as against wood.

34· Yes. 35· Yes. 36. Rates are regulated according to the character of the risk.

37· In New South Wales, yes. In buildings of

'' solid construction '' discounts off the pre­ miums are allowed for various approved fire­ proof materials ranging from 5 per cent. to 40 per cent. 38. Yes. 39· Yes.

40. Yes. 41. Yes . 43· Yes.

SECTION XXVIII.-FrRE INQUESTS.

Question 92.

What is your opinion concerning the necessity for exhaustive inquests in the case of fires?

R eplies.

1. We think it is generally desirable. z. Think same high! y desirable. 3· Consider there should be an inquiry into every fir e of any size. 4· Provided the inquiries are exhaustive, and the

inquests are carried out with care, we think they would act as a deterrent to incendiaries and others. There is, however, the impor­ tant point to be borne in mind that a Com­

pany is prejudiced in dealing with a dis­

honest insured if he has been exonerated from responsibility at the inquest, which necessarily could not go so niinutely into the case as the Company's inquiries would do. 5· I should say quite unnecessary. Time enough

to hold an inquest when the police think it needful, which is seldom. 6. I think it would have the effect of being a de­ terrent to incendiaries if exhaustively carried

out.

7. I think inquests should be held upon doubtful cases; but am of opinion that the costs

should not be borne by the Insurance Com­ pany or the insured. 8. Desirable when the Companies interested re­ quest the Government in any special case.

9 . Would have the effect of materially reducing the number of fires. 1 o. There should be an inquest on every important

fire, in the interests of the public. Such a

rule might act as a deterrent to incendiarism, and, if generally applied, there would be no stigma implied in cases of honest fir es . II Not necessary. I z. There are many instances where an exhaustive

inquest would be a distinct advantage. It should be within the power of the police to order an inquest, either in their own volition or at the request of an Insurance Company. 13 . Unnecessary. I4· I think they are most necessary, and, if always

held, would reduce the number of fires con­ siderably. r 5. I think inquests should be held upon doubtful cases, but am of opinion that the costs should

not be borne by the Insurance Company or the insured. 16. I consider that for the protection of the com­ munity and of the Fire Insurance Com­

panies, as well as for the detection of fraud and prevention of arson, inquests are neces­ sary in very many cases, and they should

104

either be compulsory for all cases, or granted when asked for by any person on cause

shewn, or on the application of the police. The inquiry should be conducted by a magis­ trate--a stipendiary, where practicable, and the parties should not be required to pay any of the costs of the inquiry.

P.S.-lnquests-Since writing my answer to question No. 92, I have come across the City of London Fire Inquests Act I888 (51 and 52 Viet. cap. XXXVIII.), which makes provision for holding inquests somewhat of the nature I have suggested. I am unable to 33·

supply a copy, but the Act will be found on 34·

page LXI. of the Addendum to Bun yon's Law of Fire Insurance, 5th edition. 35·

1 7. We think that in the interests of the

inquests should be held in the case of fires, 36·

and that they should be held in the same

manner as other inquests-free of cost to the parties concerned. 18'. Very desirable, as in my opinion it would have a good effect on incendiarism. 1 9. We consider inquests most desirable as tending

to stop incendiarism.

37· J8. 39·

zo. An inquiry should be held into the cause of all fires. · 40 ·

2 I Sometimes necessary. If there be no imme-

4 r.

diate results from inquests they act as a

check on crime. 43 ·

z 2. Desirable often. Inquests, without exception, not necessary, and too cost! y. 2 3. Every fire does not call for an inquest, but

many do into which no inquiry is made. It is desirable that provision should be made for such, but not at the cost of the Insur- Does

ance Companies. z 4· Not all fires call for an inquest. The public

authorities should decide when an inquest is desirable.

places in North Germany. I remember when business there came before me in the course of my work, that the Insurance Companies were not allowed to p·ay a loss without a cer­ tificate from the police. I quote this, but

do not personally agree with the system, be­ cause I think it unnecessarily hampers legiti­ mate business, and that Insurance Companies should exercise caution in carrying on their own business, and that doing so is the very best protection they can have against arson and fraud. Very desirable. Desirable, when the Companies interested re­

quest the Government in any special case. I believe an inquest should be held in most

cases. In many cases inquests are necessary. The fact that such inquiries are made checks incen­ diarism. There is no necessity, except in suspicious cases. Very important to have an inquest on every fire. Very good results would be obtained in stop-

ping the occurrence of fires, and thereby re­ ducing the fire waste, insured or uninsured, both from carelessness and incendiarism. Yes, undoubtedly, in all cases. Inquests have had no practical results as to the

cause of fires. Inquest should be held in every ·case ·as a

deterrent.

SECTION XXIX.-INCENDIARISM.

Question 93·

the experience of your Company furnish evi­ dence or indications of wilful destruction by fire for purposes of gain?

Replies.

25. Public inquests not of much value. r. We have none in our connexion.

Zb . I am of opinion that it is highly necessary that z. We have had such cases.

compulsory inquests should be held for every 3· Yes; but fires destroy the evidence, and cases fire, at the discretion of the coroner, but the are very difficult to prove.

cost of such inquests should not be borne by 4· Yes. any of the parties concerned. 5· Sometimes indications, but scarcely ever

2;. I consider an exhaustive inquest most desirable, evidence. In two cases many years ago the

but I greatly doubt the value of the jury sys- Company initiated prosecutions for incen-

tem in this connexion. diarism, when the parties were convicted.

z8. Authority should be obtained for the police to 6. Yes. On three occasions have received "con-order an inquest at the request of an insur- science money."

ance office. 7. Very rare! y.

29. They are not of much value, except in the case 8. Indications. of suspicious fires. 9· Yes, indications.

JC. May act as a deterrent to fraud, but these in- IO. Yes.

quiries rarely lead to the cause of a fire being I r. Yes. found out. I2. Yes, frequently.

3r. I am strongly in favour of exhaustive inquests 13. No. in the case of fires. I am perfectly certain 14. So suspected, but proof is never available.

that eventually it would lead to a reduction Companies feel sure in many cases they are

in the fire loss waste, and consequent reduc- being swindled, but have to " grin and bear

tion in premiums. Great care, however, it," and pay up.

should be exercised in the appointment of IS. Very rarely. coroners. At Broken Hill the coroner is an r6. From the fact that we have received "con-

agent for an Insurance Company; in my science money," it is fair to assume that

opinion, this is an improper thing. fraud has actually occurred in our own ex-

,, •. From the public point of view, I think there perience. We have no moral doubt that

should be .an inquest on every fire, because wilful destruction does occur, but we have

a fire does not only affect the individual; it no means of proving same.

affects his neighbours, and it affects the rate r 7. There have been indications, but conclusive at which his neighbours can obtain insurance proof has been lacking.

premiums, and it sometimes affects life. But, r 8. In many cases, fires and circumstances are very as a fire insurance manager, I do not attach suspic-ious, but it is seldom, if ever, possible

the least value to inquests. Fires are looked to prove arson or incendiarism.

upon as a public injury in a great many r9. There are undoubtedly many fires. which are

places; for instance, irt Prussia, and other suspicious in their origin.

:20. Yes. :21. Yes. :22. Impossible to give a useful answer.

105

ZJ. Such cases of incendiarism certainly do occur. "Valued policies" would tend to increase the number, too. 24. Undoubtedly this occasionally happens. 25. Such experience not unknown, but rare.

Risks are not underwritten in connexion with which the least suspicion of " moral hazard " is in existence. z6. Occasionally there has been indication of wilful

destruction by fire, but definite proof was wanting in respect thereof. 27. Not so far.

2 8. Occasionally.

29. No.

30. As previously indicated, proof is most diffi­ cult to obtain, but there are any number

of fires of very suspicious character. ·

31. Yes. 32. We have had such ·cases. 33· Yes. 34· Indications. 35· Yes.

36. Have not sufficient information to enable me to answer this question. It is very difficult to sheet home a charge of incendiarism. 37. Our experience as the Company's agents for

New South Wales does not furnish us with evidence, but indications appear to occasion­ ally exist in the direction suggested. 38. Yes; but very difficult to prove. 39· Yes.

40. Yes. 41. Yes. 43· Yes.

Question 94·

Are such cases relatively numerous in the Common­ wealth?

I. No.

2. No.

Replies.

3· In some districts, especially mmmg districts, also in times of financial depression. 4· This is perhaps a matter of conjecture, htl:t we are of opinion that they an'\ relatiVely

numerous·, for the reason that it is compara­ tively easy to avoid detection in in­

stances in a country where wooden bmldmgs prevail. 5· Cannot say. 6. In New South Wales, no,

7. No.

8. I do not think more than in other British com-munities. 9· I cannot say.

10. No; but many claims are paid wihout in respect to which the circumstances pomt to at least contributory negligence. II. Fairly numerous, in my opinion.

12. Am unable to say. 13. Not to my knowledge. 14. I think so.

15. No. 16. There is no direct evidence. 17. We do not know. 18. Cannot say.

19. The proportion varies in different

Decaying mining townshii?s. are very prohfic in fires, and certain cond1t10ns, e.g., labour troubles often result in numerous fires.

1341 ;,;,•

We are unable to give any idea of the general experience, but so far as this Company's ex· perience is concerned, we do not find dis­ tinctly incendiary fires numerous, though

there are frequent suspicious cases. 20. No. ·

2r. Not in Tasmania. 2 z. No reliable information. 23. I have no statistics to appeal to on this matter. 24. I think not.

25. See reply to question No. 93· z6. I cannot sav.

'27. I cannot say. 28. Cannot say. 29. No. 30. A fair number of very suspicious cases, but it

is almost impossible to secure proof. 31. Many suspicious cases occur, very difficult in­ deed to prove. 32. Relativel;l to what? My experience of busi­

ness, although fairly extensive at one time, has for the last thirty-five. years been con­ fined practically to Australasia (including New Zealand). I think that cases of the

kind are less numerous in the Commonwealth than in New Zealand. From my previous experience in the home and foreign depart­ ments at the head office of the Company in

England, I do not think that incendiarism is distinctively prevalent in the Common­ wealth, and certainly not so prevalent as in the United States and Canada. 33· Have no records to guide us in forming an

opinion. We, . however, think they are

when business is ba.d. 34· I do not think more so than in other British

communi ties.

35· I can only guess, but my candid opinion is

"Yes."

36. No means of knowing. 3 7. We consider that they are not relatively

numerous. Such a condition would alter for the worse if the present invaluable checks in the present system of insurance were modi­ fied. " Bad times " have an appreciable

effect on this question. 38. Not that we are aware of. 39· Fairly so; but proved cases are rare. 40. Yes.

4r. We do not think so.

43· I understand more numerous here than in Great Britain.

Question 95.

How does the ratio of such cases to total fires vary in the different countries in which your Com­ pany transacts business?

Replies.

r. Have not any information. 2. Have not got the information. 3 · Unable to answer this question. 4· We have rio information on the point.

5· I do not recollect a case in New Zealand,

which is the only other country in which this Company transacts Fire Insurance business. 6. Our business confined to New South Wales. 7. Cannot say. 8. I have not the information. 9· I cannot say.

10. There is not much difference in States (we working only in Australia), the conditions applying more to districts and classes, r r. See reply to question No. 4·

12. I3· I4· 15. r6. 17. r8. 19., 20.

22. 23. 24.

25. 26. 27. 28. 29. JO. 31.

J2. 33· 34· 35·

36. 37·

41. 43·

Impossible to answer this question. See reply to question No. 93· I cannot say, as it is suspicion only. Cannot say. '

I am unable to say.

We do not know. Do not know. I am unable to say.

The Company's business is confined to New South Wales and Victoria. Cannot tell. See reply to question No. 94· Impossible to say. There may be grounds for

suspicion in several cases, but the proved cases are infinitesimal in number. Cannot say. I have no knowledge. I cannot say.

Have no information on this point. Cannot say. Do not know. In my opinion, arson is more prevalent in Tas­

mania and Western Australia than it is in other parts of the Commonwealth. It is impossible to answer this question. Cannot say ; no know ledge.

I have not the information. The moral hazard is very bad in New Zealand, and nearlv as bad in the Commonwealth, being particularly bad in Western Australia. No means of knowing. It is impossible to reply to this question,

especially as it involves two conditions, viz., " evidence " and " indications." Cannot say. I do not know.

Do not transact business beyond Australia and New Zealand. Possibly 3 per cent. Cannot say.

SECTION XXX.-PRoPosALs, PoLICIEs, ETC.

Question 96.

Please submit copies of policies, proposals, and all other forms or documents which either expressly or by implication are made ·part of the Fire Insurance contracts of your

Company?

Replies.,

r. Herewith. 2. Specimens of forms attached. 3· Forms enclosed. 4· Attached, copy of proposal form; copy of

policy form. 5· Copies of policy, proposals, receipts for pre­ mium, average clause-Act No. 305. Deed of settlement. 6. All documents mentioned are forwarded here­

with.

7. Enclosures are--(i.) Copy of policy form; (ii.) Copies of all proposal forms. 8. Policy form, proposals. 9· Policy form, proposal, declaration of loss form,

attached.

ro. These are annexed. rr. Proposals, (z), receipt for agricultural risk, and policy form, attached hereto. 1 z. Sent herewith.

13. Copies herewith. 14· .Policy, cover note, proposal form, notices (3), claim form, .balance-sheet.

106

r 5. Enclosures are--(i.) Copy of policy form; (ii.) Copies of all proposal forms. r6. Policy forms (3), proposal forms (3), are sent

herewith.

I7. Policy form, proposal form, haystack proposal form. r8. Submitted. 19. Attached· hereto. 20. Forms enclosed. 2r. Proposal and policy forms now sent on. 22. Forms herewith. Those in use in the Com-

monwealth are practically the same. 23. Polir.y form enclosed. 24. Documents submitted. I. Policy f(,rrn, with conditions on back thereof.

2. Ordinary proposal form. 3· Special proposal form for haystacks. 4· Form for statement of classified risks. See question No. 59· zs. Herewith. 2 6. Forms enclosed.

27. Forwarded herewith. 28. Copies of policy and prqposal forms are at­ tached hereto. 30. Those used in New South Wales enclosed here­

with. 1'olicy form, agents and branch in­ terims and renewal receipts and cover notes, and thr,:e proposals-ordinary, farm and crop, b;dance-sheet and constitution and rules. Jr. Cover note. proposal, and policy herewith: 32. Exhibit No. 3· I submit copy of policy form

(No. n.335,or2 cancelled), the conditions being uniform in all Companies. Also

Exhibit No. 4, copy of proposal form, the back, w!lich is ruled through in red, has nothing to do with the proposal vouched for by proposer. 33· Fire policy form, proposal, interim receipt,

renewal receipts, reinsurance proposal forms. 34· Policy form, proposals. 35· Proposal and policy forms attached. 36. Submitted herewith. 37· Copy of policy form and proposals (general,

haystack;; and crops) are enclosed herewith. 38. Proposal and policy herewith. 39· A policy !orm and proposal, ordinary, and haystack are enclosed. 40. Herewith. 41. Herewith. 43· Herewith.

Question 97.

Indicate what conditions specified in such forms or documents are considered by your Company fo be non-essential ?

Replies.

2. All considered essential. 3. All essential. 4· None. 5· None. 7. All essential. 8. None.

9. They are all essential. All are es,.ential, but are only required and used as a protection against fraud. ro. rz.

IJ.

Every condition in our policy is based on prac­ tice and wide world experience, and we con-sider ew:rv one essential to the proper and fair war king of our business. All are ccmsidered essential, but enforcement

is dependent on facts.

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14· None. 1 5. All essential. 16. There are no non-essential conditions. 17. We do not consider any of them non-essential. 18. No. 19. Everything is essential, but in cases of fires,

which are in our judgment of a bona fide

character, C'Ompliance with technicalities is rarely insisted on. 20. It is not customary to enforce any conditions of the policy in bona fide cases of loss. 21. None.

2 2. All essential.

2 3. All of them are essential.

24. I submit that these conditions, which are the result of many years' experience in all parts of the world, are right and proper, and

there are none of them which I would

willingly part with. Of course, these con­ ditions have been frequently m9dified in minor respects, and may be modified again, but substantially they embody provisions

without which the practice of Fire Insurance would be difficult and even dangerous. 25. None. 26. Consider all are essential.

27. We consider that all conditions of our policy are essential.

28. Every condition embodied in our policy is essential to the equitable and proper conduct of our business. ·

29. None. 30. Think all information asked for in documents is essential for our requirements. 3 r. Conditions would not appear in such documents

unless considered essential. 32. No. 2-Names of occupants, and No. 3-number and street, are practically used for identification purposes only.

Nos. 4, 8, 9, ro and II, bearing upon the

moral risk are the most important. 33· None. 34· None. 35· All our conditions are essential 36. All are essential.

37. We know of none. The fact of our being in­ structed to use them would point to the

assumption that the Company considers all of them essential. If the Commissioners so desire we will refer the question to head

office.

39· All of the conditions are essential in certain cases. 40. They are all essentiaL 41. None.

43. All essential.

. '

108

APPENDIX C.

CONDITIONS AND STIPULATIONS IN-DORSED ON FIRE INSURANCE

POLICIES ISSUED IN AUSTRALIA.

MISDESCRIPTION.

r. If there be any material misdescription of

any of the property hereby insured, or of any

building or place in which such property is con­ tained, or any misrepresentation as to any fact

mat:crial to be known for estimating the risk, or any omission to state such fact, the company shall not be liable upon this policy so far as it relates

tc1 property affected by any such misdescription,

misrepresentation, or omission.

Rl'!:NT.

2. Throughout these conditions the stipulations, provisions, and requirements applicable to loss on property shall alsobe deemed to apply in the case nf any insurance on rent.

RECEIPTS.

3· No payment m respect of any premium shall be deemed to be payment to the company unless a printed form of receipt for the same, signed by an official or duly-appointed agent of the company, shall have been given to the insured.

INSURANCE WITH OTHER COMPANIES.

4· The insured shall give notice to the company of any insurance or insurances already effected, or which may subsequently be effected, covering any of the property hereby insured; and unless such notice be given, and the particulars of such

insurance or insurances be stated in or indorsed on this policy by or on behalf of the company before the occurrence of any loss or damage, the insured shall not be entitled to any benefit under this

policy. The payment of any premium, or the issue of any policy receipt or cover note, shall be deemed conclusive evidence of the existence of other inc surance, whether liability under such other insurance be disputed or not.

RrsKs NOT Covl!:RED.

5. The insurance does not under any circum­ stances cover-(a) Loss by theft during or after the occurrence of a fire;

(h) Loss or dam1ge to property occasioned by its own fermentation or natural heat­ ing (except as may be provided in ac­ cordance with Condition 7 f), or by ·its undergoing any heating or drying pro­

(c) Loss or damage occasioned or happening through-( r) the burning of property by

order of any public au­

thority.

(2) the fall or any building or part thereof, ecxent as the result of tire. .

RrsKs NOT CovERED ExcEPT UNDER CERTAIN CoNDITIONS.

6. The insurance does not cover loss or. damage by fire durmg (unless it be proved by the insured that the loss or damage was not occasioned thereby) or in consequence of :-

(a) Subterranean tire, earthquake, hurricane, volcanic eruption or other convulsion of nature; ·

(b) Invasion, act of foreign enemy, riot, civil commotion, rebellion, insurrection, mili­ tary or usurped power, or martial law.

RISKS NOT CoVERED UNLESS EXPRESSLY INCLUDED.

7. Unless otherwise expressly stated in the policy, the insurance does not cover :-(a) Goods held in trust or on commission;

(b) Bullion or unset precious stones; (c) Any curiosity or work of art for an

amount exceeding £zo; (d.) Manuscripts, plans, drawings, or designs, patterns, models, or moulds; (e) Securities, obligations, or documents of

anv kind, stamps, coined or paper

money, cheques, books of account, or other business books. (f) Coal, against loss or damage occasioned by its own spontaneous combustion. (g) Explosives. (It) Loss or damage occasioned by explosion;

but loss or damage by explosion of gas used for illuminating or domestic pur­ poses in a building in which gas is not generated, and which does not form part of any gas works, will be deemed to be loss by fire within the meaning of this policy.

MARINE CLAUSE.

8. The insurance does not cover any loss or dam­ nge to property which, at the time of the happen­ ing of such loss or damage, is insured by, or would but for the existence of this policy be insured by, any marine policy or policies, except in respect of any excess beyond the amount which would have been payable under tbe marine policy or policies, had this insurance not been effected.

ALTERATIONS AND REMOVALS.

9· Under any of the following circumstances the insurance ceases to attach as regards the property affected unless the insured, before the occurrence of any loss or damage, obtains the sanction of the company, signified by indorsement upon 'the policy by or on behalf of the company:-

(a) If the trade or manufacture carried on be altered, or if the nature of the occu­ pation of or other circumstances affect­ ing the building insured or containing

the insured property be changed in

such a way as to increase the risk of

loss or damage by fire.

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(b) If _the building insured or containing the msured property . becomes unoccupied, and so remain for a period of more

than thirty consecutive days. (c) It insured be removed to any

bmldmg or place other than that in

which it is herein stated to be insured. (d) If the interest in the property insured pass from the insured otherwise than by will or operation of law.

CANCELMENT OF TiiE INSURANCE.

Io. The insurance may be terminated at any time at the request of the insured, in which case the

company will retain the customary short-period rate for the t1me the policy has been in force. The insurance may also at any time be terminated at the option of the company on notice to that effect being

given to the insured, in which case the company be liable to repay on demand a ratable pro­

portion of the premium for the unexpired term from the date of the cancelment.

OccuRRENCE OF A FIRE.

I I . On the happening of any loss or damage

the insured must forthwith give notice in writing thereof to the company, and must within fifteen days after the loss or damage, or such further time as . the company may in writing allow in that be­

half, deliver to the company a claim in writing for the los.s and damage, containing as :Qarticular an account as is reasonably practicable of all the

articles or items of property damaged or destroyed, and of the amount of the loss or damage thereto respectively, and of any other insurances; and must at all times at his own expense produce and give

to the company all such books, vouchers, and other evidence as may be reasonably requ.ired by or on behalf of the company, together with a declaration on oath or in other legal form of the truth of the

claim and of any matters connected therewith ; and if the insurance is subject to average, the insured must within the aforesaid fifteen days, or such further time as the company may in writing allow

in that behalf, deliver to the company an account of all the property insured, with the estimated

value thereof at the breaking-out of the fire. No amount shall be payable under this policy unless the terms of this Condition h ave been

complied with. SAL

12. On the happening of any loss or damage, the company, may, so long as the claim is not ad­ justed, without thereby incurring any liability­ (a) Enter and take and keep possession of the

building or premises where the loss or damage has happened. (b) Take possession of, or require to be de­ livered to it, any property of the insured

in the building or on the premises at

the time of the loss or damage. (c) Examine, sort, arrange, or remove all or any of such property. (d) Sell or dispose of, for account of whom

it may concern, any salvage or other property taken possession of or re­

moved.

In no case shall the company be obliged to under­ take the sale or disposal of damaged goods, nor the insured under any circumstances have the

right to abandon to the company any property, damaged or undamaged, whether taken possession of by the company or not. Entry upon or taking possession of premises by the company shall not

be taken as recognition of abandonment by the in­ sured.

I_3· If the claim be in any respect fraudulent, or If any false be made or used in sup­

port thereof, or If any fraudulent means or devices are used by insured, or any one acting on his

?ehalf, to obtam any benefit under this policy, or If the los? or damage be occasioned by the wilful act, or With the connivance of the insured or if

insured or any one acting on his beharf, shall

hmder or obstruct _the in doing any of

the acts referred tom Condition 12, or if the claim be made and rejected, and an action of suit be not within three months after such rejec­

tion, or (m case of an arbitration taking place in of the r8th Condition of this policy)

Wlthm three months after the arbitrator or arbitra­ tors or umpire shall have made their award all

benefit under this policy shall be forfeited. '

REINSTATEMENT.

14. The company may, at its option, reinstate or replace the property . damaged or destroyed, or any part thereof, mstead of paying the

amount of the loss or_ damage, or may join with ;cy other ccmpany or msurers in so doing · but the company shall not be boun_d to reinstate or

but as circumstances permit and

m reasonably sufficient manner, and in no case shall the company be bound to expend more in reinstate­ ment than. it would have ;ost to reinstate such pro­ perty as It was at the time of the occurrence of

such loss or damage, nor more than the sum in­ sl:red by the company thereon. If the company require, and whether the com­ pany shall have . determined to reinstate or not the insured. shall, at his own expense, furnish company With such plans, . specifications measure­ ments, quantities, and such other particulars as the

company may require; and no acts done or caused to be done by the company with a view to rein­ statement or replacement ;;hall be deemed an elec­ tion by the company to reinstate or replace. No

amount shall be . pa;:able_ :under this policy unless the terms of this Cond1t1on have been complied with. If in any case the company shall be unable to reinstate or repai: _the property hereby insured be­ cause of any mumCipal or other regulations in force

affecting the alignment of streets or the construc­ of buildings, or otherwise, the company shall,

m every such case, only be liable to pay such sums as would. be requisite to reinstate or repair such property 1f the same could lawfully be reinstated to its former condition.

SUBROGATION OF RIGHTS.

rs. The insured shall, at the expense of the

company, do and concur in doing, and permit to be done, all such acts and things as may be neces­ sary or reasonably required by the company for the purpose of enforcing any rights and remedies or of obtJ i'1ing relief or indemnity from othe;

parties to which the company shall be or would become _entitled or subrogated, upon its paying for or makmg good any loss or damage under this policy, whether such Jets Jnd things shall be or become necessary or required before or after his indemnification by the company.

Loss-CoNTRIBUTION CLAUSE.

I6. If at the time of any loss or damage hap­ pening to any property hereby insured there be any other subsisting insurance or insurances whether effected by the insured, or by any other 'person or

persons, the same property, the company

shall not be hable to pay or contribute more than

110

its ratable proportion of such loss or damage. The payment of any premium, or the issue of any policy receipt or cover note shall be deemed conclusive evidence of the existence of other insurance, whether liability under such other insurance be disputed or not.

CoNDITIONS OF A YERAGE AND THEIR APPLICATION.

I 7. In all cases where an insurance is declared

to be subject to average, the following clause shall apply:-If the property hereby insured shall at the

breaking-out of any fire be of greater value than the sum insured thereon, then the in­ sured shall be considered as being his own insurer for the difference, and shall bear

a rateable proportion for the loss accord­ ingly. Every item, if more than one, of the policy shall be separately subject to average. In all cases where any other subsisting insurance or insurances, effected by the insured, or by any other person or persons, covering any of the pro­ perty hereby insured, either exchlsively or together

with any other property, in and subject to the same risk only, shall be subject to average, the insurance on such prorerty under this policy shall be subJect to average in like manner.

ARBITRATION.

r8. If any difference arises as to the amount of any loss or damage, such differences shall inde­ pendently of all other questions be referred to the decision of an arbitrator to be appointed in writ­ ing by the parties in difference, or if they cannot agree upon a single arbitrator, to the decision of two disinterested persons as arbitrators, of whom o.ne shall be appointed in writing by each of the parties within two calendar months after having been required so to do in writing by the other

party. In case either party shall refuse or fail

to appoint an arbitrator within two calendar months

after receipt of notice in writing requiring an ap­ pointment, the other party shall be at liberty to appoint a sole arbitrator; and in case of disagree­ ment between the arbitrators, the difference shall

be referred to the decision of an umpire, who shall have been appointed by them in writing before entering on the reference, and who shall sit with the arbitrators and preside at their meetings. The

death of anx: party shall not revoke or affect the the authority or powers of the arbitrator, arbitra­ tors, or umpire, respeatively; and in the event of the death of an arbitrator or umpire, another shall in each case be appointed in his stead by the party or arbitrators (as the case may be), by whom the arbitrator or umpire so dying ;yas appointed. Each party shall pay his, her, or their own costs of the reference, and a moiety of the costs of the award (including the arbitrators' and umpire's fees). And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators, or umpire of the amount of the loss or damage if disputed shall be first

obtained.

WAIVER.

19. No provision or requirement in this policy re­ quiring any matter or thing to be done, or to be written or indorsed hereon, shall be deemed waived by reason of any alleged notice or waiver which has not been expressly written or indorsed hereon; nor shall the company be deemed to have ·waived

any provision or condition of this policy, or any forfeiture thereunder, by any requirement, act, or proceeding on its part relating to the appraisement of any alleged loss, unless such provision, condi­ tion, or forfeiture be expressly, stated in writing to be waived by the company.

NoTicEs.

20. Every notice and other communication to the company required by these conditions must be written or printed. ·

Printed and Published for the GOVERNMENT o.f the COMMONWEALTH of AUSTRALIA by J. KEMP, Government Printer for the State of Victoria.