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Insurance Act - Insurance Commissioner - Report - Period 1 August 1974 to 30 June 1975 (1st)


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THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

1975—Parliamentary Paper No. 223

INSURANCE COMMISSIONER

FIRST ANNUAL REPORT FOR PERIOD 1 AUGUST 1974 TO

30 JUNE 1975

Presented pursuant to Statute 1 October 1975 Ordered to be printed 23 October 1975

THE GOVERNMENT PRINTER OF AUSTRALIA

CANBERRA 1976

Photographs supplied by the Australian Information Service

Printed by Kerton Bros(S.A.) Pty Ltd. Edwardstown. S.A.

The Hon. W. G. Hayden, M.P. Treasurer, Canberra, A.C.T.

In accordance with the requirements of section 125 of the Insurance Acts 1973,1 have the honour to submit for presentation to the Parliament a report on the working of that Act in respect of the period ended 30 June 1975.

M.A.BASSETT Insurance Commissioner

CONTENTS

Page

I n t r o d u c t i o n ..........................................................1

Effect of Commencement of the Act . . . 2

L i q u i d a t i o n s ......................................................... 2

Preliminary Examination of Applications · · 3

Authorisation and Exemption Provisions · · 4

Detailed Examination of Applications . . . 4

Lloyd’s .......................................................... . 6

Interpretation of the A c t .........................................7

T r i b u n a l ..................................................................8

Insurance (Deposits) Act 1932-1973 . . . 8

Statistics on the General Insurance Industry · ■ 9

Queensland F l o o d s ................................................ 19

Darwin: Cyclone T r a c y ........................................24

Provisions for Outstanding Claims · · · 31

Contacts O v e r s e a s ................................................ 35

Staff T r a i n i n g .........................................................36

A c c o m m o d a t i o n .................................................36

Public R e g is te r .........................................................37

Staff and O r g a n is a t io n ........................................ 37

Appendix A— Classification of Insurance Organisations as at 30 June 1975 · 39

Appendix B— Statistical Tables · ■ · - 4 7

Glossary of T e r m s ............................................... H 9

Introduction

Section 125 of the Insurance Acts 1973 (‘the Act’) provides that the Commissioner shall, within three months after each year ending on 30 June, furnish to the Treasurer for presentation to the Parliament a report on the working of the Act during that year. The Act received Royal Assent on 19 June 1973. Part I—‘Preliminary’ and Part II—‘Administration’ (but only those two Parts) came into operation on the date of Royal Assent. The first report is to relate to the period commencing on the date of commencement of section 21 (which was 1 August 1974) and ending on the next succeeding 30 June.

This report should not be confused with the reports of the Life Insurance Commissioner (formerly called the Insurance Commissioner). This Act is concerned with the supervision of general insurance only. The definition of ‘insurance business’ in the Act excludes in particular ‘life insurance business’. Throughout this Report the term ‘insurance business’ has the meaning ascribed to it in the Act.

I was appointed Insurance Commissioner on 13 August 1973. In subsequent months an organisation was approved, staff recruited and an intensive staff training program carried out. Before the main operative sections of the Act could be proclaimed, it was necessary for regulations to be prescribed setting out, among other things, details of the information to be furnished by companies lodging applications for authority to carry on insurance business. The drafting of these regulations was not completed until 7 August 1974. Accordingly the operative sections of the Act, with a few exceptions, came into operation on 1 August 1974.

The exceptions referred to above are:

• Section 132 enabling the making of regulations came into operation on 1 August 1973. • Section 44 (Accounts and statements to be lodged with the Commissioner by authorised companies) and section 109 (Transitional provisions relating to

accounts and statements under Part IV) came into operation on 23 November 1973. • Minor amendments to sections 3, 6 and 13 came into operation on 31 December 1973 as a result of the Statute Law Revision Act No. 216 of 1973.

This legislation also had the effect of changing the short title of the principal Act to the Insurance Acts 1973. • Section 113 (Person not to act as agent for unauthorised person) remains unproclaimed pending possible amendment.

As a result of the commencement of operative sections of the Act, particularly sections 21 and 108, from 1 August 1974 companies wishing to continue to carry on insurance business in Australia were required to make an application to the Commissioner for an authority to carry on insurance business by 1 November 1974.

Companies which had been carrying on such business before 1 August 1974 and which lodged a valid application by 1 November 1974 are, in terms of section 108, not

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guilty of an offence against section 21 by continuing to carry on insurance business unless and until refused an authority.

Effect of Commencement of the Act

Up to 30 June 1975, 264 companies had lodged applications, including 10 which had not been carrying on insurance business as at 1 August 1974 (see Appendix A). A further 220 companies or firms which were subject to the provisions of the Insurance (Deposits) A ct 1932-73 (‘Deposits Act’) prior to 1 August 1974 did not apply for an

authority.

Even an insurer which ceases to accept any new business is carrying on insurance business as long as that insurer continues to have liabilities to policy holders. However, the Act (section 107) provides that an insurer is not guilty of an offence against section 21 if it only carries on insurance business for the purpose of discharging its liabilities. On the other hand, with the objective of protecting the interests o f policy holders of those insurers which did not apply for, or which are refused, an authority, the Act (sections 105 and 106) requires the Commissioner to

supervise the arrangements of such insurers for ceasing insurance business.

By 30 June 1975 considerable progress had been made in phasing out the operations of the non-applicants, and examination of proposals by companies which have decided to withdraw from the general insurance market is continuing. Information obtained concerning non-applicant companies has established that some 60 companies which fall into this category are related to applicant companies in terms of section 4 of the Act. The phasing out of these companies is an integral part of the rationalisation of their operations induced by the introduction of the Act. It is expected that this rationalisation will be carried out in a way which will ensure protection of all policy holders. However the proposals of these companies for the winding down of their insurance operations are being examined with a view to protecting the best interests of the public, as are the proposals of all other companies withdrawing from the insurance market. In most cases, satisfactory arrangements have already been made. Several companies have completely extinguished their liabilities to policy holders which has enabled the securities lodged with the Treasurer under the ‘Deposits Act’ to be released.

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It has been established that some companies, subject to the provisions of the ‘Deposits Act’, are not in fact conducting insurance business as defined in the Act. In some cases companies are operating solely as insurance brokers without themselves accepting liability under policies of insurance, and in other cases, legal opinion is that certain activities do not constitute the carrying on of insurance business in terms of the Act.

Since 1 August 1974 a number of insurance companies have been ordered into liquidation by the courts under the provisions of the Companies Acts of the various States. Negotiations are proceeding with the respective liquidators to arrange a distribution to policyholder creditors of the securities held under the ‘Deposits Act’.

Liquidations

As at 30 June 1975, sixteen companies subject to the ‘Deposits Act’ were in the course of being wound up. Of this number, three have been ordered into liquidation

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by the courts since the commencement of the operative provisions of the Act. Some details of these liquidations are shown in the table below.

COMPANIES IN LIQUIDATION AS AT 30 JUNE 1975

Company Name

Date Placed in Liquida­ tion

Liquidator

E stim ated Assets

Estim ated Liabil­ ities

Estim ated Deficiency (Surplus)

$ $ $

Seven Seas Insurance Co L t d .............................. 22. 4.63 D. D. Davidson 802 654 833 988 31 334

Cambridge Insurance Co Pty L t d ...................... 28. 7.70 R. L. Pegler * * *

Bonus Benefits Insurances (Under­ writers) Pty Ltd . . . . 20.10.70 R. L. Pegler * * *

Travellers Insurance Corporation Ltd . . . . 1.12.70 R. M. Evans * * *

Riverina Insurance Co L t d .............................. 17.12.70 J. E. W alker 553 600 866 330 312 730

Motor M arine & General Insurance Co L t d .............................. 1. 6.71 I. B. Gray

R. V. Hillman L. B. Hunter

31 200 172 859 141 659

The Country T raders’ M utual Insurance Ltd · 15. 6.71 C. K. Roberts * * *

Vehicle & General Insurance (Aust) Ltd ■ ■ 19. 7.71 P. W. Harvey 1 583 136 2 335 069 751 933

Cosmopolitan Insurance Co L t d .............................. 4.11.71 P. D. George * * *

Lutine Marine & General Insurance Co Pty L t d ...................... 10. 7.72 H, C. Griffin * * *

Silver Self Aid Insurance Co Ltd · · ■ 23. 3.73 B. K. Taylor 348 244 563 296 215 052

General M utual Insurance Co Ltd · · · 24. 5.74 A. M. Horsburgh 994 609 362 448 (632 161)

Motorists Mutual Insurance Co Ltd · · · 24. 5.74 A. M. Horsburgh NIL 1 030 421 1 030 421

Corporate Mortgage Insurance Co Ltd · · · 2. 9.74 J. W. O ’Brien 22 135 109 778 87 643

Northumberland Insurance Co Ltd · ■ · 4.11.74 P. H. C. Commins 1 072 768 5 227 803 4 155 035

Capricorn Insurance Ltd .................................. 27. 4.75 W. J. Wilde

E. G. Harris * * *

* These details are not available for a variety of reasons—the main ones being that proper books of account were not kept or that the directors responsible for the preparation of a Statement of Affairs have failed to do so. It is not the responsibility of the Insurance Commissioner to ensure that these figures are provided.

Preliminary Examination of Applications

During the weeks immediately following receipt of the applications, a preliminary

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examination was undertaken of all applications including the comprehensive finan­ cial accounts and statements. This facilitated subsequent administrative control in­ cluding the establishment of priorities. It also established that the processing of so many companies would be a major task. Although most applicant companies will probably be able to meet the financial requirements of the Act, far fewer companies than had been anticipated appeared, on a preliminary examination, obviously to meet those requirements. No attempt was made at that stage to determine whether reinsurance arrangements were adequate in terms of section 34.

It became obvious from this preparatory survey that, with the staff available, the detailed examination of all companies to the point of determination would extend over a considerable period. Therefore every care is being exercised to process applications in such a way as to reduce, as far as practicable, the risk of loss to policy holders or damage to applicant companies arising from unavoidable delays in completing the examination process. In this connexion the results of the preliminary examination seemed to establish that the full examination of some applications could be deferred with little risk to the interests of policy holders. Moreover, it is relevant that, since all applicant companies carrying on insurance business prior to 1 August

1974 are eligible to continue to do so unless and until refused an authority, some delay in the detailed consideration of a company’s application does not necessarily involve any serious disadvantage to the company. Because companies which were not carrying on insurance business prior to 1 August 1974 cannot commence business until they obtain an authority, some priority is being given to companies in this category.

Authorisation and Exemption Provisions

The Act provides that, while companies which carried on insurance business in Australia before 9 December 1971 may be authorised by the Insurance Commissioner under sections 24, 25 or 26, companies commencing insurance business after 8 December 1971 can only be authorised by the Treasurer under section 23. In the event that the Commissioner decides not to grant an authority he is required, in accordance with section 27, to report accordingly to the Treasurer who may either grant or refuse

an authority under that section.

Under the provisions of section 37, small companies receiving direct premiums of less than $200 000 a year which deal only with their members and/or their employees, or persons engaged in a particular trade, industry or profession, may be exempted by the Treasurer from certain provisions of the Act.

Paragraph 5 (2) (i) provides that a prescribed body, not being a company, may be excluded from the provisions of the Act. There are also provisions which remove certain activities that normally would be insurance business from the operation of the Act.

Detailed Examination of Applications

As at 30 June 1975, of the 484 companies and firms subject to the provisions of the ‘Deposits Act’ prior to 1 August 1974, 264 had applied for an authority or an exemption under the Act, of which 3 had been refused an authority, 7 had withdrawn or indicated an intention to withdraw their applications, and one had been referred to the Treasurer under section 27 and was awaiting a decision. The names of the appli­

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cants concerned are listed in Appendix A, a summary of which is included in the table below.

Classification o f Insurance Organisations as at 30 June 1975

Organisations subject to the operative provisions of the ‘Deposits Act’. 484

This figure was made up by:

233

10

11 3

7

220 484

At the end of June 1975 detailed examination was proceeding in respect of 111 companies; in many cases the examination was well advanced. There are many factors which have been found to delay the finalisation of such examinations. In many cases the information supplied with the application did not fully meet the requirements of the legislation. Moreover, in most cases it has been found that information additional to that specified in the regulations is essential in order to establish that an applicant company meets all the requirements of the Act relating to authorisation, e.g.

particulars of investments, supplementary particulars of reinsurance treaties and financial statements of associated companies. In a high proportion of companies being examined matters have arisen for

decision requiring careful investigation and evaluation. These matters include questions of the admissibility and evaluation of various assets such as investments in a related company (including, for example, the ownership of a life insurance company), share portfolios (both listed and unlisted shares), real estate and other property. The

agreement of the Commissioner of Taxation to make expert valuers on his staff available to carry out a limited number of such valuations is much appreciated and will be of great assistance to this Office. No less important are problems associated with determining liabilities, in

particular provisions for outstanding claims. This problem is recognised world-wide as one of the most important problems facing insurers and supervisory authorities. In many cases a lengthy investigation will be involved before I can be satisfied (as the Act requires) that these provisions are adequate, or alternatively before I can reach a firm

view as to what increase would be necessary to make them adequate. Because of its importance a special section of this Report has been provided for discussion of this issue. Another matter involving important technical and practical issues is the determination of satisfactory provisions for unearned premiums.

(i) bodies corporate which were entitled to carry on insurance business prior to 1 August 1974 and which had applications current under sections 23, 24, 25 and 26; (ii) bodies corporate which had applications current under

section 23 but which were not entitled to carry on insurance business until granted an authority; (iii) insurers which had applied for exemption from some provisions of the Act;

(iv) bodies corporate which had been refused an authority; (v) bodies corporate which had withdrawn or which had indicated an intention to withdraw their applications; (vi) organisations which had not applied for an authority to

carry on insurance business.

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A further cause of delay is the need for my staff to make a detailed study of the complex reinsurance arrangements of all applicants. In all these areas principles and guidelines have to be established and techniques and procedures developed.

In most cases it is necessary to obtain up-dated information from a company because of such things as a fall in equity values or the possibility of poor underwriting results (e.g. Darwin cyclone losses since the close of the company’s last financial year). Increasing duplication of work will be inevitable with the passage of time as a result of these factors.

Every effort has been made to expedite completion of company examinations by discussions with senior representatives of companies, and where appropriate, visits by examining officers to the head office of the company concerned. However, these activities too are time-consuming.

A key factor in limiting progress has been the insufficient number of staff available. This matter is referred to in more detail under the heading ‘Staff and Organisation’.

Lloyd’s

One consequence of the Act is that only corporate bodies and Lloyd’s underwriters are now eligible to carry on insurance business in Australia. Lloyd’s underwriters do not form a single body corporate but consist of some 289 separate syndicates of individuals, each member of which is liable in respect of the risks underwritten by him

up to the full extent of his private fortune. Lloyd’s have contributed significantly to the Australian insurance market over many years. Adequate arrangements have been made in the Act for the protection of Australian holders of Lloyd’s policies. In addition to the elaborate system developed by Lloyd’s itself for the protection of their policy holders generally, special protection

is afforded Australian policy holders by virtue of Part VII of the Act. Part VII, and the related Schedule to the Act, requires that Lloyd’s deposit with the Treasurer securities to a market value of not less than $500 000 and lodge a covenant by a bank or banks. The value of the covenant is not to be less than the premium income in Australia of Lloyd’s underwriters in the previous financial year as defined in paragraph 10 of the Schedule to the Act. Lloyd’s have complied fully with the above requirements.

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PREMIUM INCOME DERIVED BY LLOYD’S IN AUSTRALIA

Premium Income fa r period ended December .

Class o f Business _____________________________ Variation op 1973

1973 1974

SA’000 SA’OOO SA'OOO %

Marine Hull and Liability 4 726 5 599 873 18.48

Aviation Hull and Liability 1 766 1 634 (132) (7.51)

Transport 5 259 6 666 1 407 26.75

Motor 5 301 7 364 2 063 38.94

Pecuniary Loss 264 265 1 .20

Personal Accident 1 079 1 369 290 26.97

Property 4 932 6 686 1 754 35.55

Liability 5 442 9 730 4 288 78.79

Life — — — —

Total 28 769 39 313 10 544 36.65

(a) For the purposes of the above table, prem ium income is as defined in paragraph 10 of the Schedule to the Act. In effect this means premiums received or receivable during the year less the sum of: (i) premiums in respect of a previous year; (ii) premium s refunded or refundable in respect of the current year; (iii) commissions, fire brigade charges, stam p duty in respect of the current year; and

(iv) tax payable in accordance with Division 15 of P art III of the Income Tax Assessment A c t 1936­ 1972. (b) The classes of business described above are not those prescribed in the regulations under the Act but those th at comply with classifications approved by the Organization for Economic Co-operation and

Development. (c) Total premium receipts in Australia of Lloyd’s have increased every year since 1948.

Lloyd’s Australian business is integrated in London with its world-wide business, and because Lloyd’s is not a single insurer but 289 separate syndicates, the Act recognises the need for a special arrangement regarding statistics from Lloyd’s. Thus paragraph 3 of the Schedule to the Act exempts Lloyd’s from lodging certain returns but provides that other statements and accounts furnished shall correspond, as far as

practicable, to those furnished by authorised companies. Following negotiations in late 1973 Lloyd’s agreed to introduce during 1974 changes in their computer program to enable better statistical information to be provided concerning their Australian operations. Because the new computer program

only commenced to operate effectively late in 1974 some figures will first become available in respect of 1975. Moreover, because of Lloyd’s traditional accounting system it will be several years before the full range of statistics now envisaged become available.

Interpretation of the Act

A wide range of questions involving interpretation of the Act have been raised by my Office and by the managements of insurance companies and their professional advisers. During the period under review, written enquiries involving legal interpretations have totalled 112, of which 92 were referred to the Attorney-General’s Department

after consideration by my officers. In addition, there have been frequent verbal enquiries. The assistance and co-operation of the Attorney-General’s Department has

7

been much appreciated. In the course of administering the Act some specific aspects of the legislation have come to my notice which appear to warrant consideration as possibly requiring amendment. These have been drawn to the attention of the Treasury.

In particular the restrictions imposed by section 126 appear to be so inflexible as to prevent either myself or the Treasurer from making public the names of companies which have been refused an authority to carry on insurance business, except under the protection of parliamentary privilege. The only means of disclosure at present open to the Commissioner is in his Annual Report. In view of the importance, for the protection of the public, during the present transitional period, of prompt disclosure of refusal to grant an authority, the present situation is clearly unsatisfactory.

The Act provides for the establishment of an Insurance Tribunal to hear appeals from insurers against decisions by the Treasurer or myself. The appeals are conducted in private. Subject to the Act and the regulations, the procedure of the Tribunal is within the Tribunal’s discretion and it is not bound by the rules of evidence.

Questions of law may be referred by the Tribunal to the Commonwealth Industrial Court. The Treasurer or the Commissioner, as the case may be, must give effect to the decisions of the Tribunal. The establishment of the Tribunal had not been completed at 30 June 1975.

Decisions against which appeals may be made are being taken from time to time. It is therefore desirable that the Tribunal be established in the near future.

Insurance (Deposits) Act 1932-1973

Before an authority to carry on insurance business is granted, the Act requires that the Treasurer or Commissioner, as the case may be, must be satisfied that the company is in compliance with thcInsurance (Deposits) Act 1932-1973 (formerly the Insurance A ct 1932-1966) with respect to the lodging of deposits with the Treasurer.

On commencement of the Insurance Acts 1973, an amendment was made to the ‘Deposits Act’ which provides for the cessation of the deposit requirements two years after 1 August 1974 or such longer period, not exceeding five years from that date, as may be prescribed. A date has not yet been prescribed for cessation; however, the

added protection afforded to policy owners by the ‘Deposits Act’ may be required for the maximum period of five years. Insurance brokers receiving premiums, proposals or requests in respect of insurance business for transmission outside Australia fall within the deposit provisions of the ‘Deposits Act’ in addition to those companies which underwrite risks for their own account.

Currently, some 484 companies and insurance brokers are subject to the provisions of the ‘Deposits Act’, having deposited with the Treasurer securities to a total face value of $41 766 985 as at 30 June 1975, consisting of the securities detailed below.

Tribunal

Australian Government Securities Semi-Government Securities Fixed Deposits

$22 032 347.79 $ 1 398 489.00 $ 1 467 301.94

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Titles and Mortgages Bank Guarantees United Kingdom Government Securities Other

Total

$ 1 441 300.00 $12 372 560.00 $ 2 624 9S6.67

$ 430 000.00

$41 766 985.40

The computation of the deposit required to be lodged with the Treasurer is made by reference to ratios stipulated in the ‘Deposits Act’. There is provision for the amount of the deposit required to be reassessed each year in certain circumstances according to changes in the level of premium income of the firm concerned.

Moreover, should the securities lodged decrease in value with fluctuations in the securities market, the ‘Deposits Act’ provides for lodgement of further securities sufficient to raise the value of the deposit to that required. My Office assumed responsibility for the administration of the ‘Deposits Act’ from Treasury in June 1974. However, no specific staff establishment was provided within my Office for this task as at 30 June 1975. Pending the appointment of

members of the Insurance Tribunal, the Tribunal staff (two officers) has been used for the administration of the ‘Deposits Act’. However, this staff has not been sufficient to enable all deposits to be reviewed in accordance with the legislation. Once the

Tribunal becomes operational all work on the ‘Deposits Act’ will have to cease unless staff is provided for its administration. This would be unfortunate, since the ‘Deposits Act’ does provide useful protection to policy holders of companies which have not

received an authority under the Insurance Acts 1973—particularly of those companies which have not made application.

Statistics on the Industry

The returns lodged by companies with their applications made available data which, appropriately processed, has provided considerably more comprehensive statistical information in respect of the Australian insurance industry than has been previously available.

Eventually, the intention is to process the statistical data becoming available through the operation of the Act on the Treasury computer. However, owing to restraints imposed in 1974 on the recruitment of additional staff, no staff became available to begin preparing an appropriate program until April 1975. Moreover, there was no staff available in the Office of the Insurance Commissioner to enable any

significant processing of this material manually. I am accordingly most appreciative of the action taken by the Australian Bureau of Statistics in aggregating manually selected items of information taken from the returns. Statistics derived from information so compiled by the staff of the Bureau are attached in Tables 1 to 26 of

Appendix B. It must be emphasised that these statistics are published on my responsibility as Insurance Commissioner; they do not carry the imprimatur of the Commonwealth Statistician. The results obtained in aggregating data from forms 1, 2, 3, 5, 7 and 8 are only as

accurate as the original data supplied by applicant companies. During the course of this aggregation it has become obvious that some of the basic edits detailed in the Explanatory Notes to the Forms, which were circulated to applicant companies prior to their making application, have not always been effectively applied. For this reason

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there are some discrepancies between totals shown in these aggregations and those appearing in the mainly analytical tables. The above-mentioned statistical tables have been compiled from information contained in the statutory returns submitted by insurers with their applications for authority to carry on insurance business and which relates to financial years ending between 1 July 1973 and 30 June 1974. The statistics do not cover all insurance business during the year under review since some insurers carrying on business prior to proclamation of the Act have not sought authority and consequently were not required to lodge most of the prescribed returns. The majority of the relevant insurers in this category consist of companies within groups of companies which have rationalised their insurance activities with a consequent reduction in the number of companies in the group applying for authorisation.

While the absence of information from these companies has the effect of understating somewhat the industry aggregates shown in Tables 1-26, it is felt that this non-inclusion in the other, mainly analytical, tables has had little effect on the results. For a number of reasons, including amendments which may be made as a result of the detailed examination of the returns of companies in accordance with the provisions of the Act, these statistics should be regarded as preliminary. It is intended to publish revised figures in the 1976 Annual Report.

Where relevant, the tables also incorporate statistics from insurers which are excluded from the operation of the Act. The most important of these are the government insurance offices of the States and the Motor Vehicle Insurance Trust of Western Australia. These bodies have undertaken to provide a number of statistical returns in respect of the year ended 30 June 1974 and subsequent years. Their co­

operation is most valuable in presenting a more comprehensive picture of the insurance industry in Australia. Figures for these bodies are included in tables appropriately designated in Appendix B. Premium income as defined in the Act has been interpreted to include amounts receivable by way of stamp duty. However the practice of the industry has been to exclude stamp duty from premium income. Accordingly, to increase the practical value of the statistics, stamp duty has been excluded from all statistical tables in this

report. Some key information selected from the tables in Appendix B is summarised in the remainder of this section together with some analytical material.

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$’000 $ ’000

315 676 73 118

28 860 11 206

M otor Compulsory j?m pi0y ers· p u blic Vehicle Liability Liability

Total

$’000 $’000 $’000 $’000

265 611 37 418 122 743 1 195 306

27 579 8 190 10 762 203 188

286 816 61 912 238 032 29 228 111 981 992 118

13 604 2 196 17 794 1 141 8 567 57 317

273 212 59 716

207 173 79 349

(19 633)

9 336

(28 969)

220 238 28 087 103 414

202 056 19 288 48 496

18 182 8 799

61 538 11 432

54 918

43 373

(43 356) (2 633) 11 545

934 801

679 496

255 305

328 040

(72 735)

The salient point in this table is the very heavy overall underwriting loss of almost $73 million recorded by the private sector of the industry in 1973-74, arising mainly from severe underwriting losses in the two main liability classes, i.e., Employers’ Liability ($43,356 million) and Compulsory Third Party ($28,969 million).

The figures show that, in these two classes, for each dollar of earned premiums, claims and expenses absorbed Compulsory Third Party $1.49 Employers’ Liability $1.20

It is apparent that premiums have not been adequate in these classes. This situation has been aggravated, in the case of Employers’ Liability business, by the comparatively widespread practice over the relevant period of giving substantial discounts not justified by the claims experience.

The situation is even more unsatisfactory when it is considered that these two classes accounted for 30 per cent of all premium earned by the private sector of the industry in Australia. Profits were recorded only in Houseowners/Householders, Marine and O ther’ (a grouping which comprises all general insurance not included in any other class) but the losses in the liability classes, and to a lesser extent in Motor Vehicle, dwarfed the results in other classes.

It should be noted in this and related tables that the allocation of expenses amongst classes in somewhat arbitrary, since practices vary between companies and my Office has not yet laid down guidelines in this regard.

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UNDERWRITING ACCOUNT— BY CLASS OF BUSINESS— IN AUSTRALIA PUBLIC SECTOR— 1973-74

Compulsory Third Party

Employers Public Liability Liability Other Total

$'000 $'000 $'000 $'000 $'000 $’000

Direct Premiums (less returned premiums and rebates) ......................... 18 370 18 066 596 3 471 58 468 136 753

Less: Net effect of inward and outward reinsurance premiums . . . . 4 526 1 257 563 698 304 1 005

Premium income during the financial year ........................................................... 13 844 16 809 33 2 773 58 164 135 748

Less: Net increase in premium p ro v is io n s ................................................... 1 412 1 330 (42) 170 3413 11 339

$'000 $'000 $’000 $'000

111 354 1 880 7 753 356 711

582 185 1 155 10 275

110 772 1 695 6 598 346 436

4 369 74 1 225 23 290

Premiums earned during the financial year ........................................................... 12 432 15 479 75 2 603 54 751 124 409 106 403 1 621 5 373 323 146

Less: Claims incurred during the financial y e a r ...................................... 5 088 8 266 87 1 953 46 199 183 742 121 895 1 518 2 153 370 901

7 344 7 213 (12) 650 8 552 (59 333) (15 492) 103 3 220 (47 755)

Less: Expenses incurred during the financial year in respect of insu­ rance underwriting business ................. 4 381 5 248 (13) 834 10 964 4 506 7 254 192 2 428 35 794

Underwriting Surplus (Deficit) ................. 2 963 1965 1 (184) (2412) (63 839) (22 746) (89) 792 (83 549)

The most notable feature of this table is that, in the public sector also, the losses incurred in Compulsory Third Party ($63,839 million) and Employers’ Liability ($22,746 million) dominate the total underwriting results. In each of these classes, the underwriting deficits sustained in the public sector bore a similar relationship to the earned premiums as was experienced in the private sector.

Moderate profits were recorded in Fire, Houseowners/Householders, Contractors and ‘Other’. As in the private sector, an underwriting loss was recorded for Motor Vehicle. It will be seen from information contained in the section of this report dealing with the effect on the insurance industry of the Queensland floods in early 1974 that the net cost of those floods to the Australian industry, including State Government Insurance Offices, was $36 million and that $34 million of this was in classes other than Employers’ Liability, Compulsory Third Party and Motor Vehicle. Despite this severe loss the industry recorded a small underwriting profit in these other classes as a whole. This underlines the serious nature of the losses in the liability classes. The 1974 Queensland floods are believed to have cost the Australian industry more than any prior single disaster. Yet in 1973-74 the underwriting loss arising from Employers’ Liability ($66 million) was almost double the cost of the Queensland floods and losses in respect of Compulsory Third Party business ($92 million) nearly three times.

INDUSTRY PROFITABILITY-—! 973-74

Business in Business outside Business in Australia Australia Australia

Private Sector Private Sector Public Sector

$'000 $’000 $'000

Net underwriting surplus ( d e f i c i t ) .................

Plus: Other insurance business income ■ ■ (72 735) (1 889) (83 549)

(investment income e t c . ) ......................... ■ · 88 548 3 776 47 452

15813 1 887 (36 097)

Less: Other insurance business expenses ■ · • ■ 14 464 1 022 442

Net Profit (loss) from insurance business ■ ■ ■ · 1 349 865 (36 539)

Plus: Non-insurance business income · · · ■ ■ 50 820 1 567 —

52 169 2 432 (36 539)

Less: Non-insurance business expenses · · · ■ ■ 35 126 1 498 —

Net Profit (loss) before t a x a t i o n ..................... • · 17 043 934 (36 539)

Less: Provision for t a x a t i o n .............................. ■ ■ 14 788 658 *

Net profit after t a x a t i o n .................................. ■ ■ 2 255 276 *

* In the interests of confidentiality these figures have been deleted as only one organisation in the public sector has made provision for taxation in respect of this year.

A dominant feature of this table (which appears in greater detail as Table 5 in Appendix B) is the large underwriting losses suffered by the industry in the year under review.

14

Private Sector—Business in Australia

Companies operating in Australia incurred a net underwriting deficit of $72,735 million which is equivalent to 7.8 per cent of premiums earned on Australian operations. This loss was offset by the net return from interest and dividends etc. of $74,084 million ($88,548 million gross less $14,464 million expenses) resulting in a net profit from insurance business of $1,349 million. For an industry with available net assets of more than $570 million this was a most unsatisfactory result. Non-insurance

business yielded net income of $15,694 million leaving a net profit of $17,043 million before tax and $2,255 million after tax.

In short, in 1973-74 the industry incurred heavy underwriting losses in Australia which were just barely offset by investment income. The industry’s profit came mainly from non-insurance business which accounted for 92 per cent of the industry’s net profit before taxation.

It must also be stressed that the above figures have been calculated on a basis incorporating the provisions for outstanding claims as estimated by companies. However, as pointed out elsewhere in this report, I am of the opinion that some companies are underprovided.

The position could well be that the creation of adequate provisions, even in respect only of the current year’s operations, would have resulted in underwriting losses more than absorbing the investment and non-insurance income.

There are manifest dangers to the industry and to policy holders in a situation where the industry is relying on investment income to fund underwriting losses, particularly in times of rapid changes in the value of money when there is a possibility of a decline in the value of some investments. Moreover, this situation does not provide a basis upon which the industry can develop a capacity to cope with the future

rapid expansion of premium income, and in claims, which will inevitably arise from price inflation and economic growth.

Private Sector—Business outside Australia The most notable feature of the operating results outside Australia of Australian incorporated companies was that, although there was an underwriting loss of $1,889 million, this was more than offset by the investment income giving a net profit from

insurance business of $0,865 million which.was a considerably better return relative to the return on premium earned on business written in Australia.

Public Sector—Business inside Australia In the public sector, the underwriting deficit of $83,549 million was only partially offset by the net investment income of $47.01 million. There was no recorded income or expenses in respect of non-insurance business.

15

ASSETS (at book values)—Private Sector— In Australia— 1973-74

Percentage

Precentage o f Asset

Item $'000 of Total Category held

Assets in Related

Bodies Corporate

Fixed Assets ..................................................................... 221 192 10.53 0.0

Public Securities ............................................................ 115 875 5.52 0.0

S h a r e s .................................................................... ' . . . 539 537 25.69 29.3

Debentures and N o te s........................................................ 212 549 10.12 8.5

Other Investments 495 199 23.58 21.6

Current Assets ................................................................ 513 976 24.49 29.1

I n t a n g i b l e s ......................................................................... 1 473 0.07 0.5

Total ......................................................................... 2 099 801 100.00

LIABILITIES (at book values)—Private Sector—-In Australia— 1973-74

hem $'000

Percentage o f Total Liabilities

Long Term Liabilities .................................. • · · · 32 588 2.13

Current L ia b ilitie s ........................................... • . . · 368 583 24.10

Premium Provisions ...................................... ■ ■ ■ . 430 716 28.17

Outstanding Oaim s Provisions ................. ■ ■ ■ . 697 210 45.60

Total ........................................................ ■ · ■ · 1 529 097 100.00

The above tables summarise the assets and liabilities in Australia (at book values) of the private sector. The information is shown in more detail in Tables 7 and 11 in Appendix B. It should be noted that this report contains no information on market values. This and other tables are based on book values only. The Act requires market values to be

supplied in respect of certain items and it is expected that these will be shown in subsequent years. To facilitate analysis, the life insurance statutory fund assets and liabilities have been deleted from the tables. These balancing items are concerned with life insurance activities undertaken by general insurance companies and the assets are not available in the ordinary course of their general insurance business. Table 11 in Appendix B shows that such assets account for 47.8 per cent of the total assets in Australia of the private sector. After removal of the statutory funds, assets in Australia of the private

sector total $2099.801 million and liabilities $1529.097 million. From the assets table it can be seen that the largest single item is shares at $539,537 million or 25.69 per cent of total assets. Listed shares at $344.74 million comprise 16.42 per cent of assets and total listed investments (shares and debentures) comprise $437,962 million or 20.86 per cent of total assets (see Table 11 of Appendix

B). The effect on the industry of fluctuations in the equity and security markets is obvious. Current assets at $513,976 million account for 24.48 per cent of total assets, the largest single item being outstanding premiums at $191.787 million.

16

The industry’s investment in fixed assets ($221,192 million) is comparatively small, accounting for only 10.53 per cent. Total shares and debentures of, and amounts owing by, related companies was substantial at $432.55 million or 20.6 per cent of total assets (see Table 11 of Appen­ dix B).

The liabilities table illustrates the importance of amounts set aside as provisions for outstanding claims. It can be seen that these constitute by far the largest group of liabilities, accounting for 45.2 per cent of the total. When premium provisions are added they together account for 73.8 per cent of liabilities.

PREMIUMS AND CLAIMS— Business in Australia— 1973-74

Premiums Claims

Private Public Private Public

Sector Sector Sector Sector

$’000 $’000 $’000 $’000

Direct Premiums · · 1 195 306 356 711 Direct claims paid (in­

cluding inward facultative reinsurance claims)

621 960 214 171

LESS: net effect of pre- 203 188 10 275 LESS: n et effect of 119 491 6 721

miums in respect of in- claim s paid in res-

ward and outward re- pect o f inw ard and

insurance outward reinsurance

Net Premium income 992 118 346 436 Net claims paid . . . . 502 469 207 450

LESS: net increase in 57 317 23 290 PLUS: net increase in 177 027 .163 451

unearned premium pro- provision for outstanding

vision claim s (in clu d in g p ro ­

visions for claims in­

curred but not reported)

Earned premiums ■ 934 801 323 146 Claims incurred . . . . 679 496 370 901

The table shows premiums and claims for the private and public sectors tor business in Australia. The information is dissected in more detail in Tables 15, 17, 19 and 21 in Appendix B. In the private sector the reinsurance arrangements had a marginally beneficial effect on the ratios of claims paid by Australian insurers to their premium income,

reducing the ratio from 52 per cent to 50.6 per cent. It must be borne in mind that figures for a single year are of limited value, especially in times of inflation, because of the time lag between the receipt of premiums and the payment of claims. Moreover, it is probable that not all commission received or receivable by ceding companies from

reinsurers will have been brought into account in calculating outward reinsurance premiums. This too could distort the figures. The public sector reinsured to a much lesser degree.

17

UN DERW RITING EXPENSES— Business in Australia— Private Sector— 1973-74

A m ount

Percentage to Earned Premium

$’000 %

Net commission, brokerage and charges paid and payable . . . .

Fire brigade, hospital and statutory 82 701 8.85

charges ..................................

Taxes (other than income tax and 30 409 3.25

stamp d u t y ) ...................................... 4 277 0.46

M anagem ent e x p e n s e s ................. 200 333 21.43

Other underwriting expenses · ■ 10 320 1.10

Total expenses 328 040 35.09

The table shows underwriting expenses incurred by the private sector on business in Australia. It is analysed in more detail in Table 23 in Appendix B. The percentage to earned premium are overall figures only. They will, of course, vary widely between classes, and in fact range from 15.6 per cent for Compulsory

Third Party to 53.9 per cent for Fire.

PLACE OF INCORPORATION AND NUMBER OF BODIES CORPORATE CARRYING ON INSURANCE BUSINESS IN AUSTRALIA AS AT 30 JUNE 1975

Country o f Incorporation

Direct Writing Companies

Reinsurers

General General General General

only and Life only and Life

Total

A u s tr a lia ...................................... 146

United Kingdom ..................... 23

U . S . A . .......................................... 8

Japan .......................................... 7

New Zealand .............................. 2

S w itz e rla n d .................................. 2

Netherlands .............................. 1

Hong K o n g .................................. 3

Denmark .................................. 1

France .......................................... 1

West Germany ......................... . .

Norway ...................................... . .

Sweden ...................................... 1

I t a l y .............................................. . .

Ireland ...................................... 1

India .......................................... . .

Canada ...................................... 2

Total .................................. 198

9 8 4 167

4 ■ 2 29

5 13

7

1 3

2 1 5

1 2

3

1 2

2 3

2 2

2 2

. . . 1

I . . 1

1

1 1 2

14 27 5 244

(a) The above figures exclude the ten companies which have applied for an authority but are not entitled to carry on insurance business until an authority is granted. (b) For the purposes of this table a direct writing company is defined as one which normally derives at least 50 per cent of its premiums as direct premiums.

18

(c) The figures include those companies which have applied for an authority to carry on insurance business, had not withdrawn their application or had an authority refused, and were entitled to carry on insurance business as at 30 June 1975.

(d) The figures do not include insurance organisations established as government or semi-government instrumentalities.

Queensland Hoods

During the period covered by the above statistics, i.e. financial years ended between 1 July 1973 and 30 June 1974, there occurred a major natural disaster—the Queensland floods of January 1974.

The statutory returns lodged by companies with their applications did not provide specific information on the effect on the industry of these floods. In consultation with the industry arrangements were made, however, to obtain special returns from the industry on a voluntary basis. The response was particularly good: of the companies

approached, only seven failed to respond. All State Government Insurance Offices also responded.

Every effort has been made to ensure that the information obtained is as complete as possible. For this reason insurance brokers known to place business overseas were also approached, and, again a good response was received. Information was also obtained from a number of companies, especially those with a significant premium

F a irfie ld — Y ero n g a D istrict, B risb a n e . F lo o d in g in h o m e s, 18 F ebruary, 1974.

19

income in 1973-74, which did not lodge an application. Almost invariably such companies were members of a group of insurance companies. Nevertheless there is certain to be some business, especially business placed directly overseas without the inter­

mediation of an Australian broker, which will not be included in the survey. For most classes of insurance business in the survey, however, any omission is likely to be marginal. The results of the survey are set out in the table below.

COST OF CLAIMS ARISING FROM THE QUEENSLAND FLOODS OF JANUARY AND FEBRUARY 1974

Commercial Domestic

Building Loss Contra c- Buildings

and o f tor’s and

contents Profits Insurance Contents

Special R isks

Sub-total of

Commercial ~ and Domestic

Marine

H ull Cargo

M otor Vehicle Aviation Other Total

Claims

(1) GRO SS CO ST O F

DIRECT CLAIMS · · · Less Gross Claims notified by brokers placing busi­ ness d irectly overseas

with — (2) L loyd's.....................

— (3) O th e r overseas

i n s u r e r s .................

(4) G R O SS C O ST O F

CLAIMS TO THE AUS­ TRALIAN INDUSTRY <4) = (l)-< 2 )-< 3 )

(5) REINSURANCE ' RE­ COVERIES .....................

$’000

51 420

1 519

2 255

47 646

$’000

15 823

227

1 302

14 294

$’000

1 862

103

$’000

4 571

37

$’000

122

$’000

73 798

1 896

3 964

$’000 $’000 $’000 $’000 $’000 $’000

967 9 446 3 557 23 354 88 145

238

204

4 022

8

1 352 4 534 67 938 5 416 3 555

6 158

4 199

354 77 788

44 715 13 503 1 007 2 237 61 498 218 2 912 1 468 175 66 271

COSTS O F CLAIM S ontinued

REINSU RANCE R E ­ C O V E R IE S M A D E

FROM THE AUSTRA­ LIAN INDUSTRY (6) Treaty 4 847 1 230 20 55 2 6 154

(7) Facultative 9 487 2 701 118 114 5 12 425

(8) Unallocated * * * * * 5 172*

27 6 941

101 12 726

5 172

(9) TOTAL RECOVERY WITHIN AUSTRALIA (9) = (6)+(7)+(8) 14 334 3 931 138 169 7 23 751 4 708 248 . . 128 24 839

(10) NET COST TO THE

AUSTRALIAN INDUS­ TRY ..................................

(10) = (4 )-(5 )+ (9 ) 17 265 4 722 483 2 466 83 30 191 311 3 212 2 335 . . 307 36 356

910 6 152 296 28 657

* No apportionment was possible in respect of unallocated reinsurance.

The above table is not restricted to claims in respect of damage in Brisbane alone because the exceptional weather pattern which prevailed during the period was so widespread and involved so many separate meteorological features.

The figures are net of salvage and recoveries (other than rein­ surance recoveries) and include claims both paid and estimated as at 30 June 1975.

Stanley Street, South Brisbane, 18 February, 1974. F lo o d e d areas in B risb a n e s u b u r b o f W e st E n d , 18 F eb ru a ry, 1974.

A similar exercise was carried out by the Insurance Commissioner’s Office in Queensland. Although the statistics provided by this source are also not restricted to damage in Brisbane, they are not complete because they do not include claims under policies issued by insurance companies not carrying on insurance business in

Queensland.

These results are reproduced in the table below with the kind permission of Mr J. G. Rutherford, Queensland Insurance Commissioner.

GENERAL AND MARINE INSURANCE CLAIMS ARISING OUT OF QUEENSLAND W EATHER DURING JANUARY AND FEBRUARY 1974 As at 30 June 1974

Type o f Policy

Gross Claims Paid Gross Claims Estimated as Outstanding

Total

Brisbane Metropolitan Area

Rem ainder o f Queensland

Brisbane-Metropolitan Area

Remainder o f Queensland

$’000 $’000 $’000 $'000 $’000

Fire and Household Storm , T em p est and

Rainwater · · ■ 2 048 479 2 347 463 5 337

Flood ................. 21 356 1 186 23 442 2 454 48 438

Loss of Profits ■ · ■ Storm , T em pest and

Rainwater . . . 11 1 122 12 146

Flood ................. 1 893 608 7 667 1 273 11 441

Motor Vehicle · · 1 742 376 1 413 261 3 792

Marine ................. 2 821 126 1 566 25 4 538

O t h e r ..................... 568 324 781 207 1 880

Total . . . . 30 439 3 100 37 338 4 695 75 572

23

Darwin: Cyclone Tracy

Because of the magnitude of the natural disaster involved in the devastation caused at Darwin on 25 December 1974 by cyclone Tracy it inevitably had a major impact on the Australian insurance industry—both immediate and longer term.

.[I*N

_ .. ■«

Ο

I F t f i l i

ν'

- - v

J * ,

W l " ■

' * \ v

1 .·- iw·'

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J iL' ■ - * «*■* . ' :■ ' it * -I — " *v v-, . -

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• * ’5 ·»»Î¹·.·.. ,· -

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s 3 s £ ' * - •'*■1

V iew fro m th e w a te r to w e r in th e D a r w in s u b u r b o fW a g a m a n , 2 3 January, 1975.

Various estimates have been made of the cost to the insurance industry of cyclone j Tracy and of the net cost to the Australian industry after reinsurance recoveries from J overseas. The industry, however, readily co-operated in the planning of a survey Ί designed to give more reliable data. It should be noted that this survey was confined to i | damage to property and excluded all liability classes of business such as Compulsory Third Party, Employer’s Liability, Public Liability and Loan, Mortgage and Lease. I

Like the Queensland floods survey, this project also encompassed brokers placing I business overseas, State Government Insurance Offices and some companies which j have since ceased insurance business. Again the response from both insurance i companies and insurance brokers has been excellent, only seven insurance companies : failing to respond. Thus, although it is not practicable to ascertain every last claim, the results of this survey are believed to give substantially complete figures. It must be borne in mind, however, that insurers may not yet be in a position to determine

24

reliably either their gross claims arising from cyclone Tracy or their reinsurance recoveries. It will, therefore, be necessary to produce up-dated figures. The results of the survey are set out in the table on the next page.

25

COSTS OF CLAIMS ARISING FROM CYCLONE TRACY, DARWIN, 25 DECEMBER 1974

Commercial Domestic Sub-total Marine

----------------------------------- -------------------------- o f ---------------

Buildings Loss Contrac- Buildings Commercial M otor Plate Total

and or tor’s and Special and H ull Cargo Vehicles Aviation Glass Other Claims

Contents Profit Insurance Contents R isks Domestic

$’000 $’000

(1) GROSS COST OF DIRECT CLAIMS .................................. 59 985 6 703

Less Gross Claims notified by b ro k e rs p lac in g business

directly overseas with —(2) Lloyd's .......................... 773 57

(3) Other overseas insurers .............................. 574 173

$’000 $’000 $'000 $ O00 $’000

10 172 124 739 1 134 202 733 2 523

- 184 — 1014 9

— — — 747 3

$’000 $’000 $’000 $’000 $’000 $'000

644 9 118 757 142 1 597 217 514

243 22 258 — 1 1 547

21 2 773

(4) GROSS COST OF CLAIMS TO THE AUSTRALIAN IN­ DUSTRY (4) = ( l > - ( 2 ) - < 3 ) ..................... 58 638 6 473 10 172 124 555 1 134 200 972 2 511 380 9 096 497 142 1 596 215 194

REINSURANCE RECOVERIES (5) P ro p o rtio n a l................. . . 24 049 2 549 5 244 23 750 61 55 653 1 394 1 044

(6) Non-Proportional . . . . 4 510 740 896 15 578 24 21 748 38 34

(7) Facultative ................. . . 5 301 926 1 014 545 7 7 793 57 27

(8) C a t a s t r o p h e ................. . . 19 159 1 590 2 382 65 620 402 89 153 92 30

87

1 039 17

5 930

219 16

29

451 58 864

17 22 905

408 8 302

242 95 447

(9) TOTAL REINSURANCE RE­ COVERIES (9 )= (5 )+ (6) + (7) + (8) . . . . 53 019 5805 9536 105493 494 174 347 1 581 1 135 7073 219 45 1 118 185 518

C O S T S O F C L A IM S—continued

REINSURANCE RECOVERIES M A DE FRO M T H E A U S­

T R A L I A N I N D U S T R Y (10) T r e a t y ..................... . . . 3 985 1 104 3 254 5 039 24 13 406 180 54

(11) Facultative . . . . . . . 2 889 559 219 538 6 4 211 85 1 003

(12) Unallocated . . . * * * * * 14 467* — —

579 2

119 202 14 540

2 5 303

— 14 467

(13) TOTAL RECOVERY W ITH­ IN AUSTRALIA (13) = (10) + (11) + (12) . . . . 6 874 1 663 3 473 5 577 30 32 084 265 1 057 581 119 — 204 34 310

(14) NET COST TO THE AUS­ TRALIAN INDUSTRY (14)= (4) -(9)4- (13) ................. 12 493 2 331 4 109 24 639 670 58 709* .1 195 302 2 604 397 97 682 63 986

(15) N U MB E R OF D IR E C T

C L A I M S ...................................... 2 564 372 101 10 068 906 14011 463 44 9 135 25 96 227 24 001

* No apportionment was possible in respect of “unallocated" reinsurance

The figures in the above table are net of salvage and recoveries (other than reinsurance recoveries) and include claims both paid and estimated as at 30 June 1975. From this survey it appears that the ultimate cost to the world

insurance industry of cyclone Tracy will exceed $218 million, of which around $215 million will represent direct claims on Australian insurers. However, Australian direct insurers will recover over $185 million, or 86 per cent of their losses, from

reinsurers. After taking account of their recoveries from their retrocessionaires the cost to reinsurance companies established in

Australia will be of the order of $34 million. In brief the aggregate cost to the insurance industry will be of the order of $218 million, of which some $64 million (or 30 per cent) will be met by insurers and reinsurers established in

Australia—$30 million by direct insurers and $34 million by reinsurers. .

The aggregate cost of $218 million is substantially less than earlier estimates suggested, but it nevertheless represents a disaster of world significance and easily the most expensive in Australian history.

View from the water tower in the Darwin suburb ofWagaman, 23 January, 1975.

My impression is that the Australian industry generally was anxious to alleviate financial hardship to policy holders by paying claims as quickly as possible. Because of the magnitude of the disaster and the isolation of Darwin the problems involved were unprecedented in this country.

It will be seen from the above table that there were nearly eleven thousand claims in respect of domestic buildings and/or contents policies alone, more than 9000 motor vehicle claims and several thousand commercial claims, many of considerable complexity. The assessment of claims alone presented a formidable task, aggravated by the evacuation of so many policy holders to other Australian cities.

The Australian industry reacted with commendable speed and efficiency to this emergency. On 27 December, only two days after Tracy, three senior representatives of the industry arrived in Darwin. To facilitate speedy handling of the large number of claims, companies co­ operated to establish a central claims handling organisation available to all companies for the assessment and preliminary clerical handling of all domestic and motor vehicle claims and small commercial losses. Within a few days claims assessors were recruited and sent to Darwin to form a Survey and Assessment Bureau. Clerical personnel were also provided by various companies to form a Central Claims Office.

Claims reported to branches of insurance companies in Darwin and other capital cities were forwarded to the Central Claims Office and thence to the Survey and

28

Assessment Bureau. Different assessors were able to specialise, e.g. some in building claims, some in contents claims and others in motor vehicle claims. Many building claims were settled on the basis of rudimentary assessment reports. Because of the limited repair facilities available in Darwin, motor vehicle claims

presented a particular problem. As claims were presented, advertisements were placed in the Darwin newspaper each day requesting selected claimants to bring their vehicles to a central marshalling point where damage could be assessed. In each case an immediate cash settlement was offered as an alternative to risking a long delay

before repairs could be arranged. This arrangement by the companies continued until the end of May, when a firm of assessors took over responsibility for handling approximately two hundred domestic and one hundred commercial claims still outstanding in the hands of the

Central Claims Office. This co-operative effort appears to have been a considerable success, enabling much faster settlement of claims than would have been possible otherwise. However, the difficulties of physically processing so many claims in a short period

were only one aspect of the problem. Equally severe were difficulties associated with financing such a massive outlay. From the above table it will be seen that direct Australian insurers faced a gross liability of some $215 million, of which they were entitled to recover $185 million from reinsurers. However, as far as the policy holder is

Wrecked aircraft at Darwin Airport, 7 January, 1975.

29

r *F·' ■1111™^ j

! f e C !,S ......

■

^ v : . - V · /.- ■*"

j&jffih' ■ '- ■ ■ ' · ; ί > ■·-"'■

i’-

":v.

■ ■ ■

Capsized fishing trawler at Doctor's Gully near Darwin, 7 January 1975.

concerned, reinsurance is an internal matter between the insurer and its reinsurer. The direct insurer alone is responsible to the policy holder. It is evident, however, that it would have been impossible for Australian insurers to pay out over a short period over $200 million in cash in respect of cyclone Tracy alone without calamitous consequences for the Australian industry. The attitude of reinsurers was, therefore, vital.

Local reinsurers played an important role in giving prompt assistance to the direct insurers. However, the major part of the reinsurance obligations rested with overseas reinsurers. It was fortunate that overseas reinsurers responded immediately and over and above their contractual obligations. They established a fund in Australia to which

substantial sums were remitted in anticipation of lodgment of claims. The first deposit was made within three weeks of the Darwin disaster, thus enabling Australian insurers to pay claims promptly without disruption of the industry. Having regard to the number and diversity of insurance claims arising from the

Darwin disaster, and the complexity of some of the issues involved, it is hardly to be expected that all claims would be settled to the full satisfaction of all policy holders. Judging from what I saw during my own visit to Darwin some weeks after the disaster, and what I have been able to ascertain since, it does appear, however, that over the last critical six months complaints have been relatively few. Certainly much of the

30

credit for this must go to the local insurers and to the prompt support given it by reinsurers both in Australia and overseas. The Department of Repatriation and Compensation also conducted a survey of property losses suffered as a result of cyclone Tracy. That Department has generously agreed to publication of the results in this report. In the Department’s survey it was the population itself rather than the insurance industry which was approached.

Therefore when considering the survey results set out below, sources of error arising from non-contact, refusal to participate and inaccuracies of self-estimates of loss, damage and insurance cover must be borne in mind.

SURVEY OF PROPERTY DAMAGE— CYCLONE TRACY

Damage to:

Reported damage

(1)

Damage in (D reported as uninsured (2)

$ million $ million

Business Premises 44 17

Business equipment, . stock crops and vehicles 22 13

Dwellings 72 22

Contents 40 32

M otor vehicles, boats, caravans, etc. 9 5

Total 187 89

Provisions for Outstanding Claims

As already indicated, the determination of adequate provisions for outstanding claims is one of the most difficult problems facing the insurance industry and insurance supervisory authorities. Past experience suggests that underestimation of provisions for outstanding claims is the single factor most likely to cause the collapse

of insurers writing a significant volume of insurance business. The problem relates mainly to liability classes of insurance and arises from the fact that the payment of claims lags behind the receipt of premiums; consequently unless adequate provisions have been made, current premiums may be used to pay

losses arising from past claims. Even for liability classes most claims are paid within a relatively short period; but in the case of some liability classes of insurance, such as Employer’s Liability and Compulsory Third Party insurance, the time lag before

payment of some claims may extend over a period of years. Although claims of this protracted type are a small proportion of the total claims they account for a high proportion of the total cost. In some circumstances (e.g. paraplegics) payment of claims may continue for twenty or thirty years, or even for a natural life time, after the event giving rise to the claim and may aggregate as much as half a million dollars in

respect of one claimant. Thus an insurer may have very large funds in hand and yet not be financially solvent. The liability of an insurer for outstanding claims at any particular time includes not only claims of which he is aware (i.e. reported claims), but also claims incurred but not reported. The ultimate cost of meeting these claims will depend on future

31

developments which are as yet unknown, including rates of inflation as applied to wages, hospital fees and other costs, changes in relevant State legislation and changes in social attitudes as reflected in relevant decisions of the Courts. It is not possible, therefore, to establish precisely what the provision for outstanding claims should be. On the other hand it is vital that the estimate made of future claims be reasonably adequate.

In Australia the position is aggravated by the practice of State Parliaments in passing legislation with retroactive effect which can substantially increase insurers’ liabilities with respect to their outstanding claims. Fortunately, action has been taken in recent months by the Governments of New South Wales and Victoria separately to reduce substantially any adverse consequences for insurers likely to arise from the retrospective effect of sizeable increases in workers’ compensation benefits recently introduced in those States.

A company which underestimates its future claims will be likely to write business at a loss thinking it is making a profit, and may well increase its volume of business very quickly by offering relatively low rates of premium. Such a company may appear from its published accounts to be operating profitably and not be aware that it is, in fact, riot doing so. Moreover, because of the long time lag between receipt of premiums and payment of claims it is quite possible for an insurer writing liability business to operate unprofitably for many years before becoming unable to pay claims due for payment. This will especially be so if the company is expanding its volume of business and therefore its current cash flow. The history of insurance is studded with such cases. It is because of the harm that can be occasioned to policy holders through such events that the insurance industry is supervised in many countries.

The two methods most commonly used for estimating outstanding claims are the case-by-case method and the statistical,approach. Most insurers in Australia use the case-by-case method, i.e. each claim is examined individually, an estimate made of the likely cost and a total estimate arrived at by aggregation. In times of rapid change including high inflation such as Australia is now experiencing this method is likely to be much less reliable.

In a number of countries insurers are required by the supervisory authorities to submit statistical returns showing their run-off of claims paid over a number of past years, usually analysed according to the year of the event giving rise to the claim. A great deal of research has taken place overseas on the development of these run-off statements and methods of using them as a basis for making reliable estimates. As a result of the Act all authorised companies will in future be required to commence preparing such records but it will be many years before adequate data will emerge from this requirement. Some Australian insurers have been compiling such data, at least for the past few years, as a basis for checking on the adequacy of provisions based on the case-by-case method.

Some indication of the importance of this question is afforded by the magnitude of the provisions actually made in 1973-74 by Australian insurers in respect of insurance business in Australia in the private sector, as set out in the following table.

32

Class o f Business

Provision for O ut­ standing Claims

jEarned Prem iu m

Claims Paid

Provision as Percen tage o f Earned Premium

Provision as Percentage o f Claims ' Paid

F i r e ..........................

$’000

39 236

$’000

120 530

$’000

47 467 32.55 82.66

Houseowners and Householders - . 13 229 84 590 31 093 15.64 42.55

Marine . . . . . 4 983 6 229 2 804 80.00 177.71

Contractors . . . . 16 379 38 785 22 190 42.23 73.81

Motor Vehicle · . 78 842 273 212 189 182 28.86 41.68

Compulsory Third Party * · · 187 911 59 716 37 674 314.67 498.78

Employers’ Liability . . . . 281 170 220 238 120 777 127.67 232.80

Public Liability . . . . 40 421 28 087 8 248 143.91 490.07

Other ..................... 28 618 103 414 43 034 27.67 66.50

Total . . . . 690 789 934 801 502 469 73.90 137.48

It will be noted that in 1973-74, provisions for outstanding claims in respect of Employers’ Liability insurance totalled $281 million. The important question, however, is to what extent, if any, are these provisions inadequate. In 1974 two prominent members of the industry, Mr D. Pettigrew and Mr G. Glencross, estimated

on the basis of 1972-73 statistics that for the industry as a whole these provisions could be inadequate to the extent of $150 million in respect of Employers’ Liability insurance business alone. This estimate was based on an assumption that, at that time, provisions for this class of business should in total equal around 150 per cent of

aggregate written 1972-73 premiums. Although prepared by respected authorities in the industry this estimate was clearly based on very limited evidence, and I believe the authors themselves would not regard it as more than a broad indication of the size of

the problem. As such it was useful. Of the companies which have applied for an authority, 133 recorded earned premiums in respect of Employers’ Liability business in 1973-74. The following table includes a distribution of those companies.according to the ratio of their provisions

for outstanding Employers’ Liability claims to their earned premiums from this class of business. The table also provides an assessment of the additional provisions which would be necessary to bring every company’s ratio up to the arbitrary levels shown. This table demonstrates the wide variation between companies in the extent of their provisions for outstanding claims. The table excludes those insurers which did not record earned premiums for this class of business even though they had previously

carried on such business and consequently had provision for outstanding claims in their accounts.

33

Provisions fo r Outstanding Claims as a percen tage

Companies

Cumulative Earned Premium

Cumulative Provision for Outstanding Claims

Additional Provisions

Premiums

No. % $'000 % $'000 % $'000

less than 10 12 9.0 136 0.1 7 0.0 7

less than 20 14 10.5 1 155 0.5 193 0.1 38

less than 30 15 11.3 1 175 0.5 198 0.1 154

less than 40 21 15.8 4 384 2.0 1 411 0.5 342

less than 50 23 17.3 ' 4 926 2.2 1 639 0.6 825

less than 60 27 20.3 15 332 6.9 7 377 2.6 1 822

less than 70 36 27.1 23 717 10.7 12 943 4.6 3 660

less than 80 39 29.4 27 896 12.6 16215 5.7 6 101

less than 90 45 33.9 34 457 15.6 21 872 7.7 9 140

less than 100 54 41.7 58 303 26.4 44 438 15.7 13 864

less than 110 62 47.7 98 745 44.6 86 300 30.5 22 320

less than 120 70 53.7 126 936 57.4 118 714 42.0 33 609

less than 130 73 56.0 127 615 57.7 119 543 42.3 46 356

less than 140 77 59.0 139 516 63.1 135 563 47.9 59 759

less than 150 87 65.5 135 934 69.6 156 634 55.4 74 267

less than 160 93 70.0 164 230 74.3 172 403 61.0 90 364

less than 170 98 73.8 170 290 77.0 182 660 64.6 106 832

less than 180 102 76.8 184 719 83.5 208 273 73.7 124 222

less than 190 108 80.5 208 734 94.4 252 425 89.3 144 170

less than 200 109 81.3 209 876 94.9 254 628 90.0 165 123

less than 210 111 82.8 ' 214 652 97.1 264 325 93.5 *

less than 220 · 112 83.6 214 652 97.1 264 326 93.5

less than 230 114 85.1 214837 97.1 264 741 93.6

less than 240 115 85.9 216 094 97.7 267 710 94.7

less than 250 116 86.7 219 239 99.1 275 388 97.4

less than 300 120 89.7 219 847- 99.7 279 810 98.9

less than 500 123 92.0 ■ 220 155 99.9 280 192 99.1

* Beyond this level the adequacy of provisions for outstanding claims is not in question so further estimates of additional provisions are irrelevant.

The main reason for ratios of provisions for outstanding claims to earned premiums in excess of 250 per cent is that some companies have sharply reduced the volume of business written for employers’ liability insurance but must still maintain adequate provisions in respect of premiums received in previous years.

It will be seen from the above table that in 1973-74 the private sector of the industry still writing this class of business made provision for outstanding Employers’ Liability claims of $281 million while the aggregate earned premiums of those insurers from that class of business totalled $220 million, giving an average ratio of provisions to earned premiums of 128 per cent. In 1973-74 the State Government

Insurance Offices derived earned premiums from this class of business of $106 million and had relevant provisions at 30 June 1974 of $148 million, a ratio of 139 per cent. Some supervisory authorities overseas have found it appropriate for some purposes to take the standards set by certain key companies as a guide for supervisory purposes. It seems that such an approach may be appropriate in this area in Australia at the present time. My office has collected information from a number of such companies in respect of Employers’ Liability business. Aggregating the 1973-74 figures provided by 24 major companies which have carried out research in this

34

area gives an arithmetic average percentage of provision for outstanding claims to earned premiums for these insurers of 164 per cent and a weighted average of 165 per cent. These insurers are responsible for 20 per cent of the total earned premiums derived by the private sector of the industry in this class. Individual company

percentages for these organisations vary from a low of 128 per cent to a high of 241 per cent. In assessing what provisions are required it is important to distinguish between the aggregate amount of claims which will ultimately be paid and the amount which, if set aside now, will generate sufficient funds to meet all outstanding claims as they

become due for payment. Because of the substantial return which companies are currently able to obtain on moneys invested, the difference can be considerable. Differing practices of companies in this regard would be one factor accounting for differences in their ratios of provisions for outstandingclaims to earned premiums.

The evidence so far available seems to indicate that for the private sector of the industry as a whole in 1973-74 a ratio of provisions for outstanding claims, reported and unreported, to earned premiums of approximately 160 per cent to 170 per cent was probably needed for Employers’ Liability business. If this is so it will be seen from the above table that the aggregate provisions by the private sector of the industry for Employers’ Liability insurance was approximately $100 million less than

necessary. A similar problem exists also in respect of Compulsory Third Party business, although by 30 June 1975 the shortfall is likely to be much less significant for the private sector because the major part of this business is now written by State

Government Insurance Offices and not by private insurers. It must be recognised that there can be any of a number of reasons why the ratio of provisions to earned premiums for a particular company will be greater or less than the average for the industry. An obvious example is where a company has sharply increased (or decreased) the volume of a particular type of business which it writes,

but other factors can affect the issue also. It must be emphasised that the above figures relate to 1973-74 and the situation varies somewhat from year to year. However, the Act requires me to be satisfied, before granting an authority, that the applicant has the requisite excess of assets over liabilities (including provisions for liabilities). The need to ensure that provisions for outstanding claims for Employers’

Liability and Compulsory Third Party business are adequate is reinforced by the possibility that premium income of the private sector from this business (currently some $300 million a year) would cease abruptly and almost completely with the commencement of the National Compensation Scheme.

For this reason, while recognising that there may be reasons why a particular company requires a lower than average level of provisions, in relation to its level of activity, I consider it the responsibility of the company concerned to establish on the basis of acceptable, preferably statistical, evidence the extent of any reduction justified.

Contacts Overseas Since this Office was established, written contact has been effected with insurance supervisory authorities throughout the world. Arrangements have been made in each case for exchange of information, including legislation, published reports, and where

appropriate, technical information.

35

Contacts have also been developed with a number of other agencies, companies and individuals overseas possessing technical expertise in various aspects of general insurance. In late April and early May 1975 I visited London and several other European centres for discussions with insurance supervisory authorities, leading insurers and reinsurers, and reinsurance brokers. It was not practicable at that time to extend the visit to Japan and North America, although there would obviously have been considerable value in doing so. However, Mr Judge, an Assistant Commissioner, was able to attend the Conference of American Insurance Commissioners in Seattle in June. Before returning home he visited several other cities in the United States and

Canada for discussions with supervisory authorities and insurance experts. An organisation pioneering a new area of government supervision, especially one involving such unusual economic and technical problems as the general insurance industry, has clearly much to learn from the experience of long established insurance supervisory authorities operating in other countries. Access to market, technical and statistical information concerning insurance and the insurance industry through contacts in the industry and with other authorities has also been of great value. It is

intended to maintain and develop these valuable contacts. The very7 generous assistance rendered has been greatly appreciated.

Staff Training

My officers and I were most appreciative also of the assistance given by a number of insurance organisations in Australia and their senior officers in the training of personnel of my Office in some of the technical aspects of insurance and of the operations of general insurance companies. I particularly appreciated the time given so generously by top executives personally.

Companies were also most helpful in providing on-the-job training in company head offices. The opportunities afforded myself and some of my officers to participate in seminars and similar functions organised by members of the industry have also enabled us to learn a great deal which is proving of continuing value to us in carrying out our responsibilities in terms of the Act.

In 1974, nine officers sat for examinations conducted by the Australian Insurance Institute. They were successful in three units at the Fellowship level and thirty units at the Associateship level (including five honours passes). This was a particularly pleasing result when it is considered that few of these officers had any previous

knowledge or experience in the operation of the insurance industry prior to joining my Office in late 1973 and early 1974.

Accommodation

Since my appointment in August 1973 my Office has transferred from one temporary set of offices to another on several occasions. At the end of June 1975 we still occupied below standard temporary accommodation in two locations some miles apart. The overcrowded and sub-standard office accommodation has been detri­ mental to work efficiency while the separation of the office in two locations is also not conducive to operational efficiency. I am most concerned that even now there appears

to be no assurance that early action will be taken to remedy this most unsatisfactory situation.

36

Public Register

A Register of Authorised Insurers has been established as required under section 122 of the Act. It will contain copies of the letters of authority sent to companies when they are authorised to carry on insurance business. This, and copies of Underwriting Accounts, Profit and Loss Accounts and Balance Sheets lodged by authorised companies under the provisions of section 44, may be inspected at my Office in the Treasury Building, Parkes, A.C.T., between the hours of 9.00 a.m. and 4.00 p.m. on business days.

Staff and Organisation

An organisation was approved by the Public Service Board around the time of my appointment as Insurance Commissioner to enable a staff of forty to be recruited and a beginning made in implementing the Act. This Organisation consisted of two branches each headed by an Assistant Commissioner. One branch is responsible for authorisations and the other is responsible for investigation, appeal and development functions.

It soon became evident to me that it would not be possible to carry out the authorisations requirements of the Act unless more staff was provided. However at this time (early 1974) the Public Service Board declined to approve more staff on the grounds that there was at that stage no operational experience within the existing establishment on which to assess staff requirements. Staff ceilings imposed in the

latter half of 1974 further restricted the availability of staff. It was not until after applications had been lodged by companies and substantial progress made in the examination of returns of a range of companies that detailed evidence of workload,

based on practical experience, could be produced. By April 1975 it became practicable to provide the Board with the requisite workload evidence in respect of the Authorisations Branch. The Board approved the twelve additional positions sought

on 21 May 1975. Because of the unavoidable delays in filling new positions in accordance with Public Service procedures, none of these new positions were occupied as at 30 June 1975, although officers had been appointed to some of them. As a result, although as

at 30 June 1975 twenty eight company examination positions had been provided by the Public Service Board as the minimum required, only fifteen officers were available at that date for the examination of applications and the voluminous financial and

other data associated with each application. How quickly the initial task of author­ ising or refusing companies which have applied for authorisation can be completed will depend on what staff is available over the next twelve or eighteen months. Any delay will further complicate and extend the task because it will itself involve substan­ tial further delay because of the need to up-date financial returns.

This Office’s main task (i.e. the continuing supervision of authorised insurance companies) cannot be effectively undertaken until the examination of companies initially applying for authorisation has been completed. However, only when this continuing supervision can be implemented will the protection of policy holders

intended by the Act operate effectively. A submission concerning the requirements of the Investigations, Appeals and Development Branch was forwarded to the Board in early June 1975 for the strengthening of staff numbers to administer section 105 of the Act, to carry out

37

investigations of companies (including those under section 105), to carry out essential research (particularly concerning the adequacy of provisions for outstanding claims), to administer various provisions of the Act including those concerning the Society of Lloyd’s, to carry out legal work and to administer the ‘Deposits Act’. .

As already indicated all work on administration of the ‘Deposits Act’ will shortly have to cease unless some provision is made for staff to do this work. Even more serious is the inadequate resources provided within this organisation (one clerk) to carry out investigations in depth concerning the adequacy of provisions for outstanding claims in respect of Employers’ Liability, having in mind that the welfare of a substantial sector of the workforce could be vitally affected.

I wish to express my appreciation to the members of the staff of this Office who have so enthusiastically applied themselves to acquiring in a short period the special knowledge necessary to enable them to carry out various difficult tasks involved in effectively administering the Act and the ‘Deposits Act’. Staff morale has remained high under difficult physical circumstances.

38

APPENDIX A

CLASSIFICATION OF INSURANCE ORGANISATIONS AS AT 30 JUNE, 1975

(i) Bodies Corporate Entitled to Carry on Insurance Business prior to 1 August 1974 with Applications current as at 30 June 1975 under Sections 23, 24, 25 and 26

Accident Insurance Mutual Limited A.C.I. Insurances Pty Ltd Aetna Life of Australia and New Zealand Limited

A.F.G. Insurances Limited A.G.C. (Insurances) Limited Ajax Insurance Company Limited Aktieselskabet det Kj^benhavnske Reassurance-Compagni

(The Copenhagen Reinsurance Company Ltd) Albion Insurance Company Limited Alliance Assurance Company Limited American Home Assurance Company American International Assurance Company, Limited

American Life Insurance Company American Re-insurance Company A.M.P. Fire and General Insurance Company Limited

Anchor Insurance Limited Andrew Weir Insurance Company Limited Ansvar Insurance Company Limited

A.P.A. Fire and General Insurance Company Limited A.P.A. Life Assurance Ltd Associated General Contractors Insurance Company Limited Associated Group Insurance Limited Associated National Insurance Company Limited Assurantie Maatschappij ‘Nieuw Rotterdam’ N.V. The Australian Alliance Assurance Company Australian Associated Motor Insurers Limited Australian Casualty Company Limited The Australian Community Insurance Company Limited

Australian Eagle Insurance Company Limited Australian Equitable Insurance Company Limited Australian General Insurance Company Limited Australian and International Insurances Limited

Australian Mortgage Insurance Corporation Limited Australian Motorists and General Insurance Co Pty Limited Australian Motor Traders Insurance Ltd Australian Mutual Fire Insurance Society Limited

39

Australian Natives’ Association Insurance Company Limited Australian Reinsurance Company Limited

The Baltica-Skandinavia Insurance Company Limited Bankers & Traders’ Insurance Company Limited The Bell Insurance Co Pty Ltd Beneficial Insurance Company Limited

The Bishopsgate Insurance Company Limited Boral Insurance & Fund Management Limited The British America Assurance Company The British and Foreign Marine Insurance Company Limited

British Medical Insurance Company of Victoria Limited British Protection Insurance Company Pty Limited B. T. Insurance Proprietary Limited Bunning Insurance Pty Ltd Burns, Philp and Company Limited

Canberra Insurance Company Proprietary Limited Capmo Insurance Pty Limited Car Owners’ Mutual Insurance Company Limited Catholic Church Insurances Limited The Century Insurance Company Limited C. G. A. Fire & Accident Insurance Company Limited

Chamber of Manufactures Insurance Limited China Underwriters Life & General Insurance Company Limited City Mutual General Insurance Limited C.M.L.Fire and General Insurance Company Limited The Colonial Mutual Fire Insurance Company Limited Combined Insurance Company of America Commercial & Industrial Insurance Limited

Commercial Loan Insurance Corporation Commercial Union Assurance Company of Australia Limited Commonwealth Steamship Insurance Company Proprietary Limited Consolidated Insurances of Australia Limited The Co-operative Insurance Company of Australia Limited The Copenhagen Reinsurance Company (Aust.) Limited Cornhill Insurance Company Limited

Crest Insurance Company of Australia Limited Crusader Insurance Company of Australia Limited Cumis Insurance Society, Inc

The Derwent and Tamar Assurance Company Limited The Dominion Insurance Company of Australia Limited The Dowa Fire and Marine Insurance Company Limited

Eagle Star Insurance Company Limited The Eastern United Assurance Corporation Limited Employers’ Mutual Indemnity Association Limited Equitable Life and General Insurance Company Limited

Excelsior Insurance Pty Limited

40

FAI Insurances Limited The Farmers and Graziers’ Co-operative Company Limited The Farmers and Settlers Co-operative Insurance Company of Australia Limited

The Federation Insurance Limited Fire and All Risks Insurance Company Limited F.M. Insurance Company Limited Forsikringsaktieselskapet Vesta

General Accident Fire and Life Assurance Corporation Limited GRE Insurance Limited Greater Pacific General Insurance Limited Guardall Insurance Co Pty Ltd

Guardian Assurance Company Limited The Guild Insurance Co Pty Limited

Hallmark General Insurance Company Ltd The Hanover Insurance Company Hartford Fire Insurance Company C. E. Heath Underwriting and Insurance (Australia) Pty Limited

Hematite Insurances Proprietary Limited Home Owners Insurance Pty Limited

LC. Insurance Australia Limited INA Reinsurance Company Indemnity Marine Assurance Company of Australia Limited Industrial Liability Underwriters (N.S.W.) Ltd Insurance Company of North America

The Insurance Corporation of Ireland Limited International Reinsurance Limited Interstate Steamship Insurance Company Proprietary Limited Inverness Insurance Limited

The Koa Fire and Marine Insurance Company Limited Kolnische Riickversicherungs-Gesellschaft (Cologne Reinsurance Company)

Law Union and Rock Insurance Company Limited Legal and General Assurance Society Limited The Liverpool and London and Globe Insurance Company Limited Lombard Insurance Company Limited

The London Assurance The London & Lancashire Insurance Company Limited The London and Overseas Insurance Company Limited

Manchester Unity Fire Insurance Company of Victoria Limited Manor Insurances (Australasia) Limited Manufacturers’ Mutual Insurance Limited

41

Marine Hull & Liability Insurance Company Proprietary Limited The Mercantile and General Reinsurance Company of Australia Limited The Mercantile Mutual Insurance Company Limited The Mercantile Mutual Life Insurance Company Limited

The M.L.C. Fire and General Insurance Company Pty Limited Monarch Insurance Company Limited Mortgage Guaranty Insurance Corporation of Australia Limited

Motor Accident Mutual Insurance Pty Limited Munchener Riickversicherungs-Gesellschaft (Munich Reinsurance Company) Munich Reinsurance Company of Australia Limited Municipal Association of Victoria Mutual Acceptance (Insurances) Pty Limited The Mutual Life and Citizens’ Assurance Company Limited

The National Employers’ Mutual General Insurance Association Limited National & General Insurance Company Limited The National Insurance Company of New Zealand Limited

National Mutual Casualty Insurances Limited National Mutual Fire Insurance Company Limited N.C.I.S. Insurance Pty Limited Neptune Insurance Company Pty Ltd Neuchatel Swiss General Insurance Company Limited The New India Assurance Company Limited New London Reinsurance Company Limited New Reinsurance Australia Limited New Reinsurance Company The New Zealand Insurance Company Limited The Nippon Fire & Marine Insurance Company Limited Northern Assurance Company of Australia Limited Norwich Union Fire Insurance Society Limited N.R.M.A. Insurance Limited N.S.W. General Insurance Co Pty Limited

Oak Insurance Ltd The Orion Insurance Company Limited Overseas Shipping Insurance Company Proprietary Limited

Pan Australian Insurance Pty Limited The Permanent Insurance Company Limited Phoenix Assurance Company of Australia Limited

Phoenix Life Assurance Company of Australia Limited Poseidon Insurance Company Pty Limited Progressive Insurance Company Limited

42

Provincial Insurance Company Limited The Prudential Assurance Company Limited

Queensland Insurance Company Limited

R.A.C. Insurance Pty Limited R.A.C.Q. Insurance Pty Limited R.A.C.V. Insurance Pty Ltd Reinsurance Company of Australasia Limited

Reinsurers Pty Limited Retail Traders Insurance Company Limited Riunione Adriatica di Sicurta (Adriatic Insurance Company)

Royal Insurance Company Limited

Saltergate Insurance Company Pty Limited Sapphire Insurance Company Pty Limited The Sea Insurance Company Limited The Security and General Insurance Company Limited Security Life Assurances Limited Sentry Indemnity Company The Seven Provinces Insurance Company Ltd Sirius Insurance Company Limited Skandia Insurance Company Limited Societe Anonyme Francaise de Reassurances Societe Commerciale de Reassurances South Australian Insurance Company Limited The South British Insurance Company Limited South British United Life Assurance Company Limited

Southern Pacific Insurance Company Limited The Southern Star General Insurance Company Proprietary Limited Sphere Insurance Company Limited

Storebrand Insurance Company Limited Stromark Australia Insurances Limited Sumitomo Marine and Fire Insurance Company Limited Sun Alliance Insurance Limited

Sun Insurance Office Limited Surrey Insurance Company Limited Swann Insurance Limited Swiss Reinsurance Company

Switzerland General Insurance Company Limited

T.A.B. Agents Company Limited Taisho Marine and Fire Insurance Company Limited T. & G. Fire and General Insurance Company Limited Timber Mutual Insurance Limited Timber Trade Mutual Insurance Limited

43

The Tokio Marine and Fire Insurance Company, Limited Toowoomba Insurance Pty Ltd Trade Indemnity Company Limited Traders Prudent Insurance Co Limited Trans-Pacific Insurance (Australia) Limited Transport and General Insurance Company Limited Transport Industries Insurance Company Proprietary Limited

Underwriting and Insurance Limited L’Union des Assurances de Paris I.A.R.D. Union Assurance Society of Australia Limited

Union Riickversicherungs-Gesellschaft (Union Reinsurance Company) The United Commercial Travellers’ Association of Australia Limited The United Insurance Company Limited

VACC Insurance Co Limited V.A.C.C. Insurance Co (N.S.W.) Limited Vanguard Insurance Company Limited

Victoria Insurance Company Limited Victorian Wheatgrowers Corporation Limited (trading as Wheatgrowers and General Insurance Company) The Victory Reinsurance Company of Australia Limited Vigilant Insurance Company V.I.P. Insurances Pty Limited

Waltons Insurance Company Limited Westchester Fire Insurance Company The Western Assurance Company The Western Australian Insurance Company (Canberra) Limited Western Underwriters Pty Ltd Westminster Insurance Company Limited Westralian Farmers Co-operative Limited The World Marine & General Insurance Company Limited

The Yasuda Fire and Marine Insurance Company Limited

(ii) Bodies Corporate with Applications under Section 23 Current as at 30 June 1975 but not entitled to Carry on Insurance Business until Granted an Authority

All States Insurance Company Pty Limited Ansvar Australia Insurance Limited Australian American Assurance Company Limited The Chiyoda Fire & Marine Insurance Company, Limited

English & American Insurance Company Limited General Surety & Guarantee Co Limited

44

Kemper Insurance Company Limited The Security and General Reinsurance Company Limited The Steadfast Insurance Company Limited

The Western Australian Insurance Company Limited

(iii) Insurers which had Applied as at 30 June 1975 for Exemption from some Provisions o f the Act

Barristers’ Sickness and Accident Fund Pty Limited The Church of England Insurance Company of Australia Limited Dentists' Sickness and Accident Fund Pty Limited

Institute of Mercantile Agents Limited Master Butchers Limited Medical Association Assurance of New South Wales Limited Medical Defence Association of South Australia

New South Wales Medical Defence Union Limited South Australian Methodist Insurance Fund Stock Exchange Insurances Pty Ltd Taxi Insurance Co-operative Limited

(iv) Bodies Corporate Refused Authorisation

Atlantic Underwriters Pty Limited J & T Gunn Insurers Proprietary Limited Mill Insurance Company Limited

(v) Bodies Corporate which had withdrawn or Indicated their intention to withdraw Application

Capricorn Insurance Limited Dairyland Insurance Company Excess Insurance Australia Limited Goldring Engineering (Australasia) Pty Limited

(trading as Opal Insurance Company) Gresham Fire and Accident Insurance Society, Limited The Home Insurance Company Star Insurance Limited

45

ERRATA SHEET

Tables 45 to 52 inclusive: Column 1 Delete: “Percentage to earned premiums between:” Insert: “Percentage to claims incurred between:”

Tables 53 to 60 inclusive: Column 1 Delete: “Percentage to earned premiums between:” Insert: “Percentage to claims paid between:”

46

APPENDIX B

STATISTICAL TABLES

General Note

The following statistical tables are based on the statutory returns required to be submitted by companies with their applications for authority. The State Government Insurance Offices and several other bodies not subject to the Act have provided information in similar form to facilitate the production of more comprehensive statistics.

The industry has been faced with a comparatively complex set of returns, in some cases requiring information which was not previously readily available. This has led to some errors in completing the returns and my staff situation has not permitted complete checking of the information prior to preparation of this Report.

I consider, however, that the remaining inaccuracies are minimal and I have included the statistical tables in the belief that although the information contained has not been completely verified, it warrants publication. The tables are of two types; namely those containing aggregate figures for the industry or parts thereof, and those which are of a more analytical nature. Tables 1 to 26 are in the first category and show aggregations as indicated for the private sector, the public sector and for the industry as a whole.

It has not been possible to provide State figures in any of the tables as no dissection by States was required in the returns accompanying applications. The private sector encompasses

(a) for tables showing business in Australia, the results of all companies which have sought authorisation under the Insurance Act; and (b) for tables showing business outside Australia, the results of all Australian incorporated companies carrying on insurance business outside Australia which

have sought authorisation under the Insurance Act. It is important to note that the ‘business outside Australia’ tables do not include the non-Australian business of overseas companies operating in Australia by means of branches.

The aggregate figures for the private sector will be understated to the extent that certain companies which carried on business during the period under review have not sought authorisation and consequently have not lodged the information required of applicant companies.

The public sector comprises, where applicable, the State Government Insurance Offices, The Housing Loans Insurance Corporation, The Commonwealth Sav­ ings Trading Banks Insurance Schemes, the Defence Service Homes Insurance Trust Account and the Western Australian Motor Vehicle Insurance Trust.

Tables 27 to 61 contain analyses of some specific items. Non-availability of staff has limited the amount of analysis possible in this Report. It was not feasible prior to this First Report to consult the industry on the format or content of the statistical tables. However, in view of the great potential benefits, to insurers and others, of the

47

information now becoming available it is my intention to publish, where possible, statistics relevant to the industry’s requirements both in the Annual Report and in periodical papers. With this in mind I will be seeking the views of interested organisations prior to

publication of the next Report. Stamp duty has not been included in any figure shown in the Tables.

Table Number Description of Tables

1. Underwriting Account by class of business—In Australia—Private Sector -1973-74 2. Underwriting Account by class of business—Outside Australia—Private Sector—1973-74 3. Underwriting Account by class of business—In Australia—Public Sector

— 1973-74

4. Underwriting Account by class of business—In Australia—Total Industry -1973-74 .

5. Profitability—In Australia—Private and Public Sectors— 1973-74 6. Profitability—Outside Australia—Private Sector—1973-74 7. Statement of Liabilities—In Australia—Private Sector— 1973-74 8. Statement of Liabilities—Outside Australia—Private Sector—1973-74 9. Statement of Liabilities—In Australia—Public Sector— 1973-74 10. Statement of Liabilities—In Australia—Total Industry— 1973-74

11. Statement of Assets (book values)—In Australia—Private Sector— 1973-74 12. Statement of Assets (book values)—Outside Australia—Private Sector— 1973-74 13. Statement of Assets (book values)—In Australia—Public Sector—1973-74 14. Statement of Assets (book values)—In Australia—Total Industry— 1973-74 15. Statement of Premium Income and Earned Premiums—In Australia—Private

Sector—1973-74 16. Statement of Premium Income and Earned Premiums—Outside Australia —Private Sector— 1973-74 17. Statement of Premium Income and Earned Premiums—In Australia—Public

Sector— 1973-74 18. Statement of Premium Income and Earned Premiums—In Australia—Total Industry— 1973-74 19. Statement of Claims—In Australia—Private Sector— 1973-74 20. Statement of Claims—Outside Australia—Private Sector— 1973-74 21. Statement of Claims—In Australia—Public Sector— 1973-74 22. Statement of Claims—In Australia—Total Industry— 1973-74 23. Statement of Underwriting Expenses—In Australia—Private Sector—1973-74 24. · Statement of Underwriting Expenses—Outside Australia— Private Sector

— 1973-74

25. Statement of Underwriting Expenses—In Australia—Public Sector— 1973-74 26. Statement of Underwriting Expenses—In Australia—Total Industry— 1973-74 .

27. Distribution of Loss Ratios by class of business—In Australia—Private Sector—1973-74

48

28-36 Underwriting results and provisions for outstanding claims by classes and volume of business—Private Sector—In Australia— 1973-74 37-44 Provision for outstanding claims as a percentage of earned premiums —distribution of ratios—Private Sector—In Australia— 1973-74 45-52 Provisions for outstanding claims as a percentage of claims

incurred—distribution of ratios—Private Sector—In Australia—1973-74 53-60 Provision for outstanding claims as a percentage of claims paid—distribution of ratios—Private Sector—In Australia— 1973-74 61. Analysis of balance dates—In Australia—Private Sector— 1973-74

4 9

TABLE 1. UNDERWRITING ACCOUNT—BY CLASS OF BUSINESS-IN AUSTRALIA—PRIVATE SECTOR—1973-74

Premium income during the financial year . Add: Provision for unearned premiums at

beginning of financial y e a r ..............................

Other premium provisions at beginning of financial year ....................................................

Deduct: Provision for unearned premiums at end of financial year ....................................................

Other premium provisions at end of

financial year ...................................................

Class o f Business

Fire

Houseowners

Householders Contractors Marine M otor

Vehicle

$’000 $’000 $’000 $’000 $’000

125 308 91 621 6 841 40 379 286 816

44 181 31 322 2 249 13 941 112 535

(46) 48 3 1 074

169 443 122 991 9 090 54 323 400 425

48 885 38 327 2 861 15 506 126 173

28 74 32 1 040

Premiums earned during the financial year . 120 530 84 590 6 229 38 785 273 212

Net claims paid during the financial year . . Add: O utstanding claims provision at end of financial year ...................................................

Deduct: Outstanding claims provision at beginning of financial year ...............................................

Claims incurred during the financial year . .

47 467 31 093 2 804 22 190 189 182

39 236 13 229 4 983 16 379 78 842

86 703 44 322 7 787 38 569 268 024

29 869 7 935 3 979 12 464 60 851

56 834 36 387 3 808 26 105 207 173

Compulsory Third " Em ployers'

Liability

Public Liability

Other Total

$’000 $’000 $’000 $’000 $’000

61 912 238 032 29 228 111 981 992118

26 289 83 655 10 758 44 625 369 555

5 29 15 2 716 3 844

88 206 321 716 40 001 159 322 1 365 517

28 490 101 411 11 913 52 098 425 664

67 1 3 810 5 052

59 716 220 238 28 087 103 414 934 801

37 674 120 777 8 248 43 034 502 469

187 911 281 170 40 421 28 618 690 789

225 585 401 947 48 669 71 652 1 192 258

146 236 199 891 29 381 23 156 513 762

79 349 202 056 19 288 48 496 679 496

Expenses incurred during the financial year in respect of insurance underwriting business other than life insurance underwriting

business (less recoveries and refunds): C o m m is s io n ...................................................

Fire brigade, hospital and similar statutory c h a r g e s ................................................................

Taxes (other than income tax and stamp d u t y ) ....................................................................

M anagement expenses ..............................

Other underwriting e x p e n s e s ......................

12 273

19 344

682

31 304 1 338

9 971

7 742

544

25 386 677

800 3 622 19210

564 102 817

42 207 883

1 110 8 053 53 303

244 435 3 708

376

1 162

153

7 161 484

15 572 4 349 16 528

423 24 231

1 054 150 562

42 996 6 617 24 403

1493 292 1 649

82 701

30 409

4 277 200 333 10 320

64 941 44 320 2 760 12 419 77 921 9 336 61 538 11 432 43 373 328 040

Total expenditure · · . . . .

Underwriting surplus (or deficit)

121 775 80 707 6 568 38 524 285 094 88 685 263 594 30 720

(1 245) 3 883 (339) 261 (11 882) (28 969) (43 356) (2 633)

91 869 1 007 536

11 545 (72 735)

TABLE 2. UNDERWRITING ACCOUNT—BY CLASS OF BUSINESS—OUTSIDE AUSTRALIA—PRIVATE SECTOR— 1973-74

Compulsory Third Em ployers' Public

Party Liability Liability

Other

5 866

9 581

15 447

7 442

8 005

1 038

2 789

826

1 372

3 827 2 198

1 746

2 081

1 735

463

6 110

9 242

15 352

7 480

7 872

Total

$’000 $’000 $’000 $’000 $’000

11 944 1 953 2 267 12 253 73 843

4 084 780 748 9 759 29 290

41 227

16 028 2 733 3 015 22 053 103 360

4 836 768 1 113 9 487 32 057

1 369 1 529

11 192 1 965 1 902 11 197 69 774

40 898

39 344

80 242

32 314

47 928

Expenses incurred during the financial year in respect of insurance underwriting business other than life insurance underwriting

business (less recoveries and refunds): C o m m is s io n ...................................................

Fire brigade, hospital and similar statutory c h a r g e s ................................................................

Taxes (other than income tax and stamp d u t y ) ....................................................................

Management expenses ..............................

Other underwriting e x p e n s e s .....................

3 694 437 (19) 1 008 3 379

164 47 (3) (3)

15 2 5 7

2016 508 11 898 2 078

51 1 60 12

3 048

3

1 226 14

323 520 2 241 14 631

211

2 1 10 45

306 260 1 220 8 523

2 116 69 325

5 940 994 (10) 1 971 5 479 4 291 633 897 3 540 23 735

Total expenditure .............................. . . . 14 876 2 005 17 10011 16 972 12 296

Underwriting surplus or (deficit) . . . . . (795) 58 (37) 341 70 (1 104)

2 714 1 360 11 412

(749) 542 (215)

71 663

(1 889)

TABLE 3. UNDERW RITING ACCOUNT— BY CLASS OF BUSINESS— IN AUSTRALIA— PUBLIC SECTOR— 1973-74

Expenses incurred during the financial year in respect of insurance underwriting business other than life insurance underwriting

business (less recoveries and refunds): C o m m is s io n .................................. ....

Fire brigade, hospital and similar statutory 344 543 (56) 333 1 798 1 159

c h a r g e s ................................................................ 1 622 1 556 17 299

Taxes (other than income tax & stamp duty) 19 45 1 1 101 95

M anagement expenses .............................. 2 389 2 766 25 415 8 423 2 999

Other underwriting expenses . . . . . . 7 338 85 343 253

591 52 406 5 170

872 12 4 378

38 7 10 317

5 668 131 1 993 24 809

85 2 7 1 120

4 381 5 248 (13) 834 10 964 4 506 7 254 192 2 428 . 35 794

Total expenditure .................

Underwriting surplus or (deficit)

9 469 13 514 74 2 787 57 163 188 248 129 149

2 963 1 965 1 (184) (2 412) (63 839) (22 746)

1 710

(89)

4 581 406 695

792 (83 549)

TABLE 4. UNDERWRITING ACCOUNT—BY CLASS OF BUSINESS—IN AUSTRALIA—TOTAL INDUSTRY—1973-74

Class o f Business

Houseowners Compulsory

Fire and Contractors M arine M otor Third E m ployers' Public O ther Total

Householders Vehicle Party Liability Liability

Premium income during the financial year . Add: Provision for unearned premiums at beginning of financial y e a r ..............................

Other premium provisions at beginning of financial year ....................................................

$’000 $’000 $’000 $’000 $’000 $’000 $'000 $’000 $’000 $’000

139 152 108 430 6 874 43 152 344 980 197 660 348 804 30 923 118 579 1 338 554

48 288 37 110 2 290 14 853 132 899 81 311 92 184 11 377 52 921 473 233

61 88 21 17 1 571 6 104 38 3 714 5 620

Deduct: Provision for unearned premiums at end of financial year ....................................................

Other premium provisions at end of

financial year ....................................................

187 501 145628 9 185 58022 479 450 278 977 441 092 42 338 175 214 1 817 407

54 370 45 434 2 870 16 585 149 804 94 843 114 304 12 600 61 348 552 158

169 125 11 49 1 683 9 147 30 5 079 7 302

Premiums earned during the financial year . 132 962 100 069 6 304 41 388 327 963 184 125 326 641 29 708 108 787 1 257 947

Net claims paid during the financial year . . Add: 51 838 36 558 2 914 23 812 229 203 130 413 181 321 8 978 44 882 709 919

Outstanding claims provision at end of financial year .................................................... 41118 17 261 5 092 16 928 94 262 666 116 428 882 43 578 29 657 1 342 894

Deduct: Outstanding claims provision at beginning of financial year ...............................................

92 956 53 819 8 006 40 740 323 465 796 529 610 203 52 556 74 539 2 052 813

31 034 9 166 4 111 12 682 70 093 533 438 286 252 31 750 23 890 1 002 416

Claims incurred during the financial year . . 61 922 44 653 3 895 28 058 253 372 263 091 323 951 20 806 50 649 1 050 397

Expenses incurred during the financial year in respect of insurance underwriting business other than life insurance underwriting

business (less recoveries and refunds): C o m m is s io n ................................................... 12 617 10514 744 3 955 21 008 1 535

Fire brigade, hospital and similar statutory c h a r g e s ................................................................ 20 966 9 298 581 102 1 116 1 162

Taxes (other than income tax and stamp d u t y ) .................................................................... 701 589 43 208 984 248

Management expenses .............................. 33 693 28 152 1 135 8 468 61 726 10 160

Other underwriting e x p e n s e s ..................... 1 345 1 015 244 520 4 051 737

16 163 4 401 16 934

1 295 24 243

1 092 157 572

48 664 6 784 26 396

1 578 294 1 656

87 871

34 787

4 594 225 142 11 440

69 322 49 568 2 747 13 253 88 885 13 842 68 792 11 624 45 801 363 834

Total expenditure ........................................... 131 244 94 221 6 642 41 311 342 257 276 933 392 743 32 430 96 450 1 414 231

Underwriting surplus or (deficit) 1 718 5 848 (338) 77 (14 294) (92 808) (66 102) (2 722) 12 337 (156 284)

TABLE 5. PROFITABILITY—IN AUSTRALIA— 1973-74

Private Public Total

Item Sector Sector Industry

$’000 $’000 $’000

Reported underwriting surpluses ......................... . . . . . 15689 (a) (a)

Less: reported underwriting deficiencies ................. (a) (a)

Net underwriting deficiency ....................................... 83 549 156 284

Other Insurance Business Income Interest and dividends ............................................... . . . . 70443 45 625 116 068

R e n t ................................................................................. 1 678 12 514

Other property income ............................................... . . . . 1 539 1 539

Other income from insurance b u s i n e s s ..................... . . . . 5 730 149 5 879

88 548 47 452 136 000

Less: Other Insurance Business Expenses M anagem ent expenses . ...................................... 238 8 897

Depreciation of a s s e t s ................................................... . . . . 2 150 19 2 169

Other expenses ............................................................ . . . . 3 655 185 3 840

14 464 442 14 906

Net profit (loss) from insurance b u s i n e s s ................. . . . . 1349 (36 539) (35 190)

Non-Insurance Business I n c o m e ............................................................................. . . . . 50 820

Less: e x p e n s e s ................................................................ . . . . 35 126

15 694

Profit (loss) before taxation ...................................... (36 539)

Less: provision for taxation ...................................... . . . . 14 788 (a)

Profit (loss) after taxation ........................................................... 2 255 (a)

(a) Figures deleted for purposes of confidentiality.

58

TABLE 6. PROFITABILITY—OUTSIDE AUSTRALIA—1973-74

Private Sector

S’000

Reported underwriting surpluses .................................................................................................. 1 Oil

Less: reported underwriting deficiencies......................................................................................... 2 900

! Net underwriting deficiency .......................................................................................................... 1 889

Other Insurance Business Income Interest and dividends ................................................................................................................... 3 057

R e n t ..................................................................................................................................................... 166

Other property income ................................................................................................................... 48

Other income from insurance b u s i n e s s .......................................................................................... 505

3 776

Less: Other Insurance Business Expenses M anagement expenses . . . '...................................................................................................... 278

Depreciation of a s s e t s ....................................................................................................................... -42

Other expenses . . . ................................................................................................................... 702

1 022

Net profit from insurance business .............................................................................................. 865

Non-Insurance Business I n c o m e ................................................................................................................................................. 1 567

Less: e x p e n s e s .................................................................................................................................... -1 498

-69

Profit before t a x a t i o n ....................................................................................................................... 934

Less: provision for taxation .......................................................................................................... 658

Profit after taxation ....................................................................................................................... 276

59

TABLE 7. STATEMENT OF LIABILITIES—IN AUSTRALIA—PRIVATE SECTOR— 1973-74

Liabilities

Underwriting Provisions $ 000

— Unearned premium p r o v i s i o n .............................................................................................. 425 664

— Other premium provisions .................................................................................................. 5 052

Outstanding claims provision .................................................................................................. 690 789

Other underwriting provisions .................................................................................................. 6 421

S u b - t o t a l .............................................................................................. . ...................................... 1 127 926

Long-Term Liabilities Bank loans .................................................................................................................................... 2 539

Amounts due to related bodies predominantly engaged in: — Insurance business ............................................................................................................... 2 239

— Life insurance b u s i n e s s ........................................................................................................... 1716

— Other business (excluding banking) ................................................................................. 703

Amounts due to insurers (not being related bodies) under reinsurance contracts . . . . 471

Other amounts due to insurers (not being related bodies) predominantly engaged in: — Insurance business . ·.............................................................................................. 134

— Life insurance business ....................................................................................................... 483

— Other business (excluding banking) ................................................................................. 30

D e b e n t u r e s .................................................................................................................................... 204

Other loans: — Secured .................................................................................................................................... 8 192

— U n s e c u r e d ................................................................................................................................ 1 870

Other ............................................................................................................................................. 14 007

Sub-total ............................................................................................................................................. 32 588

Current Liabilities Provisions — Taxation ............................................................................................. .... .......................... 23 777

— Long service l e a v e ................................................................................................................... 9 420

— Dividends ................................................................................................................................ 8 293

— Other provisions excluding provisions for doubtful d e b t s ............................................... 9 379

Bank overdraft and bank l o a n s .................................................................................................. 35 309

Amounts due to related bodies predominantly engaged in: — Insurance business .................................................................... ......................................·. 44 556

— Life insurance business ...................................................................................................... 730

— Other business (excluding banking) ................................................................................. 67 175

Amounts due to insurers (not being related bodies) under reinsurance contracts . . . . 49 502 Other amounts due to insurers (not being related bodies) predominantly engaged in: — Insurance business ............................................................................................................... 7 313

— Life insurance business ....................................................................................................... 39

— Other business (excluding banking) ................................................................................. 260

D eb en tu res............................................... 22

Other loans: — Secured .................................................................................................................................... 1 732

— U n s e c u r e d ................................................................................................................................ 21 893

Sundry creditors .......................................................................................................... 65590

O t h e r ................................................................................................................................................. 23 593

S u b - t o t a l ............................................................................................................................................ 368 583

Life Insurance Statutory Fund L ia b ilitie s ..................................................................................... 1 919 223

TOTAL LIABILITIES ................................................................................................................... 3 448 320

60

TABLE 8. STATEMENT OF LIABILITIES—OUTSIDE AUSTRALIA—PRIVATE SECTOR—1973-74

Liabilities

$’000

Underwriting Provisions Premium provisions — Unearned premium provision ......................................................................................... 32 057

— Other premium provisions .................................................................................................. 1 529

Outstanding claims provision .................................................................................................. 39 344

Sub-total ............................................................................................................................................. 72 930

Long-Term Liabilities Amounts due to related bodies predominantly engaged in insurance b u s i n e s s ................. 324

Other ............................................................................................................................................. 125

S u b - t o t a l ............................................................................................................................................. 449

Current Liabilities Provisions — Taxation ................................................................................................................................ 2 606

— Long service l e a v e ................................................................................................................... 51

— Dividends ................................................................................................................................ 987

— Other provisions excluding provisions for doubtful d e b t s ................................................ 514

Bank overdraft and bank l o a n s .................................................................................................. 652

Amounts due to related bodies predominantly engaged in: -— Insurance business ............................................................................................................... 3 227

-— Life insurance business ...................................................................................................... 73

— Other business (excluding banking) .................................................................................. 85

Amounts due to insurers (not being related bodies) under reinsurance contracts . . . . 4 807 Other amounts due to insurers (not being related bodies) predominantly engaged in: — Insurance business ............................................................................................................... 1 835

— Other business (excluding banking) ................................................................................. 250

Other loans: — Secured .................................................................................................................................... 285

— U n s e c u r e d ................................................................................................................................ 97

Sundry c r e d i t o r s ............................................................................................................................ 5 026

Other ............................................................................................................................................. 2 023

S u b - t o t a l ............................................................................................................................................. 23 518

Life Insurance Statutory Fund L ia b ilitie s ..................................................................................... 154 480

TOTAL LIABILITIES ................................................................................................................... 251 377

61

TABLE 9. STATEMENT OF LIABILITIES—IN AUSTRALIA—PUBLIC SECTOR— 1973-74

Liabilities

$'000

Underwriting Provisions Premium provisions — Unearned premium provision .............................................................................................. 126 494

— Other premium provisions .................................................................................................. 2 250

Outstanding claims provision ................................................................................................... 652 105

S u b - t o t a l ............................................................................................................................................. 780 849

Long-term Liabilities Amounts due to insurers (not being related bodies) under reinsurance contracts . . . . 100

Sub-total ......................................................................................................................................... 100

Current Liabilities Provisions — Taxation ................................................................................................................................. 2 908

— Long service l e a v e ................................................................................................................... 2 666

— Other provisions excluding provisions for doubtful d e b t s ............................................... 4 988

Amounts due to insurers (not being related bodies) under reinsurance contracts . . . . 1239 Sundry c r e d i t o r s ............................................................................................................................ 15214

Other ............................................................................................................................................. 3 118

Sub-total ............................................................................................................................................. 30 133

TOTAL LIABILITIES ................................................................................................................... 811082

N ote: Life Insurance Statutory Fund Liabilities have not been shown in this table.

62

TABLE 10. STATEMENT OF LIABILITIES—IN AUSTRALIA—TOTAL INDUSTRY— 1973-74

Liabilities

$’000

Underwriting Provisions Premium provisions — Unearned premium provision ............................................................................................. 552 158

— Other premium provisions .................................................................................................. 7 302

O utstanding claims provision .................................................................................................. 1342 894

Other underwriting provisions .................................................................................................. 6 421

Sub-total ............................................................................................................................................. 1 908 775

Long-Term Liabilities Bank L o a n s .................................................................................................................................... 2 539

Amounts due to related bodies predominantly engaged in: — Insurance business ............................................................................................................... 2 239

— Life insurance business ...................................................................................................... 1 716

— Other business (excluding banking) ................................................................................. 703

Amounts due to insurers (not being related bodies) under reinsurance contracts . . . . 471

Other amounts due to insurers (not being related bodies) predominantly engaged in: — Insurance business ................................................................................ 134

— Life insurance business ...................................................................................................... 483

— Other business (excluding banking) ................................................................................. 30

Debentures .................................................................................................................................... 204

Other loans: — Secured .................................................................................................................................... 8 192

— Unsecured ...................................... 1 870

Other ............................................................................................................................................. 14 007

S u b - t o t a l ....................................................... · .................................................................................. 32 588

Current Liabilities Provisions — Taxation ............................................................................................................................. 26 685

— Long service l e a v e .................................................................................................................... 12 086

— Dividends ............................................................................................................................. 8 293

— Other provisions excluding provisions for doubtful d e b t s ................................................ 14 367

Bank overdraft and bank l o a n s .................................................................................................. 35 309

Amounts due to related bodies predominantly engaged in: — Insurance business .............................................................................................................. 44 556

— Life insurance business ...................................................................................................... 230

— Other business (excluding banking) ................................................................................. 67 175

Amounts due to insurers (not being related bodies) under reinsurance contracts . . . . 50 741 Other amounts due to insurers (not being related bodies) predominantly engaged in: — Insurance business ............................................................................................................... 7313

— Life insurance business ...................................................................................................... 39

— Other business (excluding banking) ................................................................................. 260

Debentures .................................................................................................................................... 22

Other loans: — Secured ................................................................................................................................... 1 232

— U n s e c u r e d ............................................................................................................................... 21 893

Sundry c r e d i t o r s ........................................................................................................................... 80 804

Other ............................................................................................................................................ 26 811

Sub-total ............................................................................................................................................ 398 816

Life Insurance Statutory Fund L ia b ilitie s ..................................................................................... 1 919 223

TOTAL LIABILITIES ................................................................................................................... 4 259 402

63

TABLE 11. STATEMENT OF ASSETS (BOOK VALUES)—IN AUSTRALIA—PRIVATE SECTOR—1973-74

Fixed Assets ·

Land & Buildings at depreciated v a l u e ...................................

Motor Vehicles & Office Equipm ent at depreciated value . Other Fixed Assets at depreciated value ..............................

S u b - t o t a l ..........................................................................................

Investments (i) Public securities S ecurities issued by the A u stra lia n

government ............................................................

Australian local government and semi­ government s e c u r i t i e s ...............................................

Other Australian public securities ..........................

Securities issued by governments outside Australia ................................................................

S u b - t o t a l .............................................................................

(ii) Land and buildings held for development and sale . .

(iii) Other Shares in: — Banks .............................................................................

— Building societies ........................................................

— Bodies predominantly engaged in: — Insurance business ................. 1............................

— Life insurance business .......................................

— Other business — Listed on an Australian stock exchange . . . — O t h e r ....................................................................

Debentures and notes of: — Banks .............................................................................

— Building societies . . . . . . . . . . . . . .

— Bodies predominantly engaged in: — Insurance business ...............................................

— Life insurance business .......................................

— Other business — Listed on an Australian stock exchange . . . — Other ....................................................................

Deposits with and loans to: — B a n k s .............................................................................

— Building societies .......................................................

— Bodies predominantly engaged in: — Insurance business ...............................................

— Life insurance business ......................................

— Other business — Secured — By mortgages on real property .................

— On personal property ..................................

— Other ................................................................

— U n s e c u r e d ...........................................................

— Directors of the body corporate or related bodies and the spouses of those directors ................................................................

Related bodies Other Total

corporate

$’000 $'000 $'000

197 798 197 798

20 921 20 921

2 473 2 473

221 192 221 192

85 703 85 703

28 334 28 334

827 827

1 Oil 1 Oil

115 875 115 875

6 409 6 409

24 605 24 605

4310 3 404 7 714

43 272 5 335 48 607

33 840 1 040 34 880

14 989 329 747 344 736

61 903 17 092 78 995

878 878

97 97

2 022 2 022

8 250 84 976 93 226

9 745 106 581 116 326

719 43 620 44 339

1 596 53 139 54 735

9 384 166 9 550

3 215 810 4 025

3 484 87 989 91 473

8 703 8 703

323 39 344 39 667

81 404 59 351 140 755

10 892 902

64

TABLE 11. STATEMENT OF ASSETS (B O O K VALUES)— continued

— S e c u r e d .................................. ......................... 42 419 42 727

— U n s e c u r e d ........................................................ 124 193

— O t h e r ..................................................................... 30 791 32 088

Other ......................................................................... 14 550 19 633

S u b - t o t a l ......................................................................... 957 675 1 240 876

Current Assets C a s h .......................................................................................... 23 067 24 161

Premiums outstanding ........................................................ 189 700 191 787

Amounts retained under reinsurance contracts . . . . . 6 668 18 627 25 295

Amounts due from bodies predominantly engaged in: — Insurance business ................................................... .... . 44 749 20 920 65 669

— Life insurance business ....................................... . 1 424 363 1 787

— Other business ................................................................ . 74 477 9811 84 288

Sundry debtors — T r a d e .................................................................................. 61 899 68 956

— O t h e r .................................................................................. 10418 15814

Other ...................................................................................... 29 824 36 219

S u b - t o t a l ...................................................................................... 364 629 513 976

Intangible Assets Goodwill ................................................................................. 713 713

Establishment e x p e n s e s ........................................................ . 7 156 163

Other ...................................................................................... 596 597

S u b - t o t a l ..................................................................................... 1 465 1 473

Life Insurance Statutory Fund Assets .................................. . 176 978 1 748 230 1 925 208

TOTAL ASSETS .................................................................... . 609 534 3 415 475 4 025 009

65

TABLE 12. STATEMENT OF ASSETS (BOOK VALUES)—OUTSIDE AUSTRALIA— PRIVATE SECTOR— 1973-74

Reluted Bodies Corporate

Other Total

$’000 $O00 $’000

Fixed Assets Land and Buildings at depreciated v a l u e .............................. 7 550 7 550

Motor Vehicles and Office Equipm ent at depreciated value 911 911

Other Fixed Assets at depreciated value .............................. 19 19

S u b - t o t a l .......................................................................................... 8 480 8 480

investments (i) Public securities issued by governments outside A u s t r a l i a ......................................................................... 9 374 9 374

(ii) Land and buildings held for development and sale . . 1 804 1 804

(iii) Other Shares in: — Banks ............................................................................. 1 445 1 445

— Building s o c i e t i e s ........................................................ 186 186

— Bodies predominantly engaged in: — Insurance business ............................................... 2 090 473 2 563

— Other business — Listed on an Australian stock exchange . . . 2 668 255 2 923

— O t h e r .................................................................... 12 091 7 101 19 192

Debentures and notes of: — Banks ............................................................................. 3 286 3 286

— Building s o c i e t i e s ....................................................... 23 23

— Bodies predominantly engaged in-— Other business — Listed on an Australian stock exchange . . . 881 881

— Other .................................................................... 5 528 5 528

Deposits with and loans to: — Banks ............................................................................. 19 4 967 4 986

— Building s o c i e t i e s ....................................................... 1 101 1 101

— Bodies predominantly engaged in: — Insurance business ............................................... 1 336 1 336

' — Life insurance business ...................................... 398 398

— Other business — Secured by mortgages on real property . . . 300 1 493 1 793

— U n s e c u r e d ........................................................... 587 587

— Employees of the body corporate — Secured .................................................................... 521 521

— U n s e c u r e d ................................................................ 5 5

— O t h e r ............................................................................. 5 806 5 806

Other ................................................................................. 71 71

Sub-total ............................................................................. 18 902 33 729 52 631

Current Assets C a s h .............................................................................................. 177 5 393 5 570

Premiums o u tstan d in g ................................................................ 1 683 5 712 7 395

Amounts retained under reinsurance contracts ................. 246 4 442 4 688

Amounts due from bodies predominantly engaged in: — Insurance business ............................................................ 1 807 8 575 10 382

— Other business ..................... 1 .......................................... 619 1 717 2 336

66

TABLE 12. STATEMENT OF ASSETS (BOOK VALUES)— continued

Related Bodies Corporate

Other Total

$’000 $’000

Sundry debtors — Trade ................................................................ 1 793 1 802

— O t h e r ................................................................ 3 581 3 685

Other ..................................................................... 2 684 4 595

S u b - t o t a l .................................................................... 33 897 40 453

Intangible Assets ...................................................

Life Insurance Statutory Fund Assets ................. ................. 10 883 143 692 154 575

TOTAL ASSETS ................................................... ................. 36 341 230 976 267 317

67

TABLE 13. STATEMENT OF ASSETS (BOOK VALUES)—IN AUSTRALIA—PUBLIC SECTOR — 1973-74

$’000

Fixed Assets Land & Buildings at depreciated value ...................................................................................... 59 709

Motor Vehicles & Office Equipm ent at depreciated v a l u e ........................................................ 4 073

S u b - t o t a l .................................................................................................................................................. 63 782

Investments (i) Public securities Securities issued by the Australian g o v e r n m e n t ............................................................ 194 109

Australian local government and semi-government securities .................................. 268 491

S u b - t o t a l ..................................................................................................................................... 462 600

(ii) Other Shares in bodies not engaged in insurance business .................................................... 16 111

Debentures and notes of bodies not engaged in insurance business .......................... 88 947

Deposits with and loans to: — Banks . . .................................................................................................................... 34 193

— Bodies not engaged in insurance business— secured by mortgages on real p r o p e r t y ..................................................................... 103 138

Other ..................................................................................................................................... 8 513

S u b - to ta l..................................................................................................................................... 250 902

Current Assets Cash ................................................................................................................................................. 1 652

Premiums outstanding .................................................................................................................... 33 724

Other ................................................................................................................................................. 34 629

S u b - t o t a l ................................................................................................................................................. 70 005

Intangible Assets ................................................................................................................................ . .

TOTAL ASSETS ................................................................................................................................ 847 289

N ote: Life Insurance Statutory Fund Assets have not been shown in this table.

68

TABLE 14. STATEMENT OF ASSETS (BOOK VALUES)—IN AUSTRALIA—TOTAL INDUSTRY— 1973-74

$’000

Fixed Assets Land & Buildings at depreciated value ..................................................................................... 257 507

Motor Vehicles & Office Equipm ent at depreciated v a l u e ....................................................... 24 994

Other Fixed Assets at depreciated value ..................................................................................... 2 473

S u b - t o t a l ................................................................................................................................................. 284 974

Investments (i) Public securities Securities issued by the Australian g o v e r n m e n t ............................................................ 279 812

Australian local government and semi-government securities .................................. 296 825

Other Australian public securities ................................................................................. 827

Securities issued by governments outside Australia ................................................... 1011

S u b - t o t a l .................................................................................................................................... 578 475

(ii) Land and buildings held for development and s a l e ............................................................ 6 409

(iii) Other Shares in: — Banks .......................................................................................................f ................... 24 605

— Building s o c i e t i e s .......................................................................................................... 7 714

— Bodies predominantly engaged in: — Insurance business ....................................................... .......................................... 48 607

— Life insurance business .......................................................................................... 34 880

— Other business — Listed on an Australian stock e x c h a n g e ............................................................ 344 736

— O t h e r ....................................................................................................................... 95 106

Debentures and notes of: — Banks ..................................................................................................................... 878

— Building s o c i e t i e s ........................................................................................................... 97

— Bodies predominantly engaged in: — Insurance business .................................................................................................. 2 022

— Life insurance business .......................................................................................... . .

— Other business — Listed on an Australian stock e x c h a n g e ............................................................ 93 226

— O t h e r ....................................................................................................................... 205 273

Deposits with and loans to: — Banks ........................................................................................................................... 28 532

— Building s o c i e t i e s .......................................................................................................... 54 735

— Bodies predominantly engaged in: — Insurance business .................................................................................................. 9 550

— Life insurance business ......................................................................................... 4 025

— Other business — Secured — By mortgages on real property ........................................................................ 194 611

— On personal property ......................... 8 703

— O t h e r ....................................................................................................................... 39 667

— Unsecured .............................................................................................................. 140 755

— Directors of the body corporate or related bodies and the spouses of those d i r e c t o r s ............................................................................................................................... 902

— Employees of the body corporate — S e c u r e d ....................................................................................................................... 42 727

— Unsecured . .......................................................................................................... 193

— O t h e r ............................................................................................................................... 32 088

Other .................................................. 28 146

S u b - t o t a l ................................................................................................................................... 1 491 778

69

TABLE 14. STATEMENT OF ASSETS (BOOK VALUES)— continued

Current Assets $’000

Cash ................................................................................................................................................. 25813

Premiums outstanding .................................................................................................................... 225 511

Amounts retained under reinsurance contracts ......................................................................... 25 295

Amounts due from bodies predominantly engaged in: — Insurance business .................................................................................................................... 65 669

— Life insurance business ........................................................................................................... 1 787

— Other b u s i n e s s ............................................................................................................................ 84 288

Sundry debtors *

— Trade ......................... 68 956

— O t h e r ............................................................................................................................................. 15 814

Other ................................................................................................................................................. 70 848

S u b - t o t a l ................................................................................................................................................. 583 981

Intangible assets .

G o o d w il l ............................................................................................................................................. 713

Establishment expenses ............................................................................................................... 163

Other ................................................................................................................................................. 597

S u b - t o t a l ................................................................................................................................................. 1 473

Life Insurance Statutory Fund A s s e t s .............................................................................................. 1 925 208

TOTAL ASSETS ................................................................................................................................ 4 872 298

70

TABLE 15. STATEMENT OF PREMIUM INCOME AND EARNED PREMIUMS—IN AUSTRALIA—PRIVATE SECTOR— 1973-74

Class o /iiu siiu ’ss

F i r e .........................

Houseowners and Householders .

Contractors . . .

Marine .................

Motor Vehicle . .

Compulsory Third Party . . . .

Employers' Liability Public Liability . ' Other .................

Direct Premiums (including Inward Facultative Inward Treaty Outward Treaty

Outward Facultative Premium

Reinsurance Reinsurance Reinsurance Reinsurance Income

Premiums) less Premiums Premiums Premiums (l) + ( 2 t -

Returned less Returned less Returned less Returned (3 )-(4 )

Premiums and Premiums Prem ium s Prem ium s

Rebates and Rebates and Rebates and Rebates

111 (2) (3) (4) (5)

Premium Provisions at Prem ium Provisions at beginning o f financial year end o f financial year

Unearned Other Unearned Other Earned

Premium Provisions Premium Provisions Premiums

Provision which relate directly to prem ium s

Provision which relate directly to prem ium s

for the

financial year (5) + (6) + (7) ~ ( 8 ) - ( 9 )

(6) (7) (8) (9) (10)

$'000 $'000 $'000

204 835 48 423 89 699

112 622 2 594 17 247

10 570 4 958 6 959

52 713 7 107 9 431

315 676 13 280 29 594

$'000 $'000 $’000

38 251 125 308 44 181

6 348 91 621 31 322

1 728 6 841 2 249

10 010 40 379 13 941

12 546 286 816 112 535

$’000 $'000 $'000 $'000

(46) 48 885 28 120 530

48 38 327 74 84 590

2 861 6 229

3 15 506 32 38 785

1 074 126 173 1 040 273 212

73 118 5 950 12 746 4410 61 912 26 289

265 611 7 149 17 524 17 204 238 032 83 655

37 418 3 085 6 475 4 800 29 228 10 758

122743 21 850 23 416 9 196 111 981 44 625

5

29 15

2 716

28 490 . . 59 716

101 411 67 220 238

11 913 1 28 087

52 098 3 810 103 414

3 844 425 664 5 052 934 801

TABLE 16. STATEMENT OF PREMIUM INCOME AND EARNED PREMIUMS—OUTSIDE AUSTRALIA—PRIVATE SECTOR—1973-74

Prem ium Provisions at beginning o f financial year

Unearned O ther

Prem ium Provisions Provision which relate directly to prem ium s

(7)

$’000

183

Prem ium Provisions at end o f financial year

Unearned Prem ium Provision

(8)

Other Provisions which relate directly to

prem ium s

(91

Earned Prem ium s fo r the financial year '(5) + (6) + (7)

- ( 8 ) - ( 9 )

(10)

$’000 $’000 $’000

5 912 14 081

897 2 063

8 (20)

1 881 160 10 352

7 155 17 042

4 836 11 192

768 1 965

1 113 1 902

9 487 1 369 11 197

TOTAL 73 152 25 820 15 746 9 383 73 843 29 290 227 32 057 I 529 69 774

TABLE 17. STATEMENT OF PREMIUM INCOME AND EARNED PREMIUMS—IN AUSTRALIA—PUBLIC SECTOR—1973-74

Class of Business

Direct Premiums (including Inward Facultative Reinsurance Premiums) less

Returned Premiums and Rebates (1)

Inward Treaty Reinsurance Premiums less Returned

Premiums and Rebates (2)

Outward Treaty Reinsurance Premiums less Returned

Premiums and Rebates (3)

Outward Facultative Reinsurance Premiums less Returned

Premiums and Rebates (4)

Premium income (l) + (2)— (31—(4)

(5)

$'000 $'000 $'000 $'000 $'000

F i r e .........................

Houseowners and . 18 370 2 433 2 093 13 844

Householders . 18 066 1 069 188 16 809

Contractors . . . . 596 175 388 33

Marine ................. . 3471 486 212 2 773

Motor Vehicle . .

Compulsory Third . 58 468 139 165 58 164

Party ................. . 136 753 1 005 135 748

Employers' Liability 111 354 512 70 110 772

Public Liability . . . 1 880 104 81 1 695

Other ..................... . 7 753 360 795 6 598

Prem ium Provisions at beginning o f financial year

Unearned Other

Prem ium Provisions

Provision which relate directlv to prem ium s

(6) (7)

$’000 $’000

4107 107

5 788 40

41 21

912 14

20 364 497

55 022 1

8 529 75

619 23

8 296 998

Prem ium Provisions at end o f financial year

Unearned Other Earned

Premium Provisions Premiums

Provision which relate for the

directly to financial year prem ium s 7514- (6) + (7)

- ( 8 ) - ( 9 )

(8) (9) 110)

$ '0 0 0 $ '0 0 0 $ '0 0 0

5 485 141 12 432

7 107 51 15 479

9 11 75

1 079 17 2 603

23 631 643 54 751

66 353 9 124 409

12 893 80 106 403

687 29 1 621

9 250 1 269 5 373

TOTAL 356 711 6 283 3 992 346 436 103 678 1 776 126 494 2 250 323146

TABLE 18. STATEMENT OF PREMIUM INCOME AND EARNED PREMIUMS—IN AUSTRALIA—TOTAL INDUSTRY—1973-74

Class o f Business

Direct Prem ium s (including Inward Facultative Inw ard Treaty Outward Treaty

Outward Facultative Premium

Reinsurance Reinsurance Reinsurance Reinsurance Incom e

Premiums) less Premiums Prem ium s Prem ium s (l) + (2)—

Returned less Returned less Returned less R eturned (3)— (4)

Prem ium s and Premiums Premiums Premiums

Rebates and Rebates and Rebates and Rebates

(1) (2) (3) (4) (5)

Prem ium Provisions at beginning o f financial year

Unearned Premium Provision

Other Provisions which relate directly to

prem ium s

Prem ium Provisions at end o f financial year

Unearned O ther Earned

Prem ium Provisions Prem ium s

Provision which relate fo r the

directly to financial year prem ium s (5)-\- (6) + (7) — (81 —(9) (8) (9) (10)

$'000 $'000 $'000 $'000 $'000 $’000 $’000

F i r e .............................. 223 205 48 423 92 132 40 344 139152 48 288 61

Houseowners and Householders . . 130 688 2 594 18 316 6 536 108 430 37 110 88

Contractors . . . . 11 166 4 958 7 134 2 116 6 874 2 290 21

Marine ...................... 56 184 7 107 9917 10 222 43 152 14 853 17

Motor Vehicle . . . 374 144 13 280 . 29 733 12711 344 980 132 899 1 571

Compulsory Third Party ...................... 209 871 5 950 13 751 4 410 197 660 81 311 6

Employers' Liability 376 965 7 149 18 036 17 274 348 804 92 184 104

Public Liability . . . 39 298 3 085 6 579 4 881 30 923 11 377 38

O t h e r .......................... 130 496 21 850 23 776 9 991 118 579 52 921 3 714

$'000 $'000 $'000

54 370 169 132 962

45 434 125 100 069

2 870 11 6 304

16 585 49 41 388

149 804 1 683 327 963

94 843 9 184 125

114 304 147 326 641

12 600 30 29 708

61 348 5 079 108 787

TOTAL 1 552 017 114 396 219 374 108 485 1 338 554 473 233 5 620 552 158 7 302 1 257 947

TABLE 19. STATEMENT OF CLAIMS—IN AUSTRALIA—PRIVATE SECTOR—1973-74

Class o f Business

Direct Claims Paid (Including Inward Facult­ ative Reinsurance

Claims Paid/

Inward Treaty Reinsurance Claims Paid adjusted fo r

Outward Treaty Reinsurance Claims Recovered

Outward Facultative Reinsurance Claims

Outstanding Claims

adjusted fo r Salvage <£ or Recoverable Recovered or Net Claims Provision at

Salvage c£ Recoveries adjusted for Recoverable Paid beginning o f

Recoveries other other than Salvage & adjusted for m + ( 2 / - ( 3 ) financial

than Reinsurance Reinsurance Recoveries Salvage & -(4 ) year

Recoveries (l)

Recoveries (2) (3)

Recoveries (4) (5) (61

Outstanding Loss Ratio

Claims being the Ratio

Provision at o f Claims

end o f Claims Incurred to

financial Incurred Earned Premiums

year (5/ + (7f— (6) expressed as a

percentage

(7) (8) (9)

$’000 $’000 $’000 %

F i r e ..........................

Houseowners and

89 916 22 544 49 887 15 106 47 467 29 869

Householders . . 39 122 580 6 629 1 980 31 093 7 935

Contractors . . . . 4 527 2 089 3 315 497 2 804 3 979

Marine . . . . . 29 031 5813 7 730 4 924 22 190 12 464

Motor Vehicle . .

Compulsory Third 207 687 7818 18 460 7 863 189 182 60 851

Party .................

Employers’

49 176 4 285 11 611 4 176 37 674 146 236

Liability . . . . 145 801 5 856 21 216 9 664 120 777 199 891

Public Liability . . 10 003 976 1 732 999 8 248 29 381

Other ..................... 46 697 11 984 12 471 3 176 43 034 23 156

39 236 56 834 47.15

13 229 36 387 43.02

4 983 3 808 61.13

16 379 26 105 67.31

78 842 207 173 75.83

187 911 79 349 132.88

281 170 202 056 91.74

40 421 19 288 68.67

28 618 48 496 46.90

TOTAL . . . 621960 61945 133 051 48 385 502 469 513 762 690 789 679 496

TABLE 20. STATEMENT OF CLAIMS—OUTSIDE AUSTRALIA—PRIVATE SECTOR— 1973-74

Class o f Business

Direct Claims Paid (Including Inward Facult­ ative Reinsurance

Claims Paid)

Inward Treaty Reinsurance Claims Paid adjusted for

Outward Treaty Reinsurance Claims Recovered

Outward Facultative Reinsurance Claims

O utstanding Claims

adjusted for Salvage & or Recoverable Recovered or N et Claims Provision at

Salvage & Recoveries adjusted for Recoverable Paid beginning o f

Recoveries other other than Salvage & adjusted for (l) + (2) - (3) financial

than Reinsurance Reinsurance Recoveries Salvage & ~ (4) vear

Recoveries (1)

Recoveries (2) (3)

Recoveries (4> (5) (6)

$'000 $’000 $’000 $’000 $’000 $’000

F i r e ...................... . 9 296 6 154 5 131 2 020 8 299 4713

Houseowners and Householders . . 1 892 5 564 400 933 288

Contractors . . . . 100 13 86 16 11 6

Marine . . . . . 6 132 3 091 1 093 1 427 6 703 4 393

Motor Vehicle . . 12 404 238 1 051 479 11 112 4 511

Compulsory Third Party . . . . . 6 570 69 700 73 5 866 7 442

Employers’ Liability . . . . 1 594 180 523 213 1 038 1 746

Public Liability . . 986 184 221 123 826 1 735

Other ................. . 4 058 3 588 1 321 215 6 110 7 480

TOTAL . . . . . 43 032 13 522 10 690 4 966 40 898 32 314

* Earned Premiums for this class was a negative figure.

Outstanding Claims Provision at

financial

(71

Claims Incurred (5) + (7) -(6 )

(8)

Loss Ratio being the Ratio o f Claims Incurred to Earned Premiums

expressed as a percentage (9)

$’000 $’000 %

5 350 8 936 63.46

366 1 Oil 49.01

22 27 *

5 730 8 040 77.67

4 892 11 493 67.44

9 581 8 005 71.52

2 789 2 081 105.90

1 372 463 24.34

9 242 7 872 70.31

39 344 47 928

TABLE 21. STATEMENT OF CLAIMS—IN AUSTRALIA—PUBLIC SECTOR—1973-74

Class of Easiness

Direct Claims Paid /Including Inward Facult­ ative Reinsurance

Claims Paid)

Inward Treaty Reinsurance Claims Paid adjusted for

Outward Treaty Reinsurance Claims Recovered

Outward Facultative Reinsurance Claims

Outstanding Claims

adjusted for Salvageά or Recoverable Recovered or Net Claims Provision at

Salvage <£ Recoveries adjusted for Recoverable Paid beginning o f

Recoveries other other than Salvage cC - adjusted for m + i 2 ) - i 3 i financial

thim Reinsurance Reinsurance Recoveries Salvage <£- -(4) Year

Recoveries m

Recoveries (2) (3)

Recoveries (4) (5) (6)

$'000 $'000 $'000 $'000 $’000 $'000

F i r e ..................... . 8 084 2 860 853 4 371 1 165

Houseowners and Householders . . 6 536 1 007 64 5 465 1 231

Contractors . . . . 507 87 310 110 132

Marine . . . . . 2 140 330 188 1 622 218

Motor Vehicle . . 40 291 270 40 021 9 242

Compulsory Third Party . . . . . 93 072 333 92 739 387 202

Employers' Liability . . . . 60 679 135 60 544 86 361

Public Liability . . 781 33 18 730 2 369

Other ................. . 2 081 121 112 1 848 734

Outstanding Claims Provision at

financial

(7)

Loss Ratio being the Ratio o f Claims

Claims Incurred to

Incurred Earned Premiums 15) + (7) -16) expressed as a percentage (8) (9)

$'000 $'000 %

1 882 5 088 40.93

4 032 8 266 53.40

109 87 116.00

549 1 953 75.03

15 420 46 199 84.38

478 205 183 742 147.69

147 712 121 895 114.56

3 157 1 518 93.65

1 039 2 153 40.07

488 654 652 105 370 901

TABLE 22. STATEMENT OF CLAIMS— IN AUSTRALIA—TOTAL INDUSTRY— 1973-74

Class o f Business

Direct Claims Paid (Including Inward Facult­ ative Reinsurance

Claims Paid)

Inw ard Treaty Reinsurance Claims Paid adjusted for

Outward Treaty Reinsurance Claims Recovered

Outward Facultative Reinsurance Claims

O utstanding Claims

adjusted for Salvage <£ or Recoverable Recovered or Nat Claims Provision at

Salvage & Recoveries adjusted for Recoverable Paid beginning o f

Recoveries other other than Salvage <£ adjusted for

than Reinsurance Reinsurance Recoveries Salvage & -1 4 ) year

Recoveries (I)

Recoveries (2) (3)

Recoveries (4) IS) (6)

O utstanding Loss Ratio

Claims being the Ratio

Provision at o f Claims

end o f Claims Incurred to

financial Incurred Earned Prem ium s

year (5t + (7 )-(6 ) expressed as a

percentage

17) (8) (9)

$’000 $’000 $’000 $’000 $’000 $’000

F i r e .......................... 98 000 22 544 52 747 15 959 51 838 31 034

Houseowners and Householders . . 45 658 580 7 636 2 044 36 558 9 166

Contractors . . . . 5 034 2 089 3 402 807 2 914 4 111

Marine ................. 31 171 5 813 8 060 5 112 23 812 12 682

Motor Vehicle . . 247 978 7 818 18 730 7 863 229 203 70 093

Compulsory Third Party ................. 142 248 4 285 11 944 4 176 130 413 533 438

Employers' Liability . . . . 206 480 5 856 21 351 9 664 181 321 286 252

Public Liability . . 10 784 976 1 765 1 017 8 978 31 750

Other ...................... 48 778 11 984 12 592 3 288 44 882 23 890

$’000 $’000 %

41 118 61 922 46.57

17 261 44 653 44.62

5 092 3 895 61.79

16 928 28 058 67 79

94 262 253 372 77.26

666 116 263 091 142.89

428 882 323 951 99.18

43 578 20 806 67.61

29 657 50 649 46.56

TOTAL ................. 836 131 61 945 138 227 49 930 709 919 1 002 416 1 342 894 1 050 397

TABLE 23. STATEMENT OF UNDERWRITING EXPENSES—IN AUSTRALIA—PRIVATE SECTOR—1973-74

Expenses Incurred (less recoveries & refunds!

Commission. Brokerage & Sim ilar Charges

Paid or Paid or Net Fire

Class of Business Earned

Payable to Payable to Received or Commission Brigade. Taxes

Claims Agents, Ceding Receivable Brokerage & Hospital & (other than

Premiums Incurred Brokers & Insurers from Charges Paid Similar Incom e Tax

Facultative under Reinsurers or Payable Statutory & Stam p

Reinsurers Treaties (3) + 14)- (5} Charges Duty)

Π) a i (3) (4) (5) (6) ' (7) (8)

Underwriting

Other Total Surplus or

Management Underwriting Expenses (Deficit! Expenses Expenses (6) + (7)+ < U (2) t i l l

(8) + (9) + fl0)

(9! (10) (11! (12)

$'000 $'000 $'000 $'000 $'000

F i r e .................

Houseowners and House-

120 530 56 834 28 741

holders . . 84 590 36 387 15 039

Contractors . 6 229 3 808 1 554

Marine . . . 38 785 26 105 4 272

Motor Vehicle Compulsory 273 212 207 173 22 301

Third Party Employers’

59 716 79 349 553

Liability . .

Public '

220 238 202 056 17 816

Liability . . 28 087 19 288 5 448

Other . . . . 103 414 48 496 18 381

15 723 32 191 12 273 19 344 682

788 5 856 9 971 7 742 544

1 345 2 099 800 564 42

838 1 488 3 622 102 207

1 795 4 886 19 210 817 883

693 870 376 1 162 153

603 2 847 15 572 423 1 054

597 1 696 4 349 24 150

5 369 7 222 16 528 231 562

31 304

25 386 1 110 8 053 53 303

7 161

42 996

6 617 24 403

1 338 64 941 (1 245)

677 44 320 3 883

244 2 760 (339)

435 12 419 261

3 708 77 921 (11 882)

484 9 336 (28 969)

1 493 61 538 (43 356)

292 11 432 (2 633)

1 649 43 373 11 545

TOTAL . . . 934 801 679 496 114 105 27 751 59 155 82 701 30 409 4 277 200 333 10 320 328 040 (72 735)

Expenses

Underwriting

Taxes Other Total Surplus or

(other than M anagem ent Underwriting Expenses (Deficit) Expenses (6)+(7) + ( l ) - ( 2 ) - ( l l )

(8) + (9) + (10)

(9) (10) tin (12)

>0 $’000 $'000 $’000 $’000

15 2 016 51 ■ 5 940 (795)

2 508 994 58

11 1 (10) (37)

5 898 60 1 971 341

7 2 078 12 5 479 70

3 1 226 14 4 291 (1 104)

2 306 2 633 (749)

1 260 116 897 542

10 1 220 69 3 540 (215)

8 523 23 735 (1 889)

TABLE 25. STATEMENT OF UNDERWRITING EXPENSES—IN AUSTRALIA—PUBLIC SECTOR— 1973-74

Expenses Incurred (less recoveries & refunds)

Commission. Brokerage & Sim ilar Charges

Paid or Paid or Net Fire

Payable to Payable to Received or Commission Brigade. Taxes

Class o f Business Earned Claims Agents. Ceding Receivable Brokerage & Hospital & (other than

Premiums Incurred Brokers & Insurers from Charges Paid Similar Incom e Tax

Facultative under Reinsurers or Payable Statutory' & Stam p

Reinsurers Treaties (3) + (4) -(5 ) Charges Duty)

(1) (2) (3) (4) (5) (6) (7) (8)

Underwriting

Other Total Surplus or

M anagem ent Underwriting Expenses (Deficit) Expenses Expenses (6) + (7) + (1 )-(2 ) -(11)

(8)+ (9)4-(10)

(9) (10) (ID (12)

$'000 $'000 $'000

F i r e .................

Houseowners and House-

12 432 5 088 993

holders . . 15 479 8 266 657

Contractors . 75 87 14

Marine . . . 2 603 1 953 363

Motor Vehicle Compulsory 54 751 46 199 1 793

Third Party Em plovers'

124 409 183 742 1 144

Liability . .

Public

106 403 121 895 580

Liability . . 1 621 1 518 62

Other . . . . 5 373 2 153 643

$'000 $’000 $'000 $'000 $'000

7 656 344 1 622 19

114 543 1 556 45

70 (56) 17 1

2 32 333 1

5 1 798 299 101

15 1 159 95

11 591 872 38

10 52 7

1 238 406 12 10

$’000 $'000

2 389 7

2 766 338

25

415 85

8 423 343

2 999 253

5 668 85

131 2

1 993 7

$'000 $'000

4 381 2 963

5 248 1 965

(13) 1

834 (184)

10 964 (2 412)

4 506 (63 839)

7 254 (22 746)

192 (89)

2 428 792

TOTAL . . . 323 146 370 901 6 249 41 1 120 5 170 4 378 317 24 809 1 120 35 794 (83 549)

TABLE 26. STATEMENT OF UNDERWRITING EXPENSES—IN AUSTRALIA—TOTAL INDUSTRY— 1973-74

Expenses Incurred {less recoveries & refunds)

Com mission, Brokerage & Sim ilar Charges

Paid or Paid or Net Fire

Payable to Payable to Received or Commission Brigade. Taxes

Class o f Business Earned Claims Agents. Ceding Receivable Brokerage & Hospital & (other than

Premiums Incurred Brokers & Insurers from Charges Paid Similar Incom e Tax

Facultative under Reinsurers or Payable Statutory & Stam p

Reinsurers Treaties (3) + (4 ) - ( 5 ) Charges Duty)

(!) (2) - (3) (4) (5) (6) (7) (8)

Underwriting

O ther Total Surplus or

M anagem ent Underwriting Expenses (D eficit) Expenses Expenses (6)+ (7)E (!) - (2)~ III)

(8)+ (9) + (10)

(9) (10) (11) (12)

$’000 $'000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

F i r e .................

Houseowners

132 962 61 922 29 734 15 730 32 847 12617 20 966 701 33 693

and House­ holders . . 100 069 44 653 15 696 788 5970 10 514 9 298 589 28 152

Contractors . 6 304 3 895 1 568 1 345 2 169 744 581 43 1 135

Marine . . . 41 388 28 058 4 635 840 1 520 3 955 102 208 8 468

Motor Vehicle Compulsory 327 963 253 372 24 094 1 800 4 886 21 008 1 116 984 61 726

Third Party Employers’

184 125 263 091 1 697 708 870 1 535 1 162 248 10 160

Liability . .

Public

326 641 323 951 18 396 614 2 847 16 163 1 295 1 092 48 664

Liability . . 29 708 20 806 5 510 597 1 706 4 401 24 157 6 748

Other . . . . 108 787 50 649 19 024 5 370 7 460 16 934 243 572 26 396

$’000

1 345

1 015 244 520 4 051

737

1 578

294 1 656

$’000 $’000

69 322 1 718

49 568 2 747 13 253 88 885

5 848 (338) 77

(14 294)

13 842 (92 808)

68 792 (66 102)

11 624 45 801

(2 722) 12 337

TOTAL . . . 1 257 947 1 050 397 120 354 27 792 60 275 87 871 34 787 4 594 225 142 11 440 363 834 (156 284)

83

TABLE 27. DISTRIBUTION OF LOSS RATIOS BY CLASS OF BUSINESS—IN AUSTRALIA—PRIVATE SECTOR— 1973-74

Loss R atio Fire Houseowners & Contractors M arine M otor Compulsory Employers Public O ther

between % Householders Vehicle Third Party Liability Liability

U) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2) (1) (2)

OS Jx

Less than 0 0— 10 1 0 -2 0 2 0 - 3 0

3 0 -4 0 4 0 - 5 0

5 0 - 6 0 6 0 - 7 0

7 0 - 8 0 8 0 - 9 0 90—100 100—110 1 1 0 -1 2 0 1 2 0 -1 3 0 130 -1 4 0 140 -1 5 0 1 5 0 -1 6 0 160—170 1 7 0 -1 8 0 1 8 0 -1 9 0 190 —200 over 200

1.8 0.0 1.3 0.0

8.6 0.5 15.0 0.0

4.3 0.5 2.6 0.2

9.2 6.7 7.8 7.6

14.1 15.9 20.9 38.3

23.3 43.3 20.3 30.6

16.0 19.7 17.7 18.3

7.4 7.8 6.5 4.1

3.7 3.0 2.0 0.6

2.5 0.5 0.7 0.1

1.8 1.0 0.7 0.2

1.2 0.1 2.0 0.1

1.2 0.6 0.0 0.0

0.0 0.0 0.7 0.0

0.6 0.0 0.7 0.0

0.0 0.0 0.0 0.0

0.6 0.1 0.0 0.0

0.6 0.0 1.3 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

3.1 0.3 0.0 0.0

13.7 2.5 3.5 0.3

16.8 0.5 12.4 0.2

8.4 3.9 2.1 0.2

4.2 1.7 4.8 1.1

8.4 12.7 4.8 5.1

3.2 1.6 9.0 7.5

12.6 7.7 13.8 14.8

7.4 44.2 17.2 25.5

5.3 17.2 14.5 21.9

6.3 3.2 6.2 5.6

2.1 1.0 4.1 2.9

3.2 1.7 1.4 1.0

2.1 1.9 0.7 0.0

0.0 0.0 1.4 3.1

1.1 0.1 1.4 0.1

0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0

1.1 0.1 0.7 0.0

0.0 0.0 0.0 0.0

0.0 0.0 0.7 0.0

0.0 0.0 0.7 0.9

4.2 0.2 0.7 0.0

1.3 0.1

8.2 0.0

0.6 0.1

0.6 0.1

3.8 0.1

2.5 1.2

5.7 2.0

15.2 26.2

36.1 41.0

10.8 9.6

5.7 18.8

4.4 0.6

1.3 0.1

1.3 0.2

0.0 0.0

0.0 0.0

0.0 0.0

1.3 0.1

0.0 0.0

0.0 0.0

0.0 0.0

1.3 0.0

0.9 0.0

12.3 1.1

0.9 0.1

0.9 0.5

0.0 0.0

0.9 0.0

3.8 5.2

0.9 0.2

2.8 2.8

2.8 1.9

4.7 1.7

5.7 1.3

9.4 46.7

3.8 1.4

5.7 6.2

4.7 4.1

3.8 3.2

10.4 10.9 0.0 0.0

3.8 4.8

1.9 1.0

19.8 6.9

0.8 0.0

10.7 0.0

1.5 0.0

2.3 0.1

2.3 0.4

3.8 1.6

2.3 0.8

8.4 10.1

10.7 28.5 9.9 18.8

12.2 11.7 6.1 8.5

12.2 8.9

3.8 1.3

1.5 0.4

4.6 6.8

0.0 0.0

0.8 0.5

0.0 0.0

0.0 0.0

2.3 1.5

3.8 0.1

3.3 2.9

14.5 0.4

7.9 ■ 5.1 6.6 3.5

7.2 5.0

5.9 11.1

10.5 13.0 9.9 15.4

5.3 6.3

8.6 10.3

4.6 8.6

4.6 8.6

2.0 6.1

0.7 0.0

2.0 2.0

0.7 0.1

0.0 0.0

0.7 0.1

0.0 0.0

0.7 0.6

1.3 0.5

3.3 0.7

2.1 2.4

11.5 0.4

2.6 0.5

9.4 4.6

9.4 16.9

15.1 17.9 26.0 42.6 8.3 9.6

4.2 1.2

4.2 1.7

2.1 1.6

0.5 0.0

1.0 0.0

1.0 0.1

0.0 0.0

0.5 0.0

0.0 0.0

0.0 0.0

0.0 0.0

0.0 0.0

1.0 0.5

1.0 0.2

% of com · ·

panics re­ cording over 100% 7.3 1.1 4.7 0.1 11.7 4.0 7.7 5.1 9.6 1.0 69.0 86.5 35.1 28.0 16.0 18.7 5.0 0.8

loss ratio

No. of com­ panies in­ cluded in each class 163 153 95 145 158 106 131 152 192

In each class— column (I ) ~ % o f c o m p a n ie s p r o v id in g in f o r m a tio n o n th is c la s s , w h ic h a r e in th is g r o u p in g — column <2)~% o f e a r n e d p r e m iu m s o f c o m p a n ie s in (1) to to ta l e a r n e d p r e m iu m s

T h e ta b le sh o w s t h a t C o m p u ls o ry T h ir d P a r ty w as b y f a r th e m o s t u n s a tis fa c to r y c la s s in

te r m s o f lo ss r a tio s e x p e rie n c e d . L oss r a tio s in ex c ess o f 100% w ere r e c o r d e d b y 6 9 % o f th e

c o m p a n ie s c o n c e r n e d , r e p r e s e n tin g 86.5%) o f e a r n e d p r e m iu m s in th is c la s s . W h e n th e p u b lic ^ s e c to r is a d d e d th e p e rc e n ta g e s rise to 70.2%o a n d 95.1%o re s p e c tiv e ly .

E m p lo y e r s ’ L ia b ility fo llo w e d w ith 3 5 .1 % o f c o m p a n ie s , r e p r e s e n tin g 28.0%> o f e a rn e d

p r e m iu m s , r e c o r d in g lo ss r a tio s in e x c ess o f 100%>.

P u b lic L ia b ility a ls o s h o w e d a s u b s ta n t ia l n u m b e r o f h ig h lo ss r a tio s w ith 16.0% o f

c o m p a n ie s , r e p r e s e n tin g 18.7%o o f e a r n e d p r e m iu m s , e x c e e d in g a 100%o lo ss r a tio .

O th e r c la s s e s d id n o t s h o w a n u n d u ly la r g e p r o p o r t io n o f e x c e ssiv e lo ss r a t i o s a p a r t f ro m

M o to r V e h ic le w h e re 9.6%o o f c o m p a n ie s ( b u t r e p r e s e n tin g o n ly 1.0%o o f e a r n e d p r e m iu m s )

r e c o r d e d r a tio s e x c e e d in g 100%o.

A t th e o t h e r e n d o f th e sc a le H o u s e o w n e rs a n d H o u s e h o ld e r s s h o w e d th e b e s t loss

e x p e rie n c e w ith 67.9%> o f c o m p a n ie s , r e p r e s e n tin g 76.7%o o f e a r n e d p r e m i u m s in th is c la s s

s h o w in g a lo ss r a t i o o f less t h a n 50%o.

Tables 28-36 Underwriting Results and Provisions for Outstanding Claims by Classes and Volume of Business—Private Sector—In Australia— 1973-74

Tables 28 to 36 provide—separately for each class of business—the weighted average percentage relationship of certain items to earned premiums according to the volume of earned premiums. These ranges have been somewhat arbitrarily chosen by dividing the companies providing information in each class into four approximately equal groups. An analysis of loss ratios is also given for each of these groups.

In each case the first group (i.e. those with the lowest earned premiums) contains some extreme results and this can be seen for example in the loss ratios which often vary substantially from those of the other size ranges. The tables will allow the individual company to compare its performance with other companies writing a similar volume of business in the particular class.

As a general observation, the percentage of the earned premium dollar absorbed by claims incurred decreased as the volume of business rose. This can be seen for example in Fire, Houseowners/Householders and Compulsory Third Party. However there were some marked differences between classes with Marine showing an example

of an opposite trend. The ratio of total expenses to earned premiums did not disclose any marked economies of scale except for Contractors, Motor Vehicle and Compulsory Third Party. For Fire, Houseowners/Householders, Marine, Employers’ Liability and

O th er’ the ratio of expenses to earned premiums is fairly consistent irrespective of the amount of business written by the companies. In Public Liability expenses appear to rise as a proportion of earned premiums as the amount of business rises but the figures (especially where earned premium is less than $15 000) could be distorted as a result of commissions received.

There are notable differences in expense ratios for different classes of business. For Fire, Houseowners/Householders and Contractors, administrative costs are very high, total expenses averaging more than a half of earned premiums, and for Fire and Houseowners/Householders total expenses exceed claims incurred. For Marine and

Motor Vehicle, expenses are less than half of claims incurred and in the cases of Compulsory Third Party and Employers’ Liability, expenses are small in relation to claims incurred. This is particularly so in the case of those companies which write large amounts of Compulsory Third Party where total expenses were only equivalent to around 10% of claims incurred.

Since claims incurred and expenses were responsive to changes in volume it necessarily followed that changes would occur in the underwriting surplus or deficit. It can be seen that in Fire, Contractors, Motor Vehicle and Compulsory Third Party there was a very definite increase in profitability (or reduction of losses) as volume

rose. Employers’ Liability showed a generally similar trend. The only classes to re­ verse the tendency were Marine and Public Liability. The loss ratios (ratio of claims incurred to earned premiums) also recorded variations by volume of business. It should be noted that their movement will not accord with that of the other items in the tables because there is no weighting factor in the loss ratios, these being simply the median and quartiles of the results of all companies within the particular size ranges.

86

TABLE 28. UNDERWRITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS—PRIVATE SECTOR—FIRE (BY VOLUME OF EARNED PREMiUMSF-IN AUSTRALIA—1973-74

Earned Premiums Companies W eighted average percentage to earned prem ium s o f

in this class between cat ego n· Claims Total Underwriting Provision for

incurred expenses surplus or

deficit

outstanding claims

Loss Ratios (I)

25% o f 50% o f 75% o f

companies companies companies

below below below

% % %

1— 50 000 50 001— 250 000 250 001— 1 000 000 Over 1 000 000

38 70.86

37 50.61

41 49.53

41 46.29

78.49 -4 9 .3 5

53.60 — 4.20

53.54 — 3.07

53.79 — 0.08

46.02 11.4

38.89 34.0

35.49 38.0

31.18 40.3

37.7 88.4

48.5 60.0

45.0 58.0

43.7 53.9

Note (1) T h e fig u re s sh o w n a re th e m e d ia n a n d q u a rtile s fo r e a c h s iz e r a n g e . T h is m e a n s t h a t 25 % , 50 % a n d 75% o f th e c o m p a n ie s in t h a t siz e r a n g e h a d lo ss r a tio s lo w e r t h a n th e

fig u re s sh o w n .

TABLE 29. UNDERWRITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS— PRIVATE SECTOR— HOUSEOW NERS/HOUSE­ HOLDERS (BY VOLUME OF EARNED PREMIUMS)— IN AUSTRALIA— 1973-74

Earned Premiums in this class between

Companies

category

$

1— 20 000 39

20 001— 200 000 34

200 001— 750 000 35

Over 750 000 35

Weighted average percentage to earned prem ium s o f Loss Ratios (1)

Claims Total Underwriting Provision fo r 25% o f 50% o f 75% o f

incurred expenses surplus or outstanding companies companies companies

deficit claims below below below

% % %

62.12 48.84 — 10.96

46.55 47.74 5.40

47.97 50.94 1.08

41.87 52.93 5.20

% % % %

35.12 0.0 20.0 44.0

19.89 30.0 48.5 59.8

18.31 39.0 46.0 55.0

14.84 38.7 44.2 50.2

Notc(l) The figures shown are the median and quartiles for each size range. This means that 25%, 50% and 75% of the companies in that size range had loss ratios lower than the figures shown.

TABLE 30. UNDERWRITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS—PRIVATE SECTOR—CONTRACTORS (BY VOLUME OF EARNED PREMIUMS)—IN AUSTRALIA—1973-74

Earned Premiums in this class between

Companies

category>

W eighted average percentage to earned prem ium s o f

Claims Total Underwriting Provision fo r

incurred expenses surplus or outstanding

deficit claims

25% o f companies

Loss Ratios (l)

50% o f 75% o f

companies companies

below below

% %

1— 1 000 15 242.48 108.34 — 250.82 167.21

1 001— 10 000 25 56.25 72.42 — 28.67 55.50

10 001—40 000 28 54.76 51.46 — 6.22 81.15

Over 40 000 23 62.00 42.93 — 4.93 80.43

0.0 4.0

0.1 17.7

37.0 53.0

34.8 55.0

26.4 66.0 81.0 78.3

Not e d) T h e fig u r e s s h o w n a r e th e m e d i a n a n d q u a r t i le s f o r e a c h s iz e r a n g e . T h is m e a n s t h a t 2 5 % , 5 0 % a n d 7 5 % o f t h e c o m p a n i e s in t h a t siz e r a n g e h a d lo ss r a tio s lo w e r t h a n th e

fig u r e s sh o w n .

TABLE 31. UNDERW RITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS— PRIVATE SECTOR— MARINE (BY VOLUME OF EARNED PREMIUMS)— IN AUSTRALIA— 1973-74

Earned Premiums in this class between

Companies

category'

W eighted average percentage to earned prem ium s o f

Claims Total Underwriting Provision for

incurred expenses surplus or outstanding

deficit claims

Loss Ratios (1)

25% o f 50% o f 75% o f

companies companies companies

below below below

% % %

1— 25 000 37 51.36 25.20 23.45 50.51

25 001— 100 000 30 49.76 33.89 16.35 35.01

100 001—400 000 34 65.74 30.10 4.15 39.87

Over 400 000 35 68.84 32.55 — 1.38 43.11

1.8 26.0 46.0 60.3

56.0 57.4 59.0 69.0

91.0 73.5 68.0 74.9

Note (1) The figures shown are the median and quartiles for each size range. This means that 25%, 50% and 75% of the companies in that size range had loss ratios lower than the figures shown.

TABLE 32. UNDERWRITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS—PRIVATE SECTOR—MOTOR VEHICLE (BY VOLUME OF EARNED PREMIUMS)—IN AUSTRALIA—1973-74

Earned Premiums in this class between

Companies Weighted average percentage to earned prem ium s o f

category Claims Total Underwriting Provision fo r

incurred expenses surplus or outstanding

deficit claims

Loss Ratios (I)

25% o f 50% o f 75% o f

companies companies companies

below below below

% %

1— 150 000 150 001— 750 000 750 001— 2 000 000 Over 2 000 000

41 76.11

37 74.33

36 74.68

33 76.18

42.76 — 18.86

34.75 — 9.07

31.51 — 6.19

27.30 — 3.47

38.32 50.5

42.20 63.7

34.47 70.5

26.69 70.6

69.0 100.0

74.2 87.9

74.6 78.8

72.7 79.5

Note (1) T h e fig u re s sh o w n a re th e m e d ia n a n d q u a r tile s fo r e a c h size ra n g e . T h is m e a n s t h a t 2 5 % , 5 0 % a n d 75 % o f th e c o m p a n ie s in t h a t siz e r a n g e h a d loss r a tio s lo w e r t h a n th e

fig u r e s sh o w n .

TABLE 33. UNDERWRITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS— PRIVATE SECTOR— COMPULSORY T HIRD PARTY (BY VOLUME OF EARNED PREMIUMS)— IN AUSTRALIA— 1973-74

Earned Premiums in this class between

Companies in this catego rv

Weighted average percentage to earned prem ium s o f

Claims Total Underwriting Provision for

incurred expenses surplus or outstanding

deficit claims

Loss Ratios (U

25% o f 50% o f 75% o f

companies companies companies

below below below

% % %

1— 40 000 27 246.48 46.49 — 192.97 644.92

40 001—200 000 25 161.25 23.26 — 84.52 471.18

200 001—600 000 25 153.32 23.86 — 77.18 362.29

Over 600 000 22 127.52 13.18 — 40.70 293.93

24.0 110.0 95.0 114.0

110.0 218.0

139.0 177.0

140.0 197.0

146.0 175.0

Note (1) The figures shown are the median and quartiles for each size range. This means that 25%, 50% and 75% of the companies in that size range had loss ratios lower than the figures shown.

TABLE 34. UNDERWRITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS— PRIVATE SECTOR—EMPLOYERS’ LIABILITY (BY VOLUME OF EARNED PREMIUMS)—IN AUSTRALIA—1973-74

Earned Prem ium s in this class between

Companies

category

W eighted average percentage to earned prem ium s o f

Claims Total Underwriting Provision for

incurred expenses surplus or outstanding

deficit claims

Loss Ratios (1)

25% o f 50% o f 75% o f

companies companies companies

below below below

% %

1— 75 000 28 130.91 25.88 — 56.79 280.39

75 001— 750 000 32 91.54 29.00 — 20.54 133.71

750 001— 2 000 000 35 103.49 26.95 — 30.44 125.12

Over 2 000 000 29 89.04 28.11 — 17.15 127.03

0.0 75.0

60.0 91.0

81.0 95.4

74.3 83.6

124.0 119.0 117.0 108.0

Note (1) T h e fig u r e s s h o w n a r e th e m e d i a n a n d q u a r t i le s f o r e a c h s iz e r a n g e . T h is m e a n s t h a t 2 5 % , 5 0 % a n d 75 % o f t h e c o m p a n ie s in t h a t s iz e r a n g e h a d lo ss r a t i o s lo w e r t h a n th e

f ig u r e s sh o w n .

TABLE 35. UNDERW RITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS— PRIVATE SECTOR— PUBLIC LIABILITY (BY VOLUME OF EARNED PREMIUMS)— IN AUSTRALIA— 1973-74

Earned Premiums in this class between

Companies

category

W eighted average percentage to earned prem ium s o f

Claims Total Underwriting Provision for

incurred expenses surplus or outstanding

deficit claims

Loss Ratios ( l)

25% o f 50% o f 75% o f

companies companies companies

below below below

% % %

1— 15 000 33 32.48 — 19.09 86.60 91.97

15 001— 75 000 33 62.31 32.25 5.44 147.81

75 001— 250 000 36 80.47 41.97 — 22.44 150.41

Over 250 000 39 67.22 41.34 — 8.56 142.65

10.0 17.0 38.0

46.6

28.0 54.0 64.5 65.0

97.0 79.5 89.5 88.0

Note (1) The figures shown are the median and quartiles for each size range. This means that 25%, 50% and 75% of the companies in that size range had loss ratios lower than the figures shown.

TABLE 36. UNDERWRITING RESULTS AND PROVISION FOR OUTSTANDING CLAIMS—PRIVATE SECTOR—OTHER (BY VOLUME OF EARNED PREMIUMS)—IN AUSTRALIA—1973-74

Earned Premiums in this class between

Com pa nies

caiegorv

W eighted average percentage to earned prem ium s o f

Claims Total Underwriting Provision for

incurred expenses surplus or outstanding

deficit claims

25% o f companies

Loss Ratios (1)

50% o f companies

75% o f companies below

% % %

1— 50 000 51 39.34 36.58 24.07 48.42

50 001— 250 000 42 59.75 48.03 — 7.79 38.10

250 001—750 000 46 54.79 37.65 7.56 34.13

Over 750 000 44 45.33 42.54 12.12 25.59

Π.0 36.7 43.2 45.0

35.0 75.0

53.7 69.8

51.0 60.6

51.8 56.1

Note 111 T h e fig u re s s h o w n a re th e m e d i a n a n d q u a r tile s fo r e a c h size r a n g e . T h is m e a n s t h a t 2 5 % . 50 % a n d 75 % o f t h e c o m p a n ie s in t h a t s iz e r a n g e h a d lo ss r a tio s lo w e r t h a n th e

fig u re s sh o w n .

Provision for Outstanding Claims

In view of the importance of the adequacy of provisions for outstanding claims, tables 37-60 have been devoted to analysing the situation by class of business in a number of ways.

The provision for outstanding claims in each class (including claims incurred but not reported) is expressed as a percentage of:

Earned premiums (tables 37-44) Claims incurred (tables 45-52) Claims paid (tables 53-60) for the relevant class.

In each table companies have been grouped in accordance with their ratios. In future Reports the ratio size ranges for some classes will be further subdivided.

For tables 37 to 44, which relate the provisions for outstanding claims to earned premiums, a further cumulative column has been added to show the additional provision which would be necessary to raise to the last percentage figure shown in the first column the provisions of all companies whose ratio is less than that figure. The following extract of a line from table 42 will illustrate:

Percentage to earned premiums between %

160-170

Cumulative percentage of companies %

73.7

Additional provision

S '0 0 0

106 832

This means that if those 73.7% of companies, whose provisions for outstanding claims in respect of Employers’ Liability business were less than 170% of their earned premiums from this class, were to increase their percentage to 170%, a total addition to provisions of $106,832 million would be required.

The distribution of ratios is interesting in the ‘liability’, classes, i.e. Compulsory Third Party, Employers' Liability and Public Liability.

The most significant factor is that whichever of the three ratios is examined, the smaller companies tend to have the lowest relative provisions for outstanding claims. This can be seen by examination of the column ‘cumulative percentage of companies in this class’ and ‘cumulative percentage of total earned premium in this class' in each table.

In table 42 for example 40.6% of the companies supplying information on Employers’ Liability have a provision lower than 100% of earned premiums. However these companies account for only 26.4% of total earned premiums—and only 15.7% of the total provision for outstanding claims—in this class.

Tables 50 and 58 indicate a similar pattern. Table 50 shows 45.1% of companies with a ratio to claims incurred of less than 120% but accounting for only 24.7% of earned premiums and 16.6% of total provisions in this class.

92

Table 58, which relates provisions to claims paid, shows that 24.1% of companies with a ratio of less than 120% account for only 5.1% of earned premiums and 2.3% of total provisions in this class. Similar results appear in the other classes.

93

TABLE 37. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR—FIRE—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total Cumulative prem ium s in this percentage o f class earned bv total earned companies in this prem ium s in

category this class

Percentage o f total provisions for outstanding claims in this class m ade by companies

in this category

Cumulative percentage o f total provisions for outstanding

claims

A dditional provision

% %

0— 10 35 21.2

10—20 13 7.9

20—30 32 19.4

30— 40 42 25.5

40— 50 11 6.7

50—60 10 6.1

60—70 6 3.6

70—80 — 0.0

80— 90 5 3.0

90— 100 1 0.6

Over 100 10 6.0

% % %

21.2 8.1 8.1

29.1 6.0 14.1

48.5 29.9 44.0

74.0 37.9 81.9

80.7 10.2 92.1

86.8 4.1 96.2

90.4 2.4 98.6

90.4 0.0 98.6

93.4 0.5 99.1

94.0 0.1 99.2

100.0 0.8 100.0

% % - $’000

1.8 1.8 256

3.1 4.9 1 496

23.5 28.4 4 854

40.0 68.4 12 865

14.3 82.7 23 428

6.5 89.2 35 040

4.9 94.1 46 862

0.0 94.1 58 877

1.2 95.3 70 912

0.2 95.5 82 988

4.5 100.00

Weighted average this class 32.55%

TABLE 38. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR—HOUSEOWNERS/HOUSEHOLDERS—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total Cumulative prem ium s in this percentage o f class earned bv total earned companies in this prem ium s in

category this class

Percentage o f total provisions fo r outstanding claims in this class made by companies

in this category

Cumulative percentage o f total provisions fo r outstanding

claims

A dditional provision

% %

0— 10 45 29.2

10— 20 63 40.9

20—30 31 20.1

30—40 4 2.6

40—50 6 3.9

50—60 1 0.7

60—70 1 0.7

70—80 — 0.0

80— 90 — 0.0

90—100 — 0.0

Over 100 3 1.9

% % %

29.2 14.1 14.1

70.1 63.4 77.5

90.3 21.1 98.6

92.9 0.6 99.2

96.8 0.7 99.9

97.4 0.1 100.0

98.1 0.0 100.0

98.1 0.0 100.0

98.1 0.0 100.0

98.1 0.0 100.0

100.0 0.0 100.0

% % $’000

7.5 7.5 199

57.8 65.3 4 467

30.9 96.2 12 300

1.3 97.5 20 695

2.0 99.5 29 155

0.2 99.7 37 634

0.0 99.8 46 114

0.0 99.8 54 596

0.0 99.8 63 077

0.0 99.8 71 558

0.2 100.0

Weighted average this class 15.64%

TABLE 39. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR—MARINE—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between

N um ber o f com panics in category

Percentage o f total companies in this class

% %

0— 10 30 20.7

10—20 15 10.3

20—30 19 13.1

30— 40 18 12.4

40— 50 22 15.2

50—60 17 11.7

60—70 11 7.6

70—80 3 2.1

80— 90 2 1.4

90— 100 1 0.7

Over 100 7 4.8

Cu mulative percentage o f companies in this class

Percentage o f total prem ium s in this class earned by companies in this

category

Cumulative percentage o f total earned prem ium s in

this class

% % %

20.7 3.9 3.9

31.0 3.9 7.8

44.1 14.9 22.7

56.6 13.8 36.5

71.7 37.3 73.7

83.4 15.9 89.6

91.0 7.4 97.0

93.1 0.4 97.4

94.4 2.2 99.6

95.2 0.1 99.7

100.0 0.3 100.0

Percentage o f total provisions for outstanding claims in this class m ade by companies

in this category

Cumulative percentage o f total provisions for outstanding

claims

Additional provision

% %■ $’000

0.6 0.6 57

1.4 2.0 291

8.9 10.9 869

11.7 22.6 1 982

39.6 62.2 4 162

20.0 82.2 7 470

11.5 93.7 11 109

0.7 94.4 14 903

4.5 98.8 18 757

0.2 99.0 22 655

1.0 100.0

Weighted average this class 42.23%

TABLE 40. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR— MOTOR VEHICLES—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between

N um ber o f companies in categon'

%

0— 10 15

10— 20 16

20—30 52

30—40 31

40— 50 16

50—60 5

60—70 2

70—80 6

80—90 2

90— 100 1

Over 100 12

Percentage o f total companies in this class

Cum illative percentage o f companies in this class

% %

9.5 9.5

10.1 19.6

32.9 52.5

19.6 72.2

10.1 82.3

3.2 85.4

1.3 86.7

3.8 90.5

1.3 91.8

0.6 92.4

7.6 100.0

Percentage o f total Cumulative premiums in this percentage o f class earned bv companies in this

category

total earned prem ium s in this class

% %

0.3 0.3

11.8 12.1

60.4 72.4

16.4 88.8

8.9 97.7

0.7 98.4

0.1 98.5

0.5 99.0

0.3 99.3

0.1 99.4

0.6 100.0

Percentage o f total provisions fo r outstanding claims in this class made bv companies

in this categon’

Cum ulative percentage o f total provisions fo r outstanding

claims

% %

0.1 0.1

7.0 7.1

52.5 59.6

19.4 79.0

13.2 92.2

1.4 93.6

0.1 93.7

1.4 95.1

0.8 95.9

0.4 96.3

3.7 100.0

Additional provision

$’000

19 993

12 372 34 863 60 896 87 761 114 747 141 773 168 950 196 156

Weighted average this class 28.86%

TABLE 41. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR—COMPULSORY THIRD PARTY—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total Cumulative prem ium s in this percentage o f class earned by total earned companies in this prem ium s in

category' this class

Percentage o f total provisions for outstanding claims in this class made by companies

in this category

Cumulative percentage o f total provisions for outstanding

claims

A dditional provision

% %

0— 30 9 8.4

30—60 — 0.0

60—90 2 1.9

90— 120 6 5.6

120— 150 3 2.8

150— 180 4 3.7

180—210 3 2.8

210—240 7 6.5

240— 270 4 3.7

270—300 5 4.7

300—330 4 3.7

330— 360 5 4.7

360—390 3 2.8

390—420 17 15.9

420—450 4 3.7

Over 450 31 29.0

% % %

8.4 1.3 1.3

8.4 0.0 1.3

10.3 0.5 1.8

15.9 4.5 6.3

18.7 0.8 7.1

22.4 2.5 9.6

25.2 0.8 10.4

31.8 34.2 44.6

35.5 2.4 47.0

40.2 14.7 ' 61.7

43.9 2.3 64.1

48.6 3.1 67.2

51.4 2.2 69.3

67.3 13.9 83.3

71.0 6.8 90.1

100.0 10.0 100.0

Weighted average this class 314.67%

% % $’000

0.0 0.0 231

0.0 0.0 461

0.1 0.1. 715

1.6 1.7 1 307

0.4 2.1 2 467

1.3 3.4 3 948

0.5 3.9 5 725

23.8 27.7 11 856

1.9 29.6 20 102

12.9 42.5 30 760

2.3 44.8 42 202

3.4 48.2 53 961

2.5 50.7 66 371

18.0 68.7 79 842

9.2 78.0 95 770

22.0 100.0

TABLE 42. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR—EMPLOYERS' LIABILITY—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between

N um ber o f companies in category'

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total Cumulative prem ium s in this percentage o f class earned by total earned companies in this prem ium s in

category this class

Percentage o f total provisions fo r outstanding claims in this class made bv companies

in this category'

Cumulative percentage o f total provisions for outstanding

claims

A dditional provision

% %

0— 10 12 9.0

10—20 2 1.5

20—30 1 0.8

30—40 6 4.5

40—50 2 1.5

50—60 4 3.0

60— 70 9 6.8

70— 80 3 2.3

80—90 6 4.5

90— 100 9 6.8

100— 110 8 6.0

110— 120 8 6.0

120— 130 3 2.3

130— 140 4 3.0

140— 150 10 7.5

150— 160 6 4.5

160— 170 5 3.8

170— 180 4 3.0

180— 190 6 4.5

190—200 1 0.8

200—210 2 1.5

210—220 1 0.8

220— 230 2 1.5

230— 240 1 0.8

240—250 1 0.8

Over 250 17 12.8

% % %

9.0 0.1 0.1

10.5 0.5 0.5

11.3 0.0 0.5

15.8 1.5 2.0

17.3 0.3 2.2

20.3 4.7 6.9

27.1 3.8 10.7

29.3 1.9 12.6

33.8 3.0 15.6

40.6 10.8 26.4

46.6 18.3 44.6

52.6 12.8 57.4

54.9 0.3 57.7

57.9 5.4 63.1

65.4 6.5 69.6

69.9 4.7 74.3

73.7 2.7 77.0

76.7 6.5 83.5

81.2 10.9 94.4

82.0 0.5 94.9

83.5 2.2 97.1

84.2 0.0 97.1

85.7 0.1 97.1

86.5 0.6 97.7

87.2 • 1.4 99.1

100.0 0.9 100.0

% % $’000

0.0 0.0 7

0.1 0.1 38

0.0 0.1 154

0.4 0.5 342

0.1 0.6 825

2.0 2.6 1 822

2.0 4.6 3 660

1.2 5.7 6 101

2.0 7.7 9 140

8.0 15.7 13 864

14.8 30.5 22 320

11.5 42.0 33 609

0.3 42.3 46 356

5.7 47.9 59 759

7.5 55.4 74 267

5.6 61.0 90 364

3.6 64.6 106 832

9.1 73.7 124 222

15.6 89.3 144 170

0.8 90.0 165 123

3.4 93.5 186 444

0.0 93.5 207 910

0.2 93.6 229 383

1.1 94.7 250 917

2.7 97.4 272 709

2.6 100.0

W e ig h te d a v e ra g e th is c la s s 127.67%

TABLE 43. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR—PUBLIC LIABILITY—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to corned prem ium s between

N um ber o f companies in category'

Percentage o f total companies in this class

Cum ulative percentage o f companies in this class

Percentage o f total Cumulative prem ium s in this percentage o f class earned bv total earned companies in this prem ium s in

category this class

Percentage o f total provisions for outstanding claims in this class made by companies

in this category

Cumulative percentage o f total provisions fo r outstanding

claims

A dditional provision

% %

0— 10 24 15.7

10—20 3 2.0

20—30 4 2.6

30— 40 5 3.3

40— 50 5 3.3

50—60 6 3.9

60— 70 7 4.6

70—80 9 5.9

80—90 7 4.6

90— 100 9 5.9

100— 110 8 5.2

110— 120 5 3.3

120— 130 5 3.3

130— 140 2 1.3

140— 150 4 2.6

150—160 7 4.6

160— 170 9 5.9

170— 180 1 0.7

180— 190 6 3.9

190— 200 1 0.7

200— 210 1 0.7

210—220 5 3.3

Over 220 20 13.1

% % %

15.7 0.9 0.9

17.6 0.4 1.3

20.3 0.2 1.5

23.5 2.5 4.0

26.8 1.8 5.7

30.7 1.4 7.2

35.3 7.5 14.7

41.2 7.3 22.0

45.8 13.2 35.3

51.6 6.6 41.8

56.9 1.3 43.1

60.1 4.8 47.9

63.4 5.6 53.5

64.7 0.3 53.8

67.3 1.0 54.8

71.9 10.2 65.0

77.8 6.0 71.0

78.4 0.3 71.3

82.4 5.6 77.0

83.0 0.1 77.1

83.7 2.7 79.8

86.9 8.2 87.9

100.0 12.1 100.0

% % $'000

0.0 0.0 24

0.0 0.0 56

0.0 0.1 95

0.6 0.7 171

0.6 1.3 296

0.5 1.8 486

3.3 5.1 819

3.8 8.9 1 364

7.8 16.7 2 161

4.4 21.1 3 225

0.9 22.0 4 438

3.9 25.9 5 707

4.8 30.6 7 167

0.3 30.9 8 687

1.0 31.9 10 224

10.8 42.7 11 977

6.9 49.7 13 887

0.4 50.1 15 902

7.2 57.3 17 999

0.2 57.5 20 179

3.8 61.2 22 424

12.0 73.2 24 861

26.8 100.0

W e ig h te d a v e ra g e th is c la s s 1 4 3 .9 1 %

TABLE 44. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF EARNED PREMIUMS PRIVATE SECTOR—OTHER—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total Cumulative prem ium s in this percentage o f class earned by total earned companies in this prem ium s in

category this class

Percentage o f total provisions for outstanding claims in this class made by companies

in this category

Cumulative percentage o f total provisions for outstanding

claims

A dditional provision

% %

0— 10 43 22.3

10—20 45 23.3

20—30 42 21.8

30—40 25 13.0

40—50 10 5.2

50—60 3 1.6

60—70 5 2.6

70—80 2 1.0

80—90 1 0.5

90— 100 2 1.0

Over 100 15 7.8

% % %

22.3 8.5 8.5

45.6 30.7 39.2

67.4 25.6 64.8

80.3 22.1 86.9

85.5 4.4 91.3

87.0 3.0 94.3

89.6 3.6 97.8

90.7 0.5 98.3

91.2 0.6 98.9

92.2 0.1 99.0

100.0 0.9 100.0

% % $’000

2.1 2.1 264

16.5 18.6 2 650

22.4 40.9 8 031

26.5 67.5 15 995

7.1 74.6 24 973

5.7 80.3 34 395

8.1 88.4 44 162

1.4 89.8 54 077

1.9 91.7 64 040

0.2 91.9 74 054

8.1 100.0

Weighted average this class 59.01%

TABLE 45. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—FIRE—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cum ulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class m ade by com ­

panies in this category

Cumulative percentage o f total provisions fo r outstanding

claims

% %

0— 10 22 13.3 13.3 0.5 0.5

10— 20 7 4.2 17.6 3.9 4.3

20— 30 5 3.0 20.6 1.7 6.1

30— 40 8 4.9 25.5 3.8 9.9

40— 50 13 7.9 33.3 7.7 17.6

50—60 17 10.3 43.6 7.5 25.2

60—70 27 16.4 60.0 30.9 56.1

70— 80 19 11.5 71.5 15.4 71.5

80—90 16 9.7 ' 81.2 16.7 88.2

90— 100 7 4.2 85.5 5.6 93.8

100— 110 5 3.0 88.5 1.6 95.4

110— 120 6 3.6 92.1 3.1 98.5

Over 120 13 7.8 100.0 1.5 100.0

0.1 0.1

0.9 0.9

0.5 1.4

1.7 3.1

5.5 8.6

6.0 14.6

29.3 43.9

18.2 62.1

20.0 82.1

7.5 89.6

3.4 93.0

4.6 97.6

2.5 100.0

Weighted average this class 69.04%

TABLE 46.PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—HOUSEOWNERS/HOUSEHOLDERS—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class made by com ­

panies in this category

Cumulative percentage o f total provisions fo r outstanding

claims

% % %

o— io 34 22.1

10—20 5 3.3

20—30 22 14.3

30—40 37 24.0

40—50 19 12.3

50—60 17 11.0

60—70 6 3.9

70—80 3 2.0

80— 90 2 1.3

90— 100 5 3.3

Over 100 4 2.7

22.1 0.5 0.5

25.3 5.5 6.0

39.6 20.0 26.0

63.6 42.5 68.4

76.0 19.7 88.1

87.0 10.7 98.9

90.9 0.1 98.9

92.9 0.5 99.4

94.2 0.1 99.5

97.4 0.1 99.6

100.0 0.3 100.0

0.0 0.0

2.9 3.0

15.8 18.8

37.6 56.4

24.3 80.6

16.6 97.2

0.2 97.4

1.1 98.5

0.1 98.6

0.5 99.1

0.9 100.0

Weighted average this class 36.36%

TABLE 47. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—MARINE—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions for outstanding claims in this class m ade bv com ­

panies in this category

Cumulative percentage o f total provisions for outstanding

claims

%

0— 10 27

10— 20 5

20— 30 8

30—40 8

40— 50 17

50—60 24

60— 70 17

70— 80 7

80— 90 12

90— 100 6

100— 110 4

110— 120 4

Over 120 6

% %

18.6 18.6

3.5 22.1

5.5 27.6

5.5 33.1

11.7 44.8

16.6 61.4

11.7 73.1

4.8 77.9

8.3 86.2

4.1 90.3

2.8 93.1

2.8 95.9

4.2 100.0

% %

0.7 0.7

3.8 4.5

1.4 5.9

3.5 9.3

12.0 21.3

23.2 44.5

35.2 79.7

4.0 83.7

6.2 89.9

4.4 94.3

0.6 94.9

3.5 98.4

1.5 100.0

% %

0.8 0.8

0.8 1.5

0.5 2.0

2.6 4.6

9.2 13.9

21.5 35.4

35.9 71.3

5.1 76.3

8.4 84.7

7.5 92.2

0.7 92.9

4.6 97.6

2.5 100.0

Weighted average this class 62.74%

TABLE 48. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—MOTOR VEHICLE—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category>

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class m ade by com ­

panies in this category

Cumulative percentage o f total provisions fo r outstanding

claims

% % %

0— 10 17 10.8 10.8 0.2 0.2

10—20 4 2.5 13.3 1.0 1.2

20—30 15 9.5 22.8 27.4 28.6

30—40 44 27.9 50.6 40.1 68.7

40— 50 38 24.1 74.7 20.7 89.4

50—60 13 8.2 82.9 7.3 96.7

60— 70 3 1.9 84.8 0.3 97.0

70—80 3 1.9 86.7 0.5 97.5

80— 90 5 3.2 89.9 1.3 98.7

Over 90 16 10.0 100.0 1.2 100.0

0.2 0.2

0.4 0.6

20.0 20.6

35.9 56.4

23.8 80.2

10.9 91.1

0.5 91.7

0.9 92.6

2.0 94.5

5.4 100.0

Weighted average this class 38.06%

TABLE 49. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—COMPULSORY THIRD PARTY—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cum ulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class made by com ­

panies in this category

Cumulative percentage o f total provisions fo r outstanding

claims

% % % % %

0— 100 18 16.8 16.8 1.7 1.6

100— 120 6 5.6 22.4 0.3 1.9

120— 140 5 4.7 27.1 2.4 4.2

140— 160 2 1.9 29.0 0.6 4.8

160— 180 6 5.6 34.6 2.4 7.2

180— 200 13 12.1 46.7 41.7 48.8

200— 220 5 4.6 51.4 5.6 54.3

220— 240 13 12.2 63.6 12.7 67.0

240— 260 6 5.6 69.2 14.2 81.3

260— 280 5 4.7 73.8 4.8 86.1

280— 300 4 3.8 77.6 3.4 89.5

Over 300 24 22.2 100.0 10.5 100.0

% 0.3 0.4 2.8

0.3 2.7 29.4 5.0

15.0 14.4 5.7 3.3

20.7

% 0.3 0.6 3.4

3.7 6.4 35.7 40.8 55.8 70.2 75.9 79.2 100.0

Weighted average this class 236.82%

TABLE 50. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—EMPLOYERS’ LIABILITY—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earth’d premiums between:

N um ber o f companies in category

Percentage ot total cotttpanies in ibis class

Cumulative percentacc o f eotttpanics in this class

Percentage o f total claims itt this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions for outstanding claims in this class made by cottt-

panies in this category

Cumulative percentage o f total provisions for outstanding

claims

% % %

0— 10 15 11.3 11.3 0.1 0.1

10— 20 0 0.0 11.3 0.0 0.1

20— 30 2 1.5 12.8 0.1 0.1

30— 40 2 1.5 14.3 0.4 0.5

40— 50 1 0.8 15.0 0.1 0.6

50—60 1 0.8 15.8 1.2 1.8

60— 70 4 3.0 18.8 0.9 2.7

70—80 6 4.5 23.3 1.6 4.3

80— 90 13 9.8 33.1 11.6 15.8

90—100 3 2.3 35.3 0.3 16.1

1 (X)— 110 8 6.0 41.4 4.1 20.3

110— 120 5 3.8 45.1 4.5 24.7

120— 130 19 14.3 59.4 24.1 48.8

130— 140 6 4.5 63.9 11.9 60.7

140— 150 6 4.5 68.4 5.1 65.8

150— 160 7 5.3 73.7 11.9 77.7

160— 170 4 3.0 76.7 1.8 79.5

170— 180 1 0.8 77.4 1.2 80.7

180— 190 4 3.0 80.5 6.9 87.5

190— 2(X> 4 3.0 83.5 0.9 88.5

200— 210 1 0.8 84.2 0.4 88.9

210— 220 3 2.3 86.5 3.0 91.9

220— 230 6 4.5 91.0 6.7 98.6

Over 230 12 9.3 100.0 ’ 1.4 100.0

0.2 0.0 0.0 0.1 0.0

0.4 0.4 0.9 7.8 0.1

3.0 3.7 23.1 12.1 4.6 11.8

3.3 1.4 9.1 0.8 0.6 5.0 9.8

2.0

0.2 0.2 0.2 0.3 0.3 0.7

1.0 1.9 9.7 9.8 12.8 16.6 39.7 51.8 56.3 68.1 71.4 72.7 81.9 82.6 83.2 88.2 98.0 100.0

Weighted average this class 139.15%

TABLE 51. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—PUBLIC LIABILITY—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

Cumulative percentage o f total claims incurred in

this class cutegory

Percentage o f total provisions fo r outstanding claims in this class m ade by com ­

panies in this category

Cumulative percentage o f total provisions fo r outstanding

claims

%

0— 100 42

100— 110 10

110— 120 6

120— 130 6

130— 140 9

140— 150 5

150— 160 . 5

160— 170 3

170— 180 4

180— 190 15

190—200 4

200— 210 3

210— 220 7

220— 230 1

230— 240 3

240—250 1

250— 260 3

260— 270 1

270—280 3

280— 290 2

Over 290 20

% %

27.6 27.5

6.5 34.0

3.9 37.9

3.9 41.8

5.9 47.7

3.3 51.0

3.3 54.2

2.0 56.2

2.6 58.8

9.8 68.6

2.6 71.2

2.0 73.2

4.6 77.8

0.7 78.4

2.0 80.4

0.7 81.0

2.0 83.0

0.7 83.7

2.0 85.6

1.3 86.9

13.5 100.0

% %

6.1 6.1

5.4 11.5

6.1 17.6

2.5 20.0

12.5 . 32.6

2.1 34.6

4.6 39.3

0.7 39.9

1.8 41.7

9.3 51.1

6.9 58.0

1.8 59.8

12.4 72.2

0.2 72.4

2.0 74.4

1.0 75.4

6.1 81.5

2.3 83.8

2.7 86.5

2.7 89.1

11.0 100.0

% %'

5.1 5.1

2.3 7.4

4.7 12.1

1.5 13.6

10.6 24.2

1.6 25.8

2.5 28.3

0.7 29.0

1.1 30.1

9.5 39.6

6.2 45.8

1.3 47.1

15.5 62.6

0.3 62.9

1.2 64.1

0.5 64.6

9.8 74.4

4.7 79.1

3.2 82.3

2.7 85.0

14.9 100.0

W e ig h te d a v e ra g e th is c la s s 2 0 9 .5 7 %

TABLE 52. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS INCURRED PRIVATE SECTOR—OTHER—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between:

N um ber o f companies in category

Percentage of’ total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class made by com ­

panies in this category

Cumulative percentage o f total provisions fo r outstanding

claims

% % %

0— 10 36 18.7 18.7 4.7 4.7

10— 20 6 3.1 21.8 1.4 6.1

20—30 17 8.8 30.6 7.3 13.3

30—40 38 19.7 50.3 28.0 41.3

40—50 25 13.0 63.2 15.8 57.1

50—60 12 6.2 69.4 16.7 73.8

60— 70 14 7.3 76.7 7.6 81.3

70— 80 9 4.7 81.3 7.3 88.6

80—90 7 3.6 85.0 1.2 89.8

90— 100 8 4.2 89.1 3.3 93.1

100— 110 4 2.1 91.2 1.4 94.5

110— 120 3 1.6 92.7 1.3 95.7

Over 120 14 7.1 100.0 4.3 100.0

2.1 2.1

0.4 2.5

3.3 5.8

15.8 21.6

14.3 35.8

16.6 52.5

10.3 62.8

9.4 72.1

2.9 75.0

6.8 81.9

2.3 84.1

2.7 86.9

13.2 100.0

W e ig h te d a v e ra g e th is c la s s 5 9 .0 1 %

Cum ulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class m ade by com ­

panies in this categon'

0.5 0.9 0.4 0.6

2.7 4.5 18.4 20.9

0.9 21.8 4.7 3.7

7.3

2.8 9.8

Cumulative percentage o f total provisions fo r outstanding

claims

0.5 1.3 1.7 2.4 5.1 9.6 28.0 48.9 49.8

71.6 76.2 79.9 87.3

87.3 90.1 100.0

TABLE 54. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS PAID PRIVATE SECTOR—HOUSEOWNERS/HOUSEHOLDERS—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between:

N um ber o f companies in cutegon·

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions for outstanding claims in this class made by com ­

panies in this category

Cumulative percentage o f total provisions fo r outstanding

claims

% % %

0— 10 35 22.7 22.7 0.5 0.5

10— 20 5 3.3 26.0 2.9 3.4

20— 30 18 11.7 37.7 18.5 21.9

30— 40 30 19.5 57.1 31.7 53.6

40— 50 23 14.9 72.1 21.3 74.9

50— 60 6 3.9 76.0 13.4 88.3

60— 70 6 3.9 79.9 1.5 89.8

70— 80 6 3.9 83.8 4.9 94.7

80— 90 7 4.6 88.3 3.9 98.6

90— 100 2 1.3 89.6 0.4 99.0

Over 100 16 10.8 100.0 1.0 100.0

0.0 0.0

1.4 1.4

13.4 14.8

28.5 43.3

24.1 67.4

13.3 80.7

2.5 83.1

6.7 89.8

6.7 96.4

0.8 97.2

2.9 100.0

W e ig h te d a v e ra g e th is c la s s 4 2 .5 4 %

TABLE 55. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS PAID PRIVATE SECTOR—MARINE—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f eompanies in categoiy

Percentage o f lotal companies in ibis class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions for outstanding claims in this class made by com ­

panies in this category

Cumulative percentage o f total provisions for outstanding

claims

% % %

0— 10 24 16.6 16.6 0.4 0.4

10— 20 6 4.1 20.7 3.8 4.2

20— 30 3 2.1 22.8 2.6 6.8

30— 40 12 8.3 31.0 3.3 10.1

40— 50 14 9.7 40.7 7.5 17.5

50— 60 6 4.1 44.8 9.4 26.9

60— 70 18 12.4 57.2 17.0 43.9

70— 80 9 6.2 63.4 8.4 52.4

80— 90 11 7.6 71.0 26.2 78.5

90— 100 6 4.1 75.2 2.2 80.8

100— 110 2 1.4 76.6 3.8 84.6

110— 120 5 3.5 80.0 2.9 87.5

120— 130 6 4.1 84.1 4.2 91.7

130— 140 3 2.1 86.2 3.8 95.6

140— 150 2 1.4 87.6 0.3 95.9

Over 150 18 12.6 100.0 4.2 100.0

0.0 0.8 1.3 1.5

5.2 7.1 17.5 8.4 28.5

2.6 5.7 3.6 5.5

5.2 0.4 6.7

0.0 0.8 2.0 3.6

8.7 15.8 33.4 41.7

70.2 72.8 78.5 82.1 87.6

92.8 93.2 100.0

Weighted average this class 73.81%

TABLE 56. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS PAID PRIVATE SECTOR—MOTOR VEHICLE—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between:

Num ber o f companies in category'

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred bv companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class made by com ­

panies in this category'

Cumulative percentage o f total provisions fo r outstanding

claims

% % %

0— 10 15 9.5 9.5 0.3 0.3

10— 20 6 3.8 13.3 1.1 1.4

20— 30 14 8.9 22.2 27.1 . 28.4

30— 40 18 11.4 33.5 14.2 42.7

40— 50 ' 42 26.6 60.1 40.3 83.0

50— 60 21 13.3 73.4 7.0 89.9

60— 70 11 7.0 80.4 6.7 96.6

70— 80 4 2.5 82.9 0.6 97.2

80— 00 0 0.0 82.9 0.0 97.2

90— 100 2 1.3 84.2 0.1 97.3

Over 100 25 15.7 100.0 2.7 100.0

0.2 0.2

0.5 0.7

19.8 20.5

11.7 32.2

39.7 71.9

9.1 81.0

10.0 91.0

1.2 92.2

0.0 92.2

0.1 92.2

7.8

W e ig h te d a v e ra g e th is c la s s 4 1 .6 8 %

TABLE 57. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS PAID PRIVATE SECTOR—COMPULSORY THIRD PARTY—IN AUSTRALIA— 1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f c o n ip a m e s in category

Percentage o f total companies in this class

Cumulative percentage o f companies ifi this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions for outstanding claims in this class m ade bx com ­

panies in this category

Cum ulative percentage o f total provisions for outstanding

claims

% % %

0— 50 21 19.6 19.6 2.9 2.8

50— 100 2 1.8 21.5 0.2 3.0

100— 150 2 1.9 23.4 0.3 3.3

150—200 3 2.7 26.2 0.1 3.5

200— 250 5 4.6 30.8 2.5 6.0

250— 300 3 2.8 33.6 2.1 8.1

300— 350 6 5.6 39.3 4.9 13.0

350— 400 15 13.9 53.3 17.1 30.1

400—450 3 2.7 56.1 3.5 33.5

450— 500 3 2.8 58.9 10.2 43.8

500— 550 7 6.5 65.4 35.8 79.6

550— 600 7 6.5 72.0 6.5 86.1

Over 600 30 28.0 100.0 13.9 100.0

1.8 0.2 0.4 0.7

2.9 1.1 7.4 17.2

4.6 9.1 25.1 8.6 100.0

1.9 2.1 2.5

3.2 6.1 7.2 14.6 31.7 36.3 45.4 70.6 79.1 100.0

Weighted average this class 498.78%

TABLE 58. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS PAID PRIVATE SECTOR—EMPLOYERS’ LIABILITY—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between:

N um ber o f companies in category'

Percentage o f total companies in this class

Cu mulative , percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

Percentage o f total provisions fo r outstanding claims in this class made by com­

panies in this category>

Cumulative percentage o f total provisions for outstanding

claims

% % %

0— 20 14 10.5 10.5 0.1 0.1

20— 40 2 1.5 12.0 0.1 0.1

40— 60 4 3.1 15.0 1.7 1.8

60— 80 4 3.1 18.0 0.7 2.6

80— 100 3 2.3 20.3 0.8 3.4

100— 120 5 3.8 24.1 1.8 5.1

120— 140 7 5.3 29.3 7.2 12.3

140— 160 13 9.8 39.1 17.2 29.5

160—180 4 3.1 42.1 1.0 30.5

180— 200 13 9.8 51.9 23.6 54.1

200— 220 6 4.5 56.4 3.2 57.3

220—240 11 8.3 64.7 13.7 71.1

240—260 0 0.0 64.7 0.0 71.1

260— 280 1 0.8 65.4 1.1 72.2

280 -3 0 0 7 5.3 70.7 7.3 79.5

300— 400 11 8.4 79.9 2.8 82.4

41X1—500 9 6.8 85.7 8.1 90.5

51X1—600 2 1.6 87.2 1.8 92.3

Over 600 17 12.8 100.0 7.8 100.0

0.3 0.3

0.0 0.3

0.5 0.7

0.3 1.1

0.4 1.4

0.9 2.3

3.7 5.9

13.4 19.3

0.9 20.3

20.3 40.5

2.6 43.2

17.0 60.1

0.0 60.1

1.3 61.5

10.1 71.6

3.3 74.8

12.6 87.4

2.5 89.8

10.2 100.0

Weighted average this class 232.80%

TABLE 59. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS PAID PRIVATE SECTOR—PUBLIC LIABILITY—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned prem ium s between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cum ulative percentage o f total claims incurred in

this class

Percentage o f total provisions for outstanding claims in this class made by com ­

panies in this category>

Cumulative percentage o f total provisions fo r outstanding

claims

% % % % %

0— 50 32 21.0 20.9 2.5 2.5

50— 100 3 2.0 22.9 0.1 2.6

100— 150 7 4.6 27.5 2.9 5.6

150—200 7 4.6 32.0 5.3 10.8

200—250 6 4.0 35.9 2.2 13.0

250—300 8 5.3 41.2 6.3 19.2

300— 350 8 5.3 46.4 6.3 25.5

350—380 14 9.2 . 55.6 14.9 40.3

380— 410 5 3.3 58.8 5.3 45.6

410—440 4 2.6 61.4 6.6 52.2

440—470 10 6.6 68.0 6.8 58.9

470—500 4 2.7 70.6 6.5 65.5

500—600 7 3.5 75.2 5.6 71.0

Over 600 38 24.8 100.0 29.0 100.0

% %

1.9 1.9

0.0 1.9

1.2 3.1

3.0 6.2

1.5 7.6

4.7 12.2

3.8 16.1

10.7 26.8

4.9 31.7

5.2 36.9

7.3 44.2

7.6 51.7

4.8 56.5

43.5 100.0

Weighted average this class 490.07%

TABLE 60. PROVISION FOR OUTSTANDING CLAIMS AS A PERCENTAGE OF CLAIMS PAID PRIVATE SECTOR—OTHER—IN AUSTRALIA—1973-74 DISTRIBUTION OF RATIOS

Percentage to earned premiums between:

N um ber o f companies in category

Percentage o f total companies in this class

Cumulative percentage o f companies in this class

Percentage o f total claims in this class incurred by companies in this

category

Cumulative percentage o f total claims incurred in

this class

% % % % %

0— 10 36 18.7 18.7 4.6 4.6

10— 20 10 5.2 23.8 2.9 7.5

20— .30 15 7.8 31.6 6.3 13.9

30— 40 26 13.5 45.1 21.1 34.9

40— 50 16 8.3 53.4 8.9 43.8

50— 60 22 11.4 64.8 20.4 64.2

60— 70 10 5.2 69.9 5.9 70.1

70— 80 12 6.2 76.2 12.4 82.5

80— 90 7 3.6 79.8 6.4 88.9

90— 100 5 2.6 82.4 2.5 91.5

Over 100 34 17.4 100.0 8.6 100.0

W e ig h te d a v e ra g e th is c la s s 6 6 .5 0 %

Percentage o f total provisions for outstanding claims in this class made by com ­

panies in this category’

Cumulative percentage o f total provisions fo r outstanding

claims

% %

2.2 2.2

0.9 3.0

2.8 5.9

11.1 17.0

6.4 23.3

19.2 42.5

7.3 49.8

15.7 65.5

8.2 73.7

4.6 78.3

21.5 100.0

TABLE 61. BALANCE DATES—PRIVATE SECTOR—IN AUSTRALIA— 1973-74

Companies Balancing in:

Class o f Business February-

March

April-June

A ugust- Septem ber . November- Dee ember

' % % % %

FIRE Companies ........................................... 3.03 41.21 7.88 47.85

Direct P r e m iu m s ................................... 4.90 48.01 7.53 39.56

Earned Premiums .............................. 4.21 39.85 6.78 49.16

HOUSEOW NERS AND HOUSEHOLDERS Companies ........................................... 3.25 44.16 6.49 46.10

Direct P r e m iu m s ................................... 4.70 46.31 13.05 35.94

Earned Premiums ............................ 4.64 46.29 12.22 36.85

CONTRACTORS Companies ........................................ 4.12 35.05 7.22 53.61

Direct P r e m iu m s ................................... 4.57 52.18 7.86 35.39

Earned Premiums ............................ 1.97 26.77 7.35 63.91

MARINE Companies ........................................ 4.83 43.44 6.90 44.83

Direct P r e m iu m s ................................ 6.16 38.15 6.05 49.64

Earned Premiums ............................ 6.65 41.33 6.59 45.43

M O TO R VEHICLE Companies ........................................ 2.53 46.20 6.96 44.31

Direct P r e m iu m s ................................... 6.47 51.07 15.34 27.12

Earned Premiums ........................... 7.27 53.04 16.68 23.01

COM PULSORY TH IRD PARTY C o m p a n ie s............................................ 3.74 40.19 9.35 46.72

Direct P r e m iu m s ................................... 31.20 28.56 3.73 36.51

Earned Premiums .............................. 34.31 33.63 4.44 27.62

EM PLOYERS’ LIABILITY Companies ........................................... 2.26 43.61 - 7.52 46.61

Direct P r e m iu m s ................................... 3.35 54.86 7.36 34.43

Earned Premiums .............................. 3.86 54.38 7.62 34.14

PUBLIC LIABILITY Companies ........................................... 3.27 42.48 7.19 47.06

Direct P r e m iu m s ................................... 3.32 47.76 9.24 39.68

Earned Premiums .............................. 4.09 46.05 8.87 40.99

OTHER Companies ........................................... 3.88 44.66 7.28 44.18

Direct P r e m iu m s ................................... 3.47 45.69 12.45 38.39

Earned Premiums .............................. 3.69 43.41 11.12 41.78

TOTAL— ALL CLASSES Companies ........................................... 4.27 44.44 7.69 43.60

Direct P r e m iu m s ................................... 6.41 48.34 10.34 34.91

Earned Premiums .............................. 7.01 47.86 10.75 34.39

Note: N o c o m p a n y b a la n c e s in th e m o n th s o f J a n u a r y . J u ly a n d O c to b e r

118

Glossary of Terms

The following explanations have been prepared to help clarify the meanings of certain expressions as they have been employed in this Annual Report.

Application— An application made to the Commissioner for an authority to carry on insurance business under the provisions of section 22 of the Act.

Authority— An authority to carry on insurance business granted by the Commissioner to a body corporate under either sections 24, 25 or 26 of the Act or by the Treasurer under sections 23 or 27 of the Act.

Company—

Equity—

Policy—

To aid simplicity of expression the term ‘company’ is frequently used instead of ‘body corporate’ (the term used in the Act, which has a somewhat wider application).

Any investment which is dealt with on a recognised stock exchange.

The document which embodies the terms of the insurance contract between insurer and insured.

Reinsurance— An agreement made by one insurance company (the ceding company) with another company (the reinsurance company) under which the reinsurance company will accept a share, on agreed terms, of the liability under certain policies issued by the ceding company.

Retrocessionaire— The reinsurer of a reinsurer.

Returns— Accounts and statements required to be lodged with the

Commissioner under the provisions of sections 22 or 44 of the Act.

R74/2404

119