INSURANCE
THE total premium income received by the British Insurance Companies for the year 1924 amounted to £49,299,707. Of this amount £39,812,700 was paid to the Tariff Offices, and £9,487,007 to the Non-Tariff Companies. These totals include Accident business transacted both at home and abroad, but do not include the premiums paid to Lloyd's Underwriters, which are not published, but which must, of course, run into sub- stantial amounts, at a guess: say, £5,000,000 to £6,000,000. As regards the Companies' results after payment of claims, expenses and provision for the necessary reserves, the final profit on the income of £49,299,707 amounted to E1,111,253, or 2.2 per cent. As a matter of interest it may be noted that the profit made by the Tariff Companies amounted to £1,286,505, or a profit of 3.2 per cent. whilst the non-Tariff Companies showed a loss of £175,252, ar a loss of 1.8 per cent.
In 1923 the premium income of the Tariff Companies amounted to £37,078,701, with a profit of 2.2 per cent., and the non-Tariff Companies an income of £8,019,374; with a loss of 1.2 per cent.
These figtires demonstrate very clearly that the public get very full benefit iii respect of their outlay on Accident Insurance, as no one can argue that a trading profit of less than 3 per cent. is in any way excessive ; in fact, it is very creditable to the Underwriters that they can fix premiums so accurately. It may be of interest to the reader to know that as regards turnover the " Commercial Union " and its subsidiary Companies lead the way with a turnover of £7,721,403, and is followed by the "Phoenix" with ' b3,112,291, the Employers' 'Liability - £4,692,652, " Royal " 14,568,734, and the " Liverpool and London and Globe," with £4,226,210.
It will be seen that these five Offices between them control over 50 per cent. of the total premium income.
It is not perhaps very widely known that in 1923 an agreement was made between the Home Office and the Accident Offices Association in respect of Workmen's Compensation Insurance under which the Association undertook on behalf of its members to adjust from time to time the rates of premium charged for this class of insurance, so that -the. loss ratio, that is, the ratio of claims paid • to premium income, should approximate 60 per cent kir 1924, 10.5 and 1926, and not less than 62/ per cent in subsequent years to be agreed between the Secretary for State and the Association. If the claims ratio for the year works out at 60 per cent. there would be no adjustment, but should it fall to, say, 55 per cent. then a rebate of 5 per cent. is payable to the Policy Holders from the premiums payable for the folloWing year. The loss ratio as certified by Messrs. Deloitte, Plender, Griffiths and Co. for the year. 1924 was 52.88 per cent., and the Policy Holders became en- titled .to a rebate oi7.12 per cent. off these premiums for the coming year, that is the difference between 60 per cent. and 52.88 per cent.
To the outside observer it seems strange that the arrangement did not provide for the rebate to be calcu- lated to the nearest half per cent., which for 1924 would have been 7/ per cent. As it is .the clerical staff of the Insurance Companies must be involved in thousands of intricate calculations which might-well have been avoided. As so often happens, however, when such negotiations are on foot, small matters of this sort-., although of ultimate importance, are apparently overlooked. With ' a loss ratio of 60 per cent. the Companies are left with 40 per cent. out of which to pay agency commission expenses and to provide a profit. The business is expen- sive to work, as a large number of claims have to be dealt with necessitating a large clerical staff, - and also an outside staff to investigate personally difficult and doubtful claims. It is doubtful whether the most :economical - of manageMents can keep the outlay on commission and expenses at less than 35 per cent., although since the agreement was made the scale of Agency Commission has been reduced and now commences at 10 per cent. instead of 15 per cent. previously allowed to Agents. It will be seen, therefore, that a profit of 5 per cent. is, in all proba- bility, the maximum that can be hoped for. The alter- native to this arrangement was apparently State Insurance, and to those who have studied the matter it is open to very great- doubt whether a Government • Department could give anything like the service of the Insurance Offices, and certainly the cost would be infinitely greater. It will certainly be of interest to watch for the next few years how the scheme will work out.
Another section of the Accident business, which is of very great importance, and probably yields the largest income, is that of Motor Insurance. This business has been a source of some anxiety since the War as, owing to the ever-increasing number of cars on the road, the ratio in the number of accidents per car is un- doubtedly increasing, whilst the cost of repairs since the War has been steadily increasing, although it is felt by those conducting the business that the zenith has been reached, and the results have certainly been slightly more favourable, so far as one can learn, in 1924. The Accident Departments of the Companies also include Personal Accident, Sickness, Burglary, Live Stock, Fidelity Guarantee and sundry other minor sections of the business, in all of which increasing care is required to show a margin of profit, as competition is very keen, whilst the claims seem to have an increasing upward tendency. That the Companies, however, arc able to deal fairly with. the Insuring Public and give them good value for their money and yet shoiy- a fair 'return to 'their'Share- holders is evidence that those responsible for the manage- ment must be men of sound judgment and good business Capacity.
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