CO129-346 - Governor Sir Lugard - 1908 [1-3] — Page 193

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LUGU

.Vonevlog

Then I deprecate the provisions of clause 24

of the Hongkong Ordinance as to the application of the standard

of solvency. It is left to one or more policy holders or share-

-holders to set the law in motion, and that will lead to black-

-mail. Unscrupulous persons will get hold of a dumy policy-

-holder and threaten proceedings in such a way as to try to

get the Company to buy him off. Even a streng Company could be

attacked in this way, because, although its position might be

unassailable, yet the very rumour of such proceedings being

taken would frighten it. No proceedings should be permitted except on official motion, and official action should only

take the form of bringing the question before the Courts. He

Government Department should have the power on its own motion

to step a Company, but it should only have the power to bring

the question before a competent tribunal. With such a law,

sound Companies need fear nothing, and Companies on the border-

-land would have Government assistance rather than Government

opposition, and only those Companies that were really insolvent

would be driven out of the field. With such powers given to

the Government, there need be no standard of solvency, but each

and the case could be dealt with on its merits as it arose,

same standard does not apply to all Companies. A Company charg- -ing high rates of premium can afford, without being insolvent, to have smaller reserves than a Company charging low rates,

and looked at from the point of view of solvency alene, with

profit policies require smaller reserves than non-profit.

The second point of importance is that of the deposit, and here I wish you to cancel the paragraph on this subject on page 39 of my Institute paper, wherein I say that Companies should deposit the liabilities under their policies in Great Britain, and net merely a fixed sum. Further experience has convinced me that this would be a mistake, and I, therefore, beg of you to substitute for the paragraph in question the evidence I gave before the Committee of the House of Lords. I

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