CO129-346 - Governor Sir Lugard - 1908 [1-3] — Page 203

CO129 Colonial Office Hong Kong Records 理藩院香港檔案 All

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most companies can pass it, the tendency then being

for them to be content with the bare passing of the

test and not endeavour to establish a stronger and

more reliable financial position, which is what is

almost invariably done when publicity and freedom arc

the only factors used. A case in point occurs to me.

Two years ago one of the largest and most popular

British Life Offices voluntarily passed its bonus for

the express purpose of strengthening its financial

position and valuing its reserves on a much more

stringent basis. The result has been a large increase

in its reserves and an enormously increased bonus

earning power which will benefit its policy holders.

There was never any question of its solvency and it

would undoubtedly have passed any of the ordinary

standard tests of solvency. Had there been any much

test it is more than probable that this office in

common with others would have been content with satis-

-fying the test instead of taking a strong and politic

stap from which its policy holders will reap great

benefit in the future.

2nd. Government control implies to some extent at any rate

Government guarantee, and the public are apt to look

to the Government for greater protection than the

latter are prepared to afford.

3rd. By the application of one Standard test of solvency

many of the various useful schemes cannot be carried

on, and the tendency is to restrict the issue of policies to the simplest contracts under whole life

plan and Endowment Assurances. This is clearly shown!

by the results of the recont investigations by com-

missions in Canada and America. In consequence of

these, several companies have given up the issue of such policies as the 5% debenture policies, guaranteed

income

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