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conditions governing local companies out here are not
on all fours with those prevailing at home. It is
unnecessary to criticise the ordinance section by
section, many of them being taken verbatim from the
home act, but the four following appear to me to call
for comment as indicating that the framers of the
ordinance have not been well advised on many points
of considerable importance.
Section 3:-
Paragraph 4 provides that after deducting 25%
of the total premium income and claims the balance of
premium income is to be annually deposited with the Govern-
-ment.
This affords an excellent example of the danger
of making a general and sweeping rule of thumb to be in-
-discriminately applied to all companies. An old establish-
-ed Company with a large proportion of old business on its
books and doing a small or moderate amount of new business
would experience no difficulty in depositing 75% of its
premium income, in fact a deduction of 25% for expenses
would be excessive and unnecessary and if persisted in
as the ordinance demands would probably lead to the policy
holders obtaining reduced bonuses.
On the other hand to a newly established company
or one developing rapidly i.e. with a considerably greater
proportion of new business to renewals the conditions of
this section are prohibitive and unnecessary, the actuarial
regarves of newly acquired business being nothing like
75% of the office premium, while their legitimate expenses
are proportionately greater. In this connection it may be
pointed out that the late Dr. Sprague an actuary of the
highest eminence held that the legitimate expenses of a
well conducted office should average 80% of the 1st. year's
premium and 8% of the renewals. And that a company that
even exceeded this figure in respect of its new business
•Vibus app ever. 02 thuf oft ni Mw
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