EMPLOYERS' LIABILITY INSURANCE (Limitation of Charges in 1926) Certificate of the Auditors of the Accident Offices Presented to Parliament by LONDON: PRINTED AND PUBLISHED BY HIS MAJESTY'S STATIONERY OFFICE. To be purchased directly from H.M. STATIONERY OFFICE at the following addresses: Adastral House, Kingsway, London, W.C.2; 120, George Street, Edinburgh; York Street, Manchester; 1, St. Andrew's Crescent, Cardiff; 15, Donegall Square West, Belfast; or through any Bookseller. 1927 Price 2d. net Cmd. 2914. OFFICES UNDERTAKING given by the ACCIDENT ACCIDENT ASSOCIATION dated 24th May, 1923, on behalf of its constituent Insurance Offices for the purpose of limiting the charges to employers in respect of employers' liability insurance (Cmd. 1891). The general effect of the Undertaking is that the Accident Offices Association engages on behalf of its constituent members to adjust from time to time the rates of premium for this class of insurance in such a way as to make the "loss ratio " (i.e., the proportion which the total amount paid or set aside in respect of claims bears to the premiums) not less than 60 per cent. for each of the years 1924, 1925 and 1926, and not less than 622 per cent. in subsequent years (or such other proportion, not being less than 60 per cent., as may be agreed between the Secretary of State and the Association). If, on the year's experience, it is found that the "loss ratio" falls short by more than one-half per cent. of the percentage mentioned, policy holders in the Companies belonging to the Association are to be allowed a corresponding rebate in connexion with the premium which next falls to be paid. If, on the other hand, the "loss ratio exceeds the percentage by more than one-half per cent., an adjustment will be effected by means of an excess charge. The certificate of the Auditors of the Association as to the effect of the Undertaking in respect of the year 1926, which is set out herein, shews that the ratio of losses to premiums during the year has been found to be 54.65 per cent. The insured employers will, in consequence, be entitled (subject to the terms of the Undertaking) to a rebate of 5.35 per cent. In respect of 1924 the "loss ratio gave a rebate of 7.12 per cent., and in respect of 1925, 8.06 per cent. 66 The loss ratio" for 1926 has been calculated, as shewn in the Certificate, in accordance with the Directions issued by the Secretary of State on 27th May, 1925, which, with the Auditors' Certificate for 1924, were presented to Parliament in Cmd. 2483. These Directions were supplemented as regards 1925 and 1926 by a Direction that there might be added to the amount reserved for outstanding claims a sum equal to 10 per cent. of that amount, to provide a margin of safety, pending a fuller experience of the working of the formula for calculating the outstanding liabilities. It is provided in the Directions that the amount reserved at the end of any year for liability on outstanding claims is to be subject to adjustment when the actual figures become known. On the figures ascertained for 1926 it is calculated that the provision made for 1925 under this head exceeded the actual payments by £59,708 but that the provision for 1924 fell short of the actual payments by £28,532. The sum of £31,176 therefore falls to be deducted from the reserve for outstanding claims at the end of 1926. HOME OFFICE, WHITEHALL July, 1927. CERTIFICATE OF THE AUDITORS OF THE ACCIDENT OFFICES ASSOCIATION for the Year ended 31st December, 1926, pursuant to Clause (4) of the Undertaking given to the Home Office by the Association, dated the 24th May, 1923, for the purpose of limiting the charges to employers in respect of employers' liability insurance. Add Aggregate amount of Rebate in respect of per capita cases, cases where the premiums for the employers' liability risk under the policy is not more than ten shillings and cases where the rebate would be less than one shilling. Added in accordance with paragraph 3 (ii) of Directions. issued by Home Office, dated May, 1925 ... 20,866 We have vouched the above Statement of Premiums and Losses with the Returns furnished to the Accident Offices Association by its constituent Offices, such Returns being certified by the respective Auditors of those Offices except as regards the addition for Rebate, which is based upon Statements signed by Officials of the respective Companies. We certify that the above Statement has been drawn up in accordance with the notes appearing on the form annexed to the Directions issued by the Secretary of State to the Accident Offices Association on the 27th May, 1925, modified, as regards the Reserve for Liability on Outstanding Claims at the end of the year, by the arrangement set out in the Home Office letters to the Accident Offices Association dated the 2nd July, 1926, and to Deloitte, Plender, Griffiths & Co. dated the 23rd June, 1927; except that in arriving at the formula figures for computing the Reserve for Liability on Outstanding Claims figures relating to Ireland and the Isle of Man have not in all cases been excluded. The ratio of losses to premiums is 54.65 per cent. We further certify that we have seen certificates obtained by the Accident Offices Association from each of its constituent Offices and signed by the respective Managers or other responsible Officials of such Offices certifying in each case that the Rebate of 7.12 per cent. which fell to be allowed to the employers according to the Statement of Premiums and Losses in respect of the year 1924 has been allowed to the employers as provided in paragraph (3) of the said Undertaking and the Directions issued by the Home Office on the 27th May, 1925. (Signed) DELOITTE, PLENDER, GRIFFITHS & CO. (Chartered Accountants), Auditors of the Accident Offices Association. 5, LONDON WALL BUILDINGS, LONDON, E.C.2. 25th June, 1927. COMPUTATION OF RESERVE FOR LIABILITY ON OUTSTANDING CLAIMS AT 31ST DECEMBER, 1926, FOR PURPOSES OF THE UNDERTAKING GIVEN TO THE HOME OFFICE. The difference of £575 between this figure and the corresponding figure appearing on the statement for the year 1924 is accounted for by the correction of small errors subsequently discovered by certain of the Companies in their original Returns for 1924. (87) Wt. 8002-105 750 7/27 II. St. G. 3 |