The Sun.
London, England, 1864-03-08 00:00:00

we can promise perfect security ; and if this is a benefit I
don't see why we should withhold it from the people.
(Hear, hear.) I urged upon a deputation, representing the
minor offices, that they had nothing to fear from us, They
said the people generally did not desire the advantage of
insurance ; and that it was necessary to persuade them in-
dividually, go into their houses and reason and convince
them. What will happen will be this, said the deputation,
" Our agents will go into the cottages and persuade the man
that it is a good thing for him to insure, and directly they
have persuaded him that it is a good thing, he will turn
round and go and insure with the Government." (Laughter.)
That is paying a high compliment to the Government. We
cannot use such extraordinary means as offering 25 or 15
per cent. to agents, but we can offer security upon favour-
able terms. There is another peculiar facility which the
Government possesses. In this county a considerable pro-
portion of the labouring classes have become migratory in
their habits; but, wherever they go, they will know where
to pay their policy if they assure. That would be much
more difficult in case they assured in any private society.
Undoubtedly this is an advantage possessed by the
Government. (Hear, hear.) I know of no advantages
which the Government do or can possess, except their offer-
ing perfect security, more favourable returns on the drop-
ping of policies, and facilities for the migratory portion of
the population. And now let us look at the disadvantages
of the Government. In the first place, as the Government
cannot employ touting agents, of course wo must remain
without the business which such agents attract. Then if
we are to provide liberal terms for those who drop their
polices through inability to pay their premiums for a few
weeks or a few months, we must of course charge for that
in the premiums they have to pay, as it is evident that this
business of the Government must he a self-supporting busi-
ness. (Hear.) Again, the Government will not insure
persons under 16 years old, whereas in many societies more
than one-half of the persons assured are under that age.
Let those societies who are afraid of illegitimate competi-
bear this in mind. I will take the Government assurance
and compare it with a good private commercial company
doing business on its own private means. Both are depen-
dent on the premiums for meeting the claims upon deaths,
but still they are chiefly dependent upon the judicious in-
vestment of those premiums, Now here we must work in
fetters—within the limits defined by the parliamentary
guarantee. We cannot upon the average invest our pre-
miums so as to yield more than 3 or 3,1 per cent., whereas
the private companies invest at 4, 41, and sometimes 5 per
cent. Such being the case, nothing can induce the people
to come to the Government except the facility and conveni-
ence they can offer, and the perfect security we can afford.
It would be impossible for the Government to pretend that
wo can assure upon terms that would be considered cheap
in the market, therefore no fear of Government competition
need be entertained in quarters where prudence and
honesty prevails. (Hear, hear.) But, Sir, in all quar-
ters prudence and honesty do not prevail, and to those
who tell me that this measure is to be considered as
standing in the category of a common commercial business.
I will briefly reply, praying the house in the first place to
consider for a moment the peculiar nature of lite assurance.
It is a business which presents the direct converse of an or-
dinary commercial business. An ordinary commercial busi-
ness begins—if it begins legitimately—with a considerable
investment of capital, and the profits follow at a considerable
distance; but an assurance company, on the contrary, begins
with receiving largely, and tho liabilities are postponed to a
distant day. I daresay there are not many hon. members
who know to what an extent this is true, and consequently
to what extent the public is dependent upon pure prudence
and high honour and character in the management of these
institutions. When an institution of this kind is founded,
so far from having difficulties at the outset, the outset is
the time of its glory and its enjoyment. (A laugh.) The
money comes rolling in, and the claims are at a distance,
almost beyond the horizon. In the first year of the society's
existence the premiums far exceed the death claims; so in
the second year, and the third, and the fourth, and the fifth,
and the sixth. For how long does this house think the
premiums to be received aro in excess of the claims on
deaths ? For 37 years. (Hear, hear.) lam far from wish-
ing to say that for 37 years the premiums, in all cases, ex-
ceed the expenses ; but when the expenses are kept within
due limits, 37 years is the proportion. The expenses, how-
ever, have in some cases a strange tendency to grow beyond
all bounds, and then it often happens that the promising
hopes of a company are suddenly cut short. The house
may like to know the fugitive character of these institutions.
It appears from a work published by the Guardian Office
that a very large number of assurance companies either fail
or give up business. In nineteen years the number of
companies projected was 596; of these 276 were founded;
and 250 out of these 276 have ceased to exist. (Hear,
hear.) Then there are twelve amalgamations—l wish I
could read to the house the chapter on amalgamations—
(hear, hear)—and fifty-seven societies were winding-up in
Chancery. This is a subject which has both a comic and a
tragic side, but the tragic side is altogether predominant.
(Hear, hear). With regard to the companies winding-up
in Chancery, I wish to show the house how that matter
stands in the peculiar case of assurance societies. The
policy •holder has no remedy when the company is mis-
managed, for this plain and obvious reason—ho must wait
till he die before he has a claim. (Laughter,) The posi-
tion of a policy holder, therefore, unless he be a person of
great wealth, is one of almost utter helplessness. It is
obvious, that, whenever a man hears that the company in
es bleb he is assured has gone into Chancery, he feels
scrupulous about throwing good money after bad, ceases to
pay more premiums, and thereby loses all claim upon what
he has already paid. (Hear, hear.) Then there is another
form of proceeding. I allude to amalgamation. This is a
particular case of what happens on amalgamation: Sup-
pose yourself to be a person of small means insured in a
particular society, and you hear it is going to amalgamate.
What can you do ? How can you know that you will be
able to make a case against the amalgamation or bear the
costs of bringing the company to book ? Practically you
cannot resist the amalgamation. What societies do is this;
they send round gentlemen who sugges t to the policy
holders that they had better consent to the scheme. A
company called the Professional ceased business, and trans-
ferred its concerns to an institution called the European.
What did the European do ? It was understood that all the
policies in the Pro'essioual were of a certain value—they
were of a value relative to the sum assured, and the pre-
miums paid up to the time with interest. There was, how•
ever, a liability on them, and the European society made it
a condition that it should inscribe upon each policy the
amount of the remaining liability. Supposing a policy for
£l,OOO, and the outstanding sum was £6OO, the European,
on amalgamating with the Professional wrote £6OO on the
policy, and charged 4 per cent. on that sum. Then, on
the death taking place, the; £6OO, with interest, was deducted
from the £l,OOO. (Hear, hear.) That is an illustration of
what, perhaps, you will say is no better than wholesale rob-
bory. (Hear, hear.) I will now mention the cases of two
societies doing industrial business on a large scale—the
Friend in Need and the British Prudential. The Friend
in Need was born as a friendly society, but the chrysalis
passed into a butterfly, and after a time it came out as an
assurance society. It rcast be a society of considerable age.
Now the premium income of the Friend in Need is £22,000,
and its available assets £14,0:'0. And here I had better
fortify myself with the evidence of an eminent actuary. Mr.
Ingall stated before the committee, in 1833, that if the ac-
counts of a company which had been fourteen years in
existence showed that the assets were equal only to one
year's actual income, there could be no doubt of the unsafe
position of that society. (Hear, hear.) And now, sir, I
will point out the position of the assured in one particular
respect. It is well known that disputes often arise on a
death occurring as to the liability of the society; and be it
borne in mind that I am now speaking of societies of a se-
condary chracter. For these disputes arbitration is the
common remedy, and, mind you, we are now dealing with
the case of institutions which have branches all over the
country, and which you cannot localise in any particular
spot. What will the house think when I tell them that in
the case of the Friend in Need Society the condition of ar-
bitration is that it should be in London ? Think of what
these few words mean. (Hear, hear.) Think of a man
having his little policy of £2O disputed, and being told that
if he wishes for an arbitration he must go to London. It
is nothing else than confiscation, united with concealment.
The case of another company--the British Prudential—is a
very remarkable one. It is.conducted by a Mr. Harben, a
gentleman of great energy, who is stated to have raised the
organised opposition to this bill. (Laughter.) Mr.
Harben waited upon me with a deputation, and
replied that they were exceedingly anxious that
I inquired whether there would be any objec-
tion to the publication of their accounts. Mr.
Herbal
they should be published, no subsequently answered very
cautiously some questions which I put, but said that of
course the information was only for my private use. Of
course I said that I had no private use for it whatever, and
he then said that if all other companies were made to pub-
lish full particulars they were willing to do so, but as other
companies did not
publish they would rather not do so, as
the facts might be made the subject of unfavourable com-
ment. Therefore I can only refer to the one published
f:
a a t
debitw what document which I have with regard to the British Pruden-
tof ial Society—the balance sheet for the year 1861. It shows
on the policy
remarkable,
un h
a most singular state of things, because
the policies on which the society has received a very large
sum, and therefore incurred heavy liabilities, are repre-
sented as being iu themselves assets of greater value than
the whole liabilities, The debit is the present value of the
whole sum assured, and the credit is actually made into
assets. Put in another way, the premium income was
£52,000, and the assets £16,000, and there was an unpaid
capital besides the assets. Tho result shown by the balance
sheet is a balance of £ll,OOO in favour of the society. That
balance sheet, however, has been examined by actuaries,
who proceeded upon principles not more open to question
than a proposition of Euclid, and instead of a balance of
£ll,OOO for the company, they found a balance of £30,000
against it. According to the balance sheet there are £15,000
capital not pals up which ought to do more than liquidate
this balance, but this society does not appear in 1861
to have been in a position at all resembling that of the
societies whose cases I am about to bring under your
notice. I am net going to push this case further than
to say that it is not just that societies in such a con-
dition should come forward and say, " We admit that
the great asouranoe companies (19 sot 49 the 'imbue,