The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1848-04-11 00:00:00

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/4,xOJ XV,7d

Iwas formed, and I was so satisfied of the sound and scientifie
principles on which it was based, that I never doubted that, as
soon as they came to be understood, it would meet with that
general favour and support which I am glad to see it has, to
such an extent, received. There were two great principles on
which Mr. Cleghorn proceeded. The first was to make the
Premiums as low as was consistent with the entire safety of the
Institution, and so as to secure, beyond all risk, the fulfilment
of its obligations. In this respect, most of the existing Assur-
ance Companies had been misled by the Northampton tables,
and had made the Premiums for young lives—in which I in-
clude ages up to fifty or so—much higher than was necessary,
while their tables for the older lives were somewhat too low.
This error was perceived by Mr. Cleghorn, who, from more
recent and better calculated mortality tables, found that the
premiums for these younger lives could be safely and very con-
siderably reduced; and he framed a table which all subsequent
experience has proved to be singularly correct. lam happy to
sav that, since this table was framed by Mr. Cleghorn, the
Registrar-General of England has appended to one of his late
Reports a table for the guidance of Life Assurance Societies -,
and it is very gratifying to find that the rates specified in that
table are nearly the same, and in many instances precise 'y the
same, with those of this Institution. Now one of the chief and
immediate benefits resulting from this reduction of the pre-
miums upon the younger lives is, that it operates as a direct
bonus in favour of every Insurer, when the premiums of this
Institution are contrasted with those payable to the older As-
surance Societies. It operates in this way. A person of twenty
years of age, insuring with this Institution, can, for the. pay-
ment of the same annual sum which other offices would demand
for insuring £lOO, insure here £ll5 or £l2O, payable imme-
diately on his death. The Premium payable to this Institution
for 4100 is 15s. Bd., while, in other Offices, it is £2 Is. 6d., or
or £2 as. 2d., and, in some, still higher. There is thus an
immediate and certain benefit secured by the lower rates of
premium. But the second, and most important improvement
suggested by Mr. Cleghorn was this, that if any profits should
he made, after paying all expenses and securing all the obliga-
tions, as must be the case, even at his reduced rates of pre-
mium, these were not to be frittered away among those insurers,
or their representatives, whose contributions to the general
fund could never possibly have tended to make such profits,
but should be reserved for distribution among those contribu-
tors whose payments into the general fund had come to be equal
to the sum assured. The importance of this improvement has
never, I think, been sufficiently estimated. And: truly the
practice which has prevailed in several highly respectable and
flourishing Mutual Assurance Societies, of giving a share of
what they call their bonuses or profits to the representatives of
every insurer, who has been such for five years, is, to say the
least, very strange, and seems to indicate a very limited know-
ledge of the true principles of Life Assurance. It reminds me
of the old rule by whi h originally all lives, whether young or
old, were equally insured at the same invariable rate of 5 per
cent. The absurdity of this rule was soon discovered ; but
truly the other is not much less absurd. Why, in five or seven
years. every life should get the same share of what are called
profits, is utterly incomprehensible. The delay is plainly in-
tended to approximate somewhat to the sum assured • but this
can never be done upon reasonable principles, till there' be a
graduated scale, corresponding to the age of the parties, ac-
cording to which the profits shall be distributed among the
policies which fall. If any Office were to insure a person at 75
years of age, which, I dare say, few Offices would do, I have no
doubt the premiums would be so high that, in five years, it
would approximate to the sum insured; and if this sum were
£lOO, and if 2 per cent, yearly of profits were to he added, for
each of the five years, supposing the policy then to fall, the suns
payable would be £llO. But suppose a young man of 20 to
insure £lOO at £2 a year, and to pay the premium for five
years, and then to die, his representatives would equally draw
2 per cent. yearly upon his policy, and would also get 4110, so
that all that the office would receive by this transaction would be
the interest upon the premiums which had been paid. Nothing,
surely, can be more absurd than this. It might be thought
that these representatives, drawing the .100 insured, or .4'90
more than they had paid into the office, would get a sufficiently
handsome return for the policy; and why,. over and above,
they should have all the premiums returned to them; under the
name of bonus, I cannot conceive. Yet this is the footing upon
which a great deal of insurance business is done ; and it is very
apparent how greatly such a system must withdraw the profits
from those who alone contribute to their being formed. Even
in this Institution, low as the premiums for the younger lives
are, I know that such an ample provision was made by Mr.
Cleghorn for the expenses of management and for contingent
losses, that there must ultimately be very considerable profits
realized; and surely those by whose contributions such profits
are realized ought to draw them. This is the principle on which
the main improvement made by Mr. Cleghorn hinges. And,
though the prosperity of this Institution has been very remark-
able, I am far from being surprised at it ; and I am persuaded
that, the more its principles are known and studied, the more
favour will it receive from the public. I desire to make no in-
vidious comparison with other similar Institutions. I rejoice
in the prosperity of all of them, because I see in that prosperity
much that must conduce to the moral and economical welfare
of the community. And all I wish is, that, in the details of
their management, they should be guided by sound and scien-
tific principles. I observe that, every year since the com-
mencement of this Institution, its business has been steadily
and progressively increasing. I see that, during its first year,
182 Policies were issued, and that, in each succeeding year, the
number has been regularly increasing, till, during, last year,
they amounted to 472, being 56 above the preceding year. Al-
low me, then, to congratulate this meeting on the growing
prosperity of the Institution, and to propose the following mo-
tion which has been put into my hands?—" That the Meeting
approve of the Report by the Directors, now read, and confirm
the appointments thereby made ; farther, approve of the Bill
introduced into Parliament by the Directors, entitled `A Bill
for Incorporating the Scottish Provident Institution, for con-
firming the Laws and Regulations thereof, for enabling the said
Society to sue and be sued, to take and to hold property, and
for other purposes relating to said Society,' which has now been
read ; and of the alterations upon the Deed of Constitution
proposed to be thereby effected ; and authorise the Directors
to proceed with the requisite measurta for having the Bill
passed into a law, subject to such alterations as may be made
by Parliament, or as may be considered expedient by the
Counsel to whom it shall be remitted by the Directors for
revisal."

Mr. JOHN M'CaAw said, before agreeing to adopt at once the
latter part of the motion, although I have every confidence in
the Directors, I would like to be informed what are the precise
alterations which the Bill referred to makes in our Deed of
Constitution ?

Mr. JOHN HUNTER, jun., said,—lt is quite proper that Mr.
M'Craw should be satisfied upon this point. The Bill, in the
very first clause, contains a distinct declaration—" That no-
thing herein co tamed shall relieve or discharge the Society
from any contract, responsibility, debt, engagement, or obli-
gation to which the said Society is now or shall be hereafter
liable, but the same shall continue as if the Society had not
been in 7orporated under this Act ; and farther, that nothing
herein contained shall be held to invalidate or affect the Deed
of Constitution, and Laws and Regulations of the Society, or
any of the powers therein contained or any of the Bye-Laws or
other alterations of the said Deed of Constitution!, made or to
be made, in virtue of the powers given by the said Deed, except-
ing always in so far as the same are express!), altered or varied
by this Act, or are or shall be contrary to the true intent and
meaning thereof." I can assure Mr. M'Craw that there are no
alterations whatever on the Deed of Constitution, except in one
or two minor matters, rendered necessary by the extension of
the business to England. Indeed, I may say that the only
alteration is that on the arbitration clause. By that clause of
arbitration, as it stands at present in the Deed of Constitution,
every person who may have a disputed claim against the Society
is bound to enter into a reference before th 3 Sheriff' of Edin-
burgh. This clause would of course he very unsuitable in the
case of Members resident in England, and it was therfore in-
dispensable that some alteration should be made upon it in the
Act of Parliament. The Bill, accordingly, does not make it
obligatory on parties having claims upon the Society to go into
arbitration at all. It gives them th 6 option either of proceed-
ing to enforce their rights by the ordinary modes which are
open to all, or to insist on the Society entering into a reference
to two parties mutually chosen. If the parties are resident in
England, the arbitration may now take place there, instead of
forcing them to go before the Sheriff of Edinburgh. This, it
will be observed, is a provision wholly in favour of the Members
and others, who may have claims on the Society. In all other
respects the Bill confirms the provisions of the Deed of Consti-
tution, and merely confers on the Society and its Members the
valuable benefits and privileges usually granted to incorporated
bodies, which carry on business in Scotland, England, and
Ireland.

Mr. J. F. MACFARLANE said, I havebeen unexpectedly called
upon to second the motion approving of the Report, which has
now been proposed by Professor Vlore. Although- I cannot

enter so minutely into the- question touched upon by the
Learned Professor, as I have had my attention more particu-
larly directed to another—a very distinguished and flourishing
Institution, with which I am connected, yet, at the same time,
I look on all these Institutions as brethren, having one great
object in view. The business of Life Insurance is only in it:

appears to me to

form one of oar national defences. We have heaid a great deal
about this of late ; but it appears to me that, as Institutions of
this kind spread, every one of then will form a guarantee for

the preservation of good order, and for peace and security pre-
vailing here and elsewhere. Certainly were they universal, our
naval and militarT establishments might be dispensed with al-

tugetner. tnear.) in reieretace to me BM wnich the Directors
have submitted, it is well that the question has been put by Mr.
M'Craw before the apvroval of the meeting is given. But, after
it has been put, and distinctly answered, every one of us must
be satisfied there is no invasion of any right which any partner
holds, or any thing introduced that is calculated to injure, but

only what is to the proper conducting of iheNusiness
of the Institution. As the passing of an Act of Parliament is
a measure of considerable importance to the Society, I think
this motion will now meet the cordial approbation of every
) ' advantages of

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