HC Deb 03 November 1909 vol 12 cc1950-62

"This society was registered under the Industrial and Provident Societies Act in 1904 with a nomina capital of £250,000, and was formed to carry on all kinds of insurance business except life assurance. Capital to the amount of £757 was issued for cash, in respect of which £55 was received by the society.

"The only asset available for meeting claims was the cash at the bank, which never exceeded £35, and was generally under £5.

"The society carried on fire and other insurance business, both here and abroad, and advertised its capital as £260,000.

"The risks outstanding on the date of the winding-up amounted to £500,000, and the assets have realised £54, The total claims paid by the society amount to £30,"

I do not pretend that the deposit of £20,000 is an indemnification for the policy holders, but it is a guarantee of a certain status, and that the business is not carried on by collecting premiums on the one hand and by paying out claims on the other hand. It makes sure there is a certain nucleus in the centre which is a guarantee of responsible and respectable dealing; and I hope the House will see that, although this may have the effect conceivably of preventing the starting of mushroom companies, it will by that very effect greatly strengthen and dignify the general business of fire and accident assurance throughout the country. That is the second portion of the Bill. Let me say that when I embarked on this question a year ago I was very anxious to carry the great assurance companies with me. After some discussion they accepted the proposition that safeguards should be applied to fire and accidents in the same way as to life insurance. They said they were afraid that the schedules might be drawn up in such a way as to cause business disturbance and loss to the companies, but I replied, "Let us go into the matter together and draw them up so as to secure the maximum of security for the public and the minimum of inconvenience to the business of the companies." That is what we have done. The third thing which the Bill does is to deal with a subject inquired into by the late Government—as to a class of business peculiarly open to abuse. It is a poor man's business. It consists in the process of sinking a lump sum by monthly or weekly payments extending over a long period. In these cases, if one payment lapsed the whole of the premiums previously paid are forfeited and some of these societies live almost entirely by that provision. Anything more injurious to the thrift of the people, anything more calculated to discourage saving habits on the part of a large mass of our fellow countrymen one cannot conceive.

We propose by this Bill to have a special schedule showing clearly the amount of profits derived from this business—from forfeited premiums. We propose to give it the fullest publicity There is also a system of drawing which brings into the arena of thrift an element of lottery. Whether it actually comes or not within the scope of the Lottery Acts I have not examined. But the Committee appointed by the late Government reported strongly against the practice, and we propose to prohibit it definitely under this Bill. The fourth thing in the Bill deals with collecting societies and industrial insurance companies, and that, I think, is the most important feature of the Bill. It may, at first sight, almost seem out of place in a Bill which deals with insurance companies to touch the question of friendly societies, but I have introduced these provisions into this Bill in order to meet an urgent and practical need—indeed, at this moment, it is the most urgent reason why this Bill should become law. Both collecting societies and industrial insurance companies carry on a vast body of business—the latter under the general insurance laws, and the collecting societies under the Friendly Societies Acts. Both have greatly exceeded their powers. There can be no doubt about it that out of some 35,000,000 policies—and this affords some indication of the enormous extent of the business—in existence, upward of ten millions are technically void. The majority of these policies are policies which have been taken out by the policy-holders from the best motives and in all innocence. They have been bonâ fide taken out by the son to provide for the parent, or by the brother to provide for the sister, or by a close relation, who may expect to have to pay the expense of the funeral of the person insured. They are not taken out in most instances for an amount in excess of that required for reasonable funeral expenses. But mixed up with them—although forming in my judgment but a very small proportion of them—there is a class of policy which is taken out by persons on the lives of perfect strangers—on an old man, decrepit in appearance—perhaps going too frequently to the public-house, or with something known about him which makes him a spotted man just as, in the same way, a ship at sea under marine insurance may be a spotted ship. In some way policies are taken out by perfect strangers in order to gain a lump sum on the death of the person. That is a very evil feature to be mixed up with a great body of perfectly proper professional and thrift assurances which, in the great majority of cases, are properly entered into. What we propose to do by this Bill is that we should validate by our Act the whole of these ten million policies if it can be shown that they were bonâ fide taken out and the person who took them out had a reasonable expectation of being called upon to pay the funeral expenses of the assured. That is the first step, and I do submit to the House, late as the Session is, long as our proceedings have been, and great as the pressure is on every Member, this is well worth doing.

It is a very dangerous thing to leave this question of assurance, affecting millions of people, in a position of uncertainty, both as to its character and the validity of the policies which have been taken out. It would be a very serious risk which we should run if having gone so far we were not to push this measure to its conclusion. The proposals which we have inserted in the Bill first of all validate all these past policies if they are bonâ fide, if they are moral, and if they are reasonable in the amount. In the second place, with regard to the future we give a clear definition of insurable interest. We say that it is permissible within the limit of reasonable funeral expenses for a person to insure himself against the death of a brother, sister, parent, grandparent, or child. Those are the degrees to which we think these insurances should be carried, and I think the mere existence of ten million policies of this character shows that they meet a legitimate and proper need of a great many people in the country. We also include a penalty Clause, and where there is no insurable interest we impose a severe fine which will have the effect of destroying that class of business. Since this provision may conceivably impose a lesser inconvenience upon an industrial insurance society than on a friendly society, I have found it necessary to insert a Clause which improves the machinery for conversion from a friendly society to an industrial assurance company. We have stated in the Bill the conclusions which we have reached after much careful consideration, but I think this is a matter which should be settled in Committee. I am very anxious to arrive at a general agreement, and Committee is the proper place to deal with it, and when that stage is reached I shall be prepared to make a further statement on the point. It is a matter which it will be very desirable, if possible, to settle by agreement, but, of course, I think we must recognise and assign due weight to the principle that the great body of the members of these societies have a right to be consulted before any change or transference is made. I know a great deal hinges on that point, but it is a Committee point, and I should be ready to discuss it in the fullest detail when we reach Committee. I do not at all say that the figure which is placed in the Bill is necessarily the one to which we must adhere.

I have been asked by the hon. Member (Mr. Keir Hardie) to move the Government to institute a general inquiry into the whole subject of industrial insurance. That is a question which will require long and anxious consideration at my hands. My first inclination was to grant it, but it is clear directly the question is carefully thought out that any inquiry must create a certain amount of uneasiness and unrest, and would therefore be bad for the business of the companies and societies interested. For these reasons an inquiry must not be embarked upon with precipitation, and if I ultimately come to the conclusion that an inquiry is necessary or desirable it will be with the object of placing all industrial assurance business on the soundest possible footing, and the terms of reference will be carefully settled with this end in view, and will not assume existence of wrong-doing of any kind in the past. As to the special point which is mentioned by the hon. Member (Mr. Stephen Walsh), I have no doubt that in Committee we shall be able to come to a decision. Nothing but the general goodwill will enable us to get the Bill at this late period of the Session, and I feel that we ought to make an effort, because it will be a considerable advance and a great advantage to large classes in the country, and therefore I put myself very much in the hands of the House in the matter, and I trust they will assist us.


The House may well be surprised that a Bill of this magnitude should be brought forward at this late stage in the Session. Everyone knows that hidden away in this Bill, which is in form a consolidating as well as an amending Bill—itself a most inconvenient form—there is one indispensable and urgent proposal. I do not rise for the purpose of mixing myself up in the controversies which surround the acceptance of that provision. I recognise that in other parts of the Bill there are other provisions, doubtless useful, and some of them even necessary; but other provisions are most disputable, and the House has some reason to complain that at this period of the Session it should be asked to enter upon the discussion of a Measure which at any part of any Session would claim, and I think ought to receive, close and long and laborious attention. I think the House has reason to complain that because of the urgency of the Clause I have alluded to, that Clause should be used on the present occasion to supply the driving power for the passing of proposals for which much more time should be allowed, and which are far less urgent in their nature. I will speak only for the companies which do life assurance business, and not for those which do fire and accident business as well. I am bound to say that those offices have still objections to certain provisions of this Bill. Although the right hon. Gentleman has met us with the greatest possible courtesy and has taken great pains to understand our difficulties, he will agree with me that all our difficulties have not been met and adjusted. That puts us in a position of very great difficulty. I am not going to invite the House to divide on the second reading, for I confess that my points are Committee points; but I am bound to say that rather than not have our points met we would prefer not to see this Bill passed at all. I cannot see why the provisions which deal with companies which trade and have heavy liabilities abroad should be included in this Bill with other provisions which are not urgent. That is a special and urgent case. The same may be said with respect to the illegal contracts entered into by certain industrial companies. These are things that might very properly have been embodied in and confined to a much shorter measure which would have been treated as entirely non- controversial, and the House might not have been indisposed to pass it under the circumstances. I do not think it is right that extremely difficult and technical matters should be mixed up in one measure with matters which are far more simple.


This is a very important and highly complicated Bill, and I would suggest that the second reading should not be taken to-night. One of my reasons for making this suggestion is this. There are notices standing in the names of three Irish Members on the Order Paper with respect to the Bill, and the Irish Members are the only Members who have not been officially informed that the second reading was to be taken to-night. The Debate which has just taken place was not calculated to put hon. Members in a humour for proceeding with a second reading Debate on a Bill of this kind. I am in favour of a good deal in the Bill, but there are certain provisions which I hope to see amended in Committee. I would suggest to the President of the Board of Trade that it would be in the interest of the Bill that the Debate should be adjourned in order that an opportunity may be given at another time to discuss the Bill properly. I beg to move, "That the Debate be now adjourned."


I beg to second that Motion.


I hope the hon. Member will not press this Motion to a division. If he persists in the Motion, I cannot see my way to agree with him. There is in the Bill, no doubt, many important points which ought to be discussed in Committee, but I hope the House will consent to the second reading to-night. The points raised by the hon. Members for Sheffield, Shoreditch, and others, are to some extent controversial points, but are essentially Committee points. I think it would be a great pity for us to prevent the Bill getting its chance of having a Committee examination. The days are running very short now, and if we do not get through the second reading to-night, I am not sure that we shall ever reach the Committee stage, and it is of the utmost importance that the more complicated points of the Bill, which I think can be dealt with shortly, should receive as careful consideration as possible. I shall do my best to get the longest possible discussion I can on this Bill. If I could get a complete day—if I was to that extent master of the time—I am quite sure that we should arrive at a happy ending. Therefore, I must ask hon. Members to show special indulgence so that we may get the second reading to-night, and I shall do my very best to meet all the points which demand attention.


Do I understand the right hon. Gentleman to say that if he gets the second reading to-night, he will undertake that the Bill shall go to a Committee of the Whole House, and that ample time—not an odd half-hour here and there—will be given for the discussion of the various points?


I pledge my intention to move that the Bill shall go to a Committee of the Whole House. As to the time, I will do my very best to get as much time as I can, but I cannot guarantee anything beyond my power.


In view of what the right hon. Gentleman has said, I ask leave to withdraw my Motion, and I reserve my right to speak on the Motion for second reading.

Motion for adjournment of the Debate, by leave, withdrawn.


The right hon. Gentleman the President of the Board of Trade, in a speech made at Cardiff, said that this Bill was one of prime importance—not alone to the great friendly societies, but affecting every branch of insurance. There is therefore no excuse on his part for saying that there has been no opportunity for an adequate discussion on this measure. Parliament has sat for a longer period than has ever been known before, and there have been opportunities without number for the discussion of a measure of this sort. It is not a party measure, but one which reaches diverse interests, and is of very great interest to the whole country. There was ample opportunity to bring this Bill forward during daylight, and for it to receive the full and useful attention of the House. Therefore any laches of the Bill when it becomes law will not be the fault of the House of Commons, but will be the fault of the Government, because of the hurry and scurry in which they have submitted this measure in the dead of night. I do not wish to oppose the second reading of this Bill. On the contrary, I shall support the second reading, and I should be the last to wish by any covert or overt act to do anything which in any way interferes with the speedy and smooth conduct of business by the insurance institutions of our country; but following what has already been said, I must protest earnestly against the action of the Government in mixing up consolidation with the very important amending proposals in this measure. In Committee it will be my duty to move various Amendments which are of vital importance to the conduct of life insurance in this country—not merely life insurance conducted by companies in which there are shareholders, but life insurance as carried out by mutual societies for the benefit of the professional and business classes of this country, thrift societies in the best sense of the word.

It will be necessary, if this Bill is to be effective and just, that foreign companies operating in this country should not have a preference as against British life offices. I do not make that observation from the point of view of what is known as fiscal reform; I put it simply on the ground that where you have, as you inevitably have under all forms of life insurance, a claim which must come sooner or later as a cash liability on the society or company, it is absolutely necessary, for the security of British policy-holder's, that foreign companies, the assets of which are abroad, and are not subject to the British law courts, except as to £20,000 deposited with the Board of Trade, these societies should not be put on a basis of free competition with home offices, the assets of which are here and are amenable to our law courts. Then I come to fire companies. It is no exaggeration to say that the Bill as it comes to the House of Commons, with the imprimatur of the Government, has bowed the knee to the combined fire insurance companies, and that an attempt has been made to destroy Free Trade in insurance by the provisions of the Bill in respect of fire insurance. In other words, what are known as the non-tariff offices are penalised by the Bill as now printed. Hon. Gentlemen who desire that this measure shall preserve full liberty of action to all companies, whether they belong to the insurance combine or whether they fee independent societies, should see that all have a fair chance before the law to have open competition in this business. I am perfectly certain of this, that the House of Commons, whether in Grand Committee or on the floor of the House, should examine with anxious care the details of the Government proposals as they affect life insurance companies, mutual life insurance companies, and particularly as they affect the fire, accident, and employers' liability branches of insurance. It would be a sorry thing if a measure of reform of this character placed the British public under the heel of a great insurance combine, and that under the name of reform we should destroy that liberty of action which has been the essence of the success which attaches to British insurance effort in this Kingdom.


I desire to associate myself with my colleagues in regard to the matter of inquiry. Personally, I believe that the time has come for inquiry, and I am more than pleased at the right hon. Gentleman's (Mr. Churchill) attitude in regard to it. I think he appreciates that there is something that ought to be looked into by himself, and I think as he is in charge of this Department that he is entitled to give close consideration to the matter himself before he promises any public inquiry in the nature of a Royal Commission or a Committee. So far as he has gone, I am quite prepared to accept his assurance that he will, on his own behalf, make searching inquiry into this whole business, and I think we are entitled to that. As to the one point which, so far as I am concerned, is important at the present moment, I think the indication which the right hon. Gentleman has given of what he is going to do in Committee to meet the case is an assurance that he thinks the principle we have been striving for all along should be adopted, namely, that if an executive committee or management committee is professing to act on behalf of the members, they should at least see that the members of that organisation are in favour of the step they themselves desire to take. That is an ordinary accepted democratic idea, that the members of a friendly society or any society should be entitled to say whether they were in favour or otherwise of a particular course, and that the management committee should not be free to take their own course, leaving the people of the society to have to spend their own money, to defend the position which people at present maintained against management committees. If the right hon. Gentleman can hold out a hope to us that he will accept the proposition that 55 per cent. of the adult members—for I think it is generally agreed that we should not have children brought into this business, and that it ought to be responsible people who know what they are doing—that 55 per cent. of those adult members must be shown to be in the affirmative, in favour of the proposition of the management committee before the courts of law are permitted to make conversion. That appears to me to be a reasonable proposition. If the right hon. Gentleman can assure us on this point I hope that my hon. Friend the Member for Merthyr Tydvil will be prepared to support.


After every consideration I have come to the conclusion that taking 55 per cent. as the basis would be the best way to deal with this question. I had not intended to announce that to-night but to leave it to its proper place in Committee, but as it has been raised, that is what I intended to foreshadow.


I am sure the statement of the right hon. Gentleman will meet with satisfaction in many quarters. I need not point out that to the House the immense magnitude and far-reaching character of this Bill. The right hon. Gentleman has given us such pledges as he can that he will do his best to get it discussed at a suitable time. I wish to remind the President of the Board of Trade of this fact, that on the 24th day of this month, the day after we meet, we are going to take a private Member's Bill which is highly contentious, and which must occupy this House for two or three days, having already been considered upstairs. That private Member's Bill is highly contentious, and will not do nearly so much good as a careful examination of this great measure. There are five-and-thirty millions of policies affected by this Bill. [Mr. CHURCHILL was understood to express dissent.] The figure is immaterial, but of those some ten millions are technically voided. That in itself is sufficient to show the great importance of this measure, and I ask the right hon. Gentleman to use his influence with the Patronage Secretary to the Treasury to secure that the Pill shall be taken in daylight on Wednesday, the 24th inst., and, if necessary, following days. He will then have an opportunity to make a great stroke towards revising our assurance legislation. I am not going to object to the Bill; I shall support it right through, but it is not right to begin at midnight the Committee stage of a Bill which is exceptionally complicated, and, above all, legislative as well as consolidative. The contention that this Bill would take longer than the private Member's Bill is not sufficient. The right hon. Gentleman ought to give us adequate time.

With regard to the inquiry, I am glad the right hon. Gentleman has refused the Motion of the hon. Member for Merthyr (Mr. Keir Hardie). I expected that he would accept it, not because of the quarter from which it emanated, but because of the love of the Government to inquire after legislation has been passed. Charges have been brought against these industrial and collecting societies. A Royal Commission is a very solemn and important thing, and if a Member of this House says that the state of affairs is so serious that a Royal Commission should be appointed, it is incumbent upon that Member to substantiate the charges on the floor of the House and to make a primâ facie case. The Mover and Seconder of the Motion refused point-blank to do so. If they can substantiate the charges, it is only fair to these societies that they should do so in public. I quite recognise the reluctance of the hon. Member for Merthyr, after a long week, to trespass upon the time of the House; but the inevitable effect of vague charges is to place these societies under a cloud. The right, hon. Gentleman has not promised a Royal Commission; he has undertaken to look into the matter himself. I strongly urge that he should publicly and deliberately refuse to promise a Royal Commission or Select Committee until he has examined the matter with the utmost care, heard persons who care to make charges, and received the replies which the societies can and will give. These bodies are incriminated by vague charges, the very vagueness of, which makes them all the more alarming. So far as I remember, during the last 15 years no Bill has been introduced based on charges of that character, on the assumption that the charges are accurate. And from all I can learn, whatever may have been the case 20, 30, or 40 years ago, there is now no ground for the assumption that illegalities are being deliberately practised for improper ends by this class of society. In my opinion they have done very great work, and I think it would be unfortunate if the Government were to promise any Royal Commission, which by its very nature might almost paralyse the work of some of these societies for two, three, or four years. We all know how long these Royal Commissions last. While the society is labouring under these vague charges it has to devote the whole of their energy to the matter, to the paralysation of its other work, because it is fighting for its life in the repudiation of these charges. For my part I am confident that these societies will emerge unscathed from any personal inquiry of the right hon. Gentleman or a collective inquiry of a Royal Commission. It is quite possible that here or there you may find something stupid or wrong done by an agent; but you can no more blame the society for that than you can blame a bank because one of its clerks has committed dishonesty. I feel very strongly on the matter, and I do hope that the right hon. Gentleman will remain firm and absolutely refuse to grant any Royal Commission unless an unanswerable case is made out by those who oppose these societies.


I beg to ask leave to withdraw the Amendment. In doing so I understand that the President of the Board of Trade will give his support to an Amendment of Clause 37; and that though a Royal Commission is not to be appointed, an inquiry will be set on foot by his Department—[Mr. CHURCHILL indicated assent]—to see whether a Royal Commission would be justified. It is important, too, that time should be given at the Committee stage of the Bill for the consideration of the Amendments specified; for, as the Bill stands, it is more a Bill to the interests of the wealthy assurance societies than it is in the interests of small policy holders in the industrial societies. Under the circumstances I ask leave to withdraw the Amendment at this point. I fully understand that the next stage will not be taken this side of the Recess?


It will not be taken before the 23rd November.

The SOLICITOR-GENERAL (Sir Samuel Evans)

I do not want the hon. Gentleman's statement to go forth unchallenged. There is no great doubt this is a great Amendment of the ordinary law of insurance. It is quite true that there is only one portion of the Bill that deals with the industrial side, but when the hon. Gentleman says that the benefit to the working classes is infinitesimal under the Bill he is entirely wrong. It is surely not a small matter that 10,000,000 policies which are now——


May I say that the point of my Amendment was that it is only the interests of the big companies and not those of the industrial companies that have been looked after.

The SOLICITOR-GENERAL (Sir Samuel Evans)

If this Bill becomes law it will confer inestimable advantages on a very large number of people.

Amendment, by leave, withdrawn.

Question, "That the Bill be now read a second time," put, and agreed to.

Bill committed to a Committee of the Whole House for Tuesday, 23rd November.—[Mr. Joseph Pease.]