§ STATEMENT of the LIFE ASSURANCE and ANNUITY Business of the on the 19, to be signed by the Actuary.
§ (The answers should be numbered to accord with the numbers of the corresponding questions. Statements of reassurances corresponding to the statements in respect of assurances are to be given throughout.) Separate statements are to be furnished in the replies to all the headings under this Schedule for business at other than European rates. Separate statements are to be also furnished throughout in respect of ordinary and industrial business respectively.
§ 1. The published table or tables of premiums for assurances for the whole term of life and for endowment assurances which are in use at the date above mentioned.
§ Mr. LOUGH
moved to omit paragraph 1 and to insert instead thereof, "The rates of premium charged by the company for the various kinds of assurance transacted by it, with a statement of any exceptions allowed to such rates and of any special terms granted or allowances made to particular classes or groups of persons, and any discounts or rebates allowed to classes or individuals, and an explanation of the, manner in which such special terms, allowances, discounts, and rebates are dealt with in the revenue account and valuation statements.
"A statement under this head is to be made by every company within six months from the commencement of this Act and on every occasion when a change is made in the rates or terms of assurance."
The Clause, which I propose to amend, deals with the published tables of premiums of insurance which the insurance companies issue. My objection to these published tables is that in many cases they are not true tables. Very different rates are charged by some companies from those actually published in their lists. I therefore put down this Amendment that the companies should disclose their true charges, and if they give any large system of rebates to individuals or to classes that they should disclose these rebates, so that the published tables may be a true statement. There are many flagrant examples in the tables of many companies at the 312 present time. There is, for instance, one with which my right hon. Friend is well acquainted, whereby Civil servants get a discount of 15 per cent, off the tables published by very well-known companies. That practice amounts to this, that while one individual has got to pay £100 for certain benefits, a second individual has only to pay £85. In these mutual companies the man who pays £100 is not only paying for a certain amount on death, but for a certain share of the profits of the company, and the advantage which the other individual gets over him is in the nature of a secret commission, a matter to which this House has turned a very strict eye in recent years. My right hon. Friend says, I believe, that this is a matter of business, and that we ought to allow the companies to make bargains with each individual. But this is a special business regulated by Parliament. We provide in this Schedule for the publication of the table of premiums, and I demand that it should be a true table. This question has made good progress both in this and in other countries in recent years. We have had an Act to prevent secret commissions being paid, and we have had a Companies Amendment Act, passed in 1907 or 1908, under which all payments of commission or allowances from the regular charges of the company which are not disclosed in the prospectus are made illegal.
This Amendment does not ask that this system of commissions should be prohibited. It only asks that it should be disclosed, so that every person who goes into a company at one price should know that there is a possibility of individuals and, perhaps, whole classes going in at another price. I think that the Amendment is a most moderate one. It is strictly limited to a disclosure and not to a prohibition of these practices. We do not often look for guidance in a matter of this kind to America. Yet in America, within the last year or two, a law has been passed that the tables actually published must be adhered to by all the societies, and it has been made a misdeameanour to publish false tables, as many of the companies do in this country. In Canada they are going to adopt a similar law. I do think it is time that the House of Commons should move in this matter. I do not think it is right to say that the insurance companies must all agree among themselves before you pass a provision of this kind into law. There is a large consensus of feeling among the insurance companies that some 313 step of this kind should be taken. We cannot expect unanimity, because some of these companies make large profits by giving these special allowances.
It is for an independent authority like the House of Commons to take action, and I do think that the matter is one that ought now to be considered. I have put down a most moderate Amendment, but if it should not be accepted, I have a second barrel in the shape of another Amendment couched in such moderate terms that I am almost ashamed of it. I appeal to my right hon. Friend to give my proposal consideration. I do not think it unfair that agents should have commission. Agents do their work, and they have a right to be paid for it; but I do object to secret arrangements whereby one individual, or a class or group of men, may share a benefit by paying a much smaller sum than the published tables show, and which most people pay. I am not asking that this practice should be made illegal, but that it should be disclosed, and if my right hon. Friend will not accept the first Amendment, then I would ask him to consider the second, which would apply only to future business, and would not apply to re-insurances. The second Amendment is couched in the most moderate way, and under all the circumstances I feel that the spirit of rectitude which has guided my right hon. Friend through the shoals and difficulties of the Bill will lead him to see whether what I ask is not right. If there should be anything wrong in the words of my Amendment, I hope he will promise to accept their spirit, and consider the matter with a view to bringing up a form of words on the Report stage.
§ Mr. CHURCHILL
My right hon. Friend has certainly pressed his views on this occasion in a most charming and caressive manner. I think there is a great deal in what my right hon. Friend says; I do not deny that at all; but I would ask the House to remember that I have tried as far as possible to restrict the number of questions to be asked, and to deal with the majority of interests affected. I have asked a certain number of very important questions, and I have kept their number to the minimum in order to cause the least inconvenience possible. There is a great division of opinon among the assurance companies upon this question. Some of the Scottish companies, whose position my right hon. Friend has expounded with great force, take a view strongly support- 314 ing that which he has put forward. On the other hand there is a great opposition, and I do not feel that I should have been considering the general interests of this very important legislation if I had attempted to deal with this question without considering that opposition. It is rather a matter for the companies to deal with themselves. It is a legitimate way of carrying on business, and I think it is a subject for them to deal with. I think there is an indication of a movement in public opinion which possibly would render legislation unnecessary. If I could meet my hon. Friend in any way, and if I thought I could do so without prejudice to the view I have expressed, 1 should be glad to do so, but in the meantime I will continue to carefully consider the matter until the Report stage.
§ Mr. HAY
In this matter the companies cannot do what the right hon. Gentleman has suggested, because the Board of Trade are the only authority that can effectively deal with this question. The suggestion that the companies should be left to fight the matter out among themselves is not practicable, because no agreement can be come to among them, as was done in the case of secret commissions in other branches of business in this country. It is because of that very fact that the Board of Trade should lay down a rule to which the companies would be bound to conform. Anyone acquainted with assurance business knows that in respect of life assurance this question goes to the very root of the value of the returns presented to the Board of Trade by life offices. If a reader of them sees that an insurer pays 3 per cent, while as a matter of fact the company are only receiving a premium of 1 per cent., then these returns are absolutely illusory and become an absolute snare to the public. The payment of commission to an agent who introduces a number of policies is a payment made in respect of a clear and definite part of an agent's business But to give an agent's commission to a man who insures his own life and introduces no other business is to give a rebate which destroys the value of these Board of Trade Returns. Not only that, but the action of insurance brokers and insurance agents is of great value not merely to the companies, but to the public. They are thoroughly acquainted with all the intricacies of insurance, and they are able to give reliable advice to the assurers as to the companies whose arrangements afford the best security or the best type of insurance. 315 Insurance is a business which requires technical knowledge, and to all intents and purposes is a matter which can only be dealt with by experts. That being so, I think those agents ought to be protected against this illicit form of giving rebates, which certainly, it seems to me, makes the returns submitted to the Board of Trade such as do not give that true idea of the position of a company which should be afforded by the fact of the Department having accepted them.
I hope that the manner in which the President of the Board of Trade referred to his intention to consider this will develop into a serious wish and that he will listen to the voice of reason in this matter, and will endeavour to find words which will give him authority to impose upon the companies the obligation, if they give any rebates, to show such rebate clearly in their papers. The right hon. Gentleman the Member for Islington alluded to the fact that assurances effected at special rates and rebates do not appear on the face of the policy. I venture earnestly to appeal to the President of the Board of Trade to remember what his right hon. Friend said. If you allow this rebate to certain classes, say a group of Civil servants, or of bank clerks, you are really denying and depriving other persons of the assets which they are entitled to receive, and of the skilful management of the company in which they are assured. In this connection I would ask the right hon. Gentleman not to be guided solely by what the assurance companies think, but to think also of the general interests of the policy holders. Therefore, I shall support the Amendment of the right hon. Gentleman the Member for Islington if he goes to a Division.
§ Mr. LOUGH
I feel that I must rest satisfied with the very small amount of encouragement that I have received from the right hon. Gentleman. [HON. MEMBERS: "Why?"] I do not observe much enthusiasm in the general body of the House, and, seeing that I do not get very much promise of support, I ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. STUART-WORTLEY
moved, in (A), at the end of paragraph 10, "The average rate of interest yielded by the assets, whether invested or uninvested, constituting the life assurance fund of the company, calculated upon the mean fund of 316 each year during the period since the last investigation, without deduction of income tax," to insert the words, "It must be stated whether or not the mean fund upon which the average rate of interest is calculated includes reversionary investments."
§ Amendment agreed to.
§ Question, "That the Schedule, as amended, be the Fifth Schedule of the Bill" put, and agreed to.
§ Schedules 6 and 7 agreed to.