HC Deb 24 November 1909 vol 13 cc301-10

NOTE 1.—When part of the assets of the company are specifically deposited, under local laws, in various places out of the United Kingdom, as security to holders of policies there issued, each such place and the amount compulsorily lodged therein much be specified in respect of each class of business, except that in the case of fire, accident, or employers' liability insurance business it shall be sufficient to state the fact that a part of the assets has been so deposited.

Mr. HAY moved, in Note 1, to leave out the words "except that in the case of fire, accident, or employers' liability insurance business it shall be sufficient to state the fact that a part of the assets has been so deposited."

You have, by this Bill, imposed a very definite and binding obligation upon a life office as to the assets they have available for British policy-holders, and I submit it is not reasonable to say that companies transacting either fire, accident, or employers' liability insurance business abroad should be exempt from this obligation. This becomes all the more necessary having regard to the fact that in many foreign countries the Government insist upon large deposits being made to satisfy the claims that may arise in those countries before British policy-holders can share in the assets of the company. This thing has now obtained such dimensions, particularly in countries where fire insurance is of a speculative character and where the risks are of the most hazardous nature, that policy-holders in the United Kingdom are being more or less deluded by the offices. The announcements in their publications, by which they attract business in the United Kingdom, run to the effect that millions upon millions of sovereigns are available to satisfy the claims of British policy holders, whereas, as a matter of fact, most of those funds are locked up abroad, and are, in a large measure, under the control of foreign Governments. The position is all the more serious from the fact that it is alleged that these disclosures, which I believe are of great importance, are not necessary, because contracts with respect to fire insurance are of short duration. But let me remind the Committee that there is a tendency more and more to take out long period policies of fire insurance. Hon. Gentlemen conversant with these matters will know that in many cases such policies are taken out for a period of seven years, and, therefore, it is a matter of immediate concern to every policy holder in this kingdom that he should be in a posi- tion to know what are the commitments of his company abroad I do not wish to weary the Committee with figures. There are one or two cases, however, which might be mentioned. I will not give names, but I can cite the case of companies which have deposits abroad to the amount of two millions and a half sterling, and yet they advertise that these funds are available for home policy holders, whereas, as a matter of fact, foreign policy holders have a preferential claim upon them. I know, too, of an advertisement in which a company tells its American policy holders that it has a huge sum available for them, and at the same time it is representing to its British policy holders that the same funds are available for them. It is nevertheless an undeniable fact that a vast proportion of these funds are held abroad under the control of foreign Governments, and are so held in order to satisfy the claims in respect of policies issued on property in those countries, and must be so utilised before the British policy holders can obtain a single shilling. I feel that now the business of insurance is being brought under the control of the British Government policy holders should have full knowledge of what business their companies are doing, and that it is only reasonable to insist that fire, accident, and employer's liability business should be put into a category which will enable the insured to know exactly what security he has when he pays a premium to cover a risk. It must not be forgotten that on the American Continent there are possibilities of calamities involving enormous loss to the companies such as are not likely to occur in Europe, and therefore, from the point of view of the British policy holder, it is all the more necessary in view of the fact that these calamities may sweep away nearly the whole of the assets of insurance companies in this country, that the information to which I have referred should be made available for the policy holders. If the right hon. Gentleman cannot accept my Amendment I hope he will be willing on the Report stage to bring up words which will enable its object to be attained.


It is the fact that in the case of life insurance companies the funds which are hypothecated abroad have to be disclosed, and the hon. Gentleman wishes, not unreasonable, to make fire insurance companies subject to a similar proviso. I cannot accept his Amendment because it would greatly widen the scope of my Bill. I should not have got so far with it had I cast my net too widely. Be it remembered that life risks are of long duration and are actual, whereas fire risks are annual, or nearly always so, and are but occasional. We are invited to ask fire companies to disclose their hypothecated deposits abroad. But even if the deposit were hypothecated they could close the business at the end of the year and bring home the funds, whereas those that are not hypothecated are no security at all. Non-hypothecation of foreign deposits would present no barrier to the money being brought home and transferred over here for the benefit of the British policy holder. There are, therefore, perfectly good reasons for not meting out absolutely the same treatment to fire and life companies. I am perfectly prepared to justify on its merits the course I have adopted. I am quite willing to admit also that this information, which we believe would do no injury or harm in the case of life companies, might cause a great deal of harm in the case of fire companies, and certainly such a demand would be very deeply resented by them.


The reply of the right hon. Gentleman is rather cynical. It shows that the public have been neglected for the sake of powerful interests which are able to exercise pressure in this House. [Mr. CHURCHILL: "No, no."] It may be true that the risks accepted by life companies are certain and inevitable, and extend over a long time. It is also true that the risks accepted by fire companies are annual and occasional, but in the case of foreign risks there are natural phenomena which I think deserve special consideration, and it seems to me one of the most extraordinary parts of the history and genesis of tins Bill that there should be this preferential treatment.


I really am quite surprised to find this attack coming from this side of the House on the British fire offices, and I venture to think there is no class of company in the world which stands so high as they do. They have been through catastrophe after catastrophe in all parts of the earth, and have emerged from them without any detriment to themselves or their clients. My hon. Friend spoke of the catastrophes of Chicago and San Francisco, and there is no doubt that nothing gave greater credit to the British fire offices than the way those claims were met, when other companies were unable to pay them. What is there, after all, in the deposit of the American companies? They have to pay up fifty thousand dollars, and they have to keep their premiums in the country during the period for which the risk is run. That is for accident and fire policies, and I cannot see what is to be gained by this attempt to cast a slur upon the British fire companies and to suggest that there is any of them which could not pay its obligations at this moment if called upon to do so. If my hon. Friends could mention one case of a single fire company which had defaulted in any part of the world there might be something to be said, but British fire companies are pre-eminent in every part of the world for the admirable and honourable way in which they have met their obligations, and that alone should, I think, protect them from the attacks of my hon. Friends.


I am very much surprised at the attitude taken up by the President of the Board of Trade, because in effect he told us that he had been overpowered by the insurance combine or trust. That is the long and the short of it. I am afraid my hon. Friend behind me has not given an absolutely unbiassed, I will not say inaccurate, version of the situation. I have been associated with fire, and other forms of insurance almost since my 'teens, and I would remind him that if these companies to which he has referred have been so punctual in their payments abroad, it has been because they have in the past made a handsome profit out of the home business, and, if they had not, they would have found it very difficult in the case of Chicago to have met their liabilities. The argument of the right hon. Gentleman that the engagements, being only for one year, differentiates them is not a real one which covers the whole case, because there is an increasing tendency, especially in the case of large companies, to accept these fire risks, not for one year, but over a term of years. I can only regret that so excellent an opportunity of helping the presentation of the best and clearest information to the British public has not been seized by the right hon. Gentleman, particularly as the reason why he has not taken it is that he has given way to the menaces of the insurance trust.

Amendment negatived.

Mr. LOUGH moved to leave out, "Note 2.—If desired, a separate balance-sheet in the above form may be rendered in respect of any particular fund," and to insert instead thereof, "Note 2.—A balance-sheet in the above form must be rendered in respect of each separate fund for which separate investments are made."

Amendment agreed to.

NOTE 3.—The balance-sheet must state how the values of the Stock Exchange securities are arrived at, and, on any occasion when a statement respecting valuation under the Fourth Schedule is made, a certificate must be appended, signed by the same persons as sign the balance-sheet, to the effect that in their belief the assets set forth in the balance-sheet are in the aggregate fully of the value stated therein, less any investment reserve fund taken into account.

Mr. CHURCHILL moved to leave out the words, "on any occasion when a statement respecting valuation under the Fourth Schedule is made," and at the end of the Note to add, "In the case of a company transacting life assurance business or bond investment business, this certificate is to be given on the occasion only when a statement respecting valuation under the Fourth Schedule is made."

Amendment agreed to.


moved, at the end, to insert the words "Companies established outside the United Kingdom must state the amount of assets in the hands of any trustee in the United Kingdom for the, benefit of British policy holders."

This Amendment would require that a life assurance company doing business in the United Kingdom, but established elsewhere, shall state the amount of assets hypothecated in the United Kingdom for the benefit of British policy holders. It is necessary to do this, not for the purpose of comparing the amount of hypothecated assets with the liabilities accepted pari passu by the same company towards policy holders abroad, but for the purpose of enabling the British policy holder to form some kind of idea how far it is likely that in pursuing his claim, when it arises, it will be open to him to sue the company in British courts, and he will not be driven by the want of assets in this country to sue the company in foreign courts. I think that information is really the least which ought to be required by British policy holders. His position if he has to sue in a foreign court is a very inferior position to what it would be if he could sue in a British court. It is not really the amount of assets that we want to know, but the extent of his liability to be dragged abroad and go through all the expense and difficulty which would be involved in pursuing his claim in the foreign country.


I am very sorry I cannot accept the Amendment. The proposal briefly is that a company established outside the United Kingdom should state the amount of assets in the hands of any trustee in the United Kingdom. If that means that the assets axe hypothecated here to the British shareholders, that would be contrary to the principles with regard to insurance companies on which we have always gone, that the whole of the assets are available for the whole of the shareholders. This principle of hypothecation would be an entirely novel departure in that respect. I believe it is overwhelmingly the opinion of those concerned in these businesses that the principle of hypothecation would not be a good one to introduce. Certainly the Lords Committee, which this Bill is the result of, recommended very strongly against it after careful investigation. If it is not to be hypothecated it is clearly removable at will, and therefore it might be possible for a very specious and effective return to be presented by these companies which the hon. Gentleman wishes to expose, and a return which will be very effective fox the purpose of deluding the public, and shortly afterwards the assets might be removed. The last reason I have against it is that the return would be a misleading one. There is no real relation between the solvency of a company and the geographical distribution of its assets. It is true there is the inconvenience as to suing, but that the Bill makes no worse, and to some extent it is minimised, by the new deposits which are required. But there is no real relation at all between the country where the deposits are and the security of the policy holders.


The speech of the right hon. Gentleman is most disappointing. He has scarcely dealt with the thing in the manner we expected. My right hon. Friend made out a very strong case. Here you have foreign or colonial life companies who come here and do a business which must involve sooner or later a claim, and the right hon. Gentleman proposes to do nothing to protect the British policy-holder. We had in recent years a foreign life company transacting business in this country and robbing a large number of our fellow countrymen of the results of their thrift. It is worth while that I should give a few figures to show the magnitude of the evil which we propose to deal with by the Amendment. The company to which I allude commenced business in the United Kingdom in 1886, and it ceased taking new business in 1905. It was allowed by the Board of Trade to withdraw its deposit of £20,000 in 1906, and in 1908 it was put in the Receiver's hands in the country in which it was originally established. The policy holders in the United Kingdom and elsewhere did not receive a shilling unless their interest was protected by a special deposit, and as a result of the deposits in Canada policy holders in Canada will receive 80 per cent, from that special deposit and may get another 10 per cent. If these deposits are so volatile if they come to this country, why is it that they form an adequate and substantial security for policy holders who insure their lives in Canada? Surely the time has come when we should take a leaf out of the book of our Colonies, if not of foreign nations. The right hon. Gentleman shrugs his shoulders at this state of things, and is not making use of the Bill as an instrument whereby we can provide safeguards. Not only that, but these foreign and Colonial companies have a direct preference shown them by the Government as against the home offices. They are not obliged to pay 1s. 2d. Income Tax which those who insure here have to pay in respect of their assets which the tax gatherer can get at. If you made these foreign companies show what business they did in this country and their assets in the United Kingdom, you would by that fact get into the tax-gatherer's net money which now escapes it. You would improve the public revenue, and put foreign and Colonial companies on a fair and equal basis with home offices. I am sure the right hon. Gentleman cannot complain of the attitude which has been taken up in any quarter of the House regarding this Bill. We have only, to use his own words, to have a little gingering-up to make this Bill effective. I am disappointed that he has shown such a weak back. A little determination on his part would enable him to make the Bill an instrument of value to all who are interested in thrift in this country.


I hope that intending insurers in the country will note the observations of the President of the Board of Trade, and that the result will be to make them ascertain which companies are registered in this country, decline to insure in foreign undertakings, and confine themselves to British companies, where their insurances are likely to be protected

Third Schedule, as amended, agreed to.

and the liabilities under policies duly honoured when the time comes.

Question put, "That those words be there inserted.

The Committee divided: Ayes, 18; Noes, 164.

Division No. 914.] AYES. [9.50 p.m.
Abraham, W. (Cork, N.E.) MacVeagh, Jeremiah (Down, S.) Williams, Col. R. (Dorset, W.)
Balcarres, Lord Magnus, Sir Philip Wolff, Gustav Wilhelm
Banbury, Sir Frederick George Roberts, S. (Sheffield, Ecclesall) Wortley, Rt. Hon. C. B. Stuart-
Corbett, T. L. (Down, North) Ronaldshay, Earl of Younger, George
Douglas, Rt. Hon. A. Akers- Rutherford, Watson (Liverpool)
Fell, Arthur Smith, Abel H. (Hertford, East) TELLERS FOR THE AYES.—Mr Hay and Mr. Carlile.
Idris, T. H. W. Valentia, Viscount
Abraham, William (Rhondda) Hancock, J. G. O'Grady, J.
Acland, Francis Dyke Harcourt, Rt. Hon. L. (Rossendale) O'Kelly, James (Roscommon, N.)
Ainsworth, John Stirling Hardie, J. Keir (Merthyr Tydvil) Parker, James (Halifax)
Allen, A. Acland (Christchurch) Hardy, George A. (Suffolk) Pearce, Robert (Staffs, Leek)
Alien, Charles P. (Stroud) Harmsworth Cecil B. (Worcester) Pirie, Duncan V.
Atherley-Jones, L. Hart-Davies, T. Pointer, J.
Baker, Joseph A. Haslam, Lewis (Monmouth) Price, C. E. (Edinburgh, Central)
Balfour, Robert (Lanark) Haworth, Arthur A. Priestley, Arthur (Grantham)
Barker, Sir John Helme, Norval Watson Priestley, Sir W. E. B. (Bradford, E.)
Barlow, Percy (Bedford) Henderson, Arthur (Durham) Radford, G. H.
Barnes, G. N. Henderson, J. McD. (Aberdeen, W.) Rea, Rt. Hon. Russell (Gloucester)
Barry, Redmond J. (Tyrone, N.) Herbert, Col. Sir Ivor (Mon., S.) Rendall, Athelstan
Beale, W. P. Higham, John Sharp Roberts, Charles H. (Lincoln)
Beauchamp, E. Hodge, John Roberts, G. H. (Norwich)
Benn, W. (Tower Hamlets, St. Geo.) Holland, Sir William Henry Robertson, J. M. (Tyneside)
Berridge, T. H. D Hooper, A. G. Roch, Walter F. (Pembroke)
Boulton, A. C. F. Horniman, Emslie John Roe, Sir Thomas
Bowerman, C. W. Jenkins, J. Rose, Sir Charles Day
Brigg, Sir John Johnson, John (Gateshead) Runciman, Rt. Hon. Walter
Bright, J. A. Johnson, W. (Nuneaton) Samuel, Rt. Hon. H. L. (Clevelano)
Brunner, Rt. Hon. Sir J. T. (Cheshire) Jones, Sir D. Brynmor (Swansea) Schwann, Sir C. E. (Manchester)
Burns, Rt. Hon. John Jones, William (Carnarvonshire) Seely, Rt. Hon. Colonel
Buxton, Rt. Hon. Sydney Charles Joyce, Michael Shackleton, David James
Byles, William Pollard King, Alfred John (Knutsford) Sherwell, Arthur James
Causton, Rt. Hon. Richard Knight King, Sir Henry Seymour (Hull) Shipman, Dr. John G.
Cawley, Sir Frederick Laidlaw, Sir Robert Silcock, Thomas Ball
Channing, Sir Francis Allston Lamb, Edmund G. (Leominster) Stanley, Hon. A. Lyulph (Ches[...]e)
Cheetham, John Frederick Lambert, George Stewart-Smith, D. (Kendal)
Cherry, Rt. Hon. R. R. Lamont, Norman Summerbell, T.
Churchill, Rt. Hon. Winston S. Layland-Barratt, Sir Francis Sutherland, J. E.
Clough, William Lever, A. Levy (Essex, Harwich) Taylor, John W. (Durham)
Collins, Sir Wm. J. (St. Pancras, W.) Lewis, John Herbert Tennant, H. J. (Berwickshire)
Corbett, A. Cameron (Glasgow) Lough, Rt. Hon. Thomas Thomas, Sir A. (Glamorgan, E.)
Cornwall, Sir Edwin A. Lupton, Arnold Thompson, J. W. H. (Somerset, E.)
Cory, Sir Clifford John Lynch, H. B. Tomkinson, Rt. Hon. James
Cotton, Sir H. J. S. Macpherson, J. T. Toulmin, George
Dalziel, Sir James Henry MacVeigh, Charles (Donegal, E.) Ure, Rt. Hon. Alexander
Dobson, Thomas W. M'Arthur, Charles Vivian, Henry
Duncan, C. (Barrow-in-Furness) M'Callum, John M. Walsh, Stephen
Duncan, J. Hastings (York, Otley) Maddison, Frederick Walters, John Tudor
Duncan, Robert (Lanark, Govan) Marks, G. Croydon (Launceston) Walton, Joseph
Dunn, A. Edward (Camborne) Marnham, F. J. Ward, W. Dudley (Southampton)
Essex, R. W. Massie, J. Watt, Henry A.
Esslemont, George Birnie Molteno, Percy Alport White, Sir Luke (York, E.R.)
Evans, Sir S. T. Morgan, G. Hay (Cornwall) Whittaker, Rt. Hon. Sir Thomas P.
Everett, R. Lacey Morrell, Philip Wilkie, Alexander
Falconer, J. Morse, L. L. Williams, W. Llewelyn (Carmarthen)
Fenwick, Charles Morton, Alpheus Cleophas Wills, Arthur Walters
Ferens, T. R. Murray, Capt. Hon. A. C. (Kincard.) Wilson, Henry J. (York, W.R.)
Ferguson, R. C. Munro Murray, James (Aberdeen, E.) Wilson, W. T. (Westhoughton)
Fullerton, Hugh Nannetti, Joseph P. Wood, T. M'Kinnon
Furness, Sir Christopher Nolan, Joseph Yoxall, Sir James Henry
Gibb, James (Harrow) Nussey, Sir Willans
Gibson, J. P. Nuttall, Harry TELLERS FOR THE NOES.—Mr Joseph Pease and Mr. Gulland.
Gladstone, Rt. Hon. Herbert John O'Brien, Patrick (Kilkenny)
Glover, Thomas O'Donnell, C. J. (Walworth)

Fourth Schedule agreed to.