HC Deb 15 June 1911 vol 26 cc1754-72

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill he now read a second time."

Mr. BOOTH

I think the House is entitled, on an important Bill like this, to a statement on behalf of those who are responsible for its promotion. I have no wish to offer any hostile criticism. The institution of Lloyd's is one of the most famous and one of the most valuable in the world, but I do think that, on a measure affecting the fortunes of Lloyd's, which has a reputation unequalled in marine Insurance, the Members of this House should have some explanatory statement on behalf of the promoters of the measure.

Mr. LESLIE SCOTT

Speaking, as I have the honour to speak, on behalf of Lloyd's, I recognise the reasonableness of the demand made by the hon. Member opposite as regards the proposals involved in this Bill. Lloyd's, as he said, is an institution in this country famous all over the world—an institution which has been in existence here for well over two centuries, and has earned the well-deserved support and admiration of the whole of the insurance world throughout both hemispheres. It was incorporated by Parliament in 1871 by an Act of that year, which vested the powers of the management of the society, and, to some extent, the discipline of underwriters carrying on insurance business on behalf of Lloyd's, in a committee constituted by the Act of 1871. That committee was made by the Act of 1871 the governing body, and upon the powers of that committee depends, to a large extent, the protection of those engaged in insurance business, and the interests of hose insured—a protection which Lloyd's extends at the present day to so large a proportion of the insurance business of the world. In 1871 the business carried on by Lloyd's was, with the exception perhaps of a negligible quantity, almost entirely marine insurance business, with the result that when Lloyd's Act was passed in 1871 it was not contemplated that Lloyd's—that is the members of Lloyd's—for there is a distinction—should do any but marine insurance business. The result was that in the Act of 1871, all through that measure you find that view recognised in the various sections of the Act, and particularly in that section of the Act which confers upon Lloyd's the power to promote its objects. Since 1871 the society constituted under the Marine Insurance Act, by Section 10 of that Act, has had for its main object the carrying on of marine insurance business by means of its members.

That Act recognised the practice of Lloyd's, which was the practice of the individual members of Lloyd's acting as underwriters and insuring ship owners, cargo and various interests, and did not in any way contemplate the society as a society, doing that business. That is a point which it is important to bear in mind in view of the provisions of the Bill now before this House. Since 1871 insurance business throughout the world, led by this country, which has done the great majority of insurance business of the world for many years, has grown very largely, and the members of Lloyd's, acting independently, as they were perfectly entitled to do, as there is nothing in the Act of 1871 to prevent their doing it, have gradually become insurers in various other classes of business than marine business—life insurance, accident insurance, employers' liability, fire insurance, and generally other risks which it is known in the business world can be insured at Lloyd's when you cannot get anybody else or any company in the world to insure them. That non-marine business has grown now, in the year we are now living in, to very large proportions, and the growth of that business has within the recent years been recognised by Parliament. In 1907 the Employers' Liability Insurance Act was passed, an Act which provided that employers' liability insurance should be, broadly speaking, subjected to the provisions applicable under the existing legislation of the country to all life insurance business. In the new Act special provisions were inserted, as to the conditions under which the members of Lloyd's were to carry out employers' liabiltiy insurance. In 1909 a general Act, it will be in the recollection of this House, was passed dealing with all the non-marine insurance, but primarily directed to the conduct of non-marine insurance by companies.

The main object of the Assurance Companies Act of 1909 was to protect the insuring public against the risk of insolvent or weak insurance companies. That protection was effected by imposing upon insurance companies carrying on this non- marine business various stringent obligations. For instance, it was provided that each company should make a deposit of £20,000 if, and only if, it obtained a warrant from the Board of Trade that it was fit to carry on insurance business. It was to publish annual accounts and send them to the Board of Trade. For five years the whole of its finance was to be investigated by an actuary, and his report was to be forwarded to the Board of Trade. Its accounts, when it carried on different classes of business, were all to be kept separate, so that the policyholders in one class of business might have the security fund allocated to that particular class of business. There was to be an annual audit, and there was a provision by Section 20 of the Act that all documents, reports, and accounts sent to the Board of Trade might be ordered by the Board of Trade to be treated as publicly deposited with the Board of Trade, and when so deposited every member of the public should have the right of inspecting those accounts. Those provisions were intended, of course, for the general protection of the public. It was recognised by Parliament in 1909 that the provisions were not all suitable to the conduct of the business of individual underwriters at Lloyd's. They were intended primarily for large insurance companies, and it was felt that it would not be fair, and also not necessary for the protection of the public, that all those requirements should be imposed upon individual members of Lloyd's.

In consequence of that, as the House may remember, in Section 28 of that Act, it was provided that those provisions should not apply to Lloyd's if they complied with certain specific provisions which were settled after the discussion of an Amendment in this House as applicable to individual underwriters at Lloyd's. Those provisions were very carefully considered, and they amounted, in short, to two main provisions with an alternative. The two main provisions were that each class of business was to be kept separate, that is to say, life business, fire business, accident business, employers' liability business, that as regards those each underwriter should deposit in regard to his liabilities as to the particular business the sum of £2,000, and that deposit was to be maintained as appropriate to his risk on that class of business and not available for policyholders on any other class of business. Secondly, he was to furnish in each year to the Board of Trade an account of the business he had done during the year with regard to fire and accidents, and an alternative was given to underwriters at Lloyd's, firstly, that all premiums in respect of the class of business in question should be invested in a trust fund under the terms of a trust deed to be approved by the Board of Trade, and, secondly, that he was to give security to the satisfaction of the Board of Trade, or if the Board of Trade so approved and directed, to the satisfaction of the Committee of Lloyd's, the governing committee, which is and was responsible for the good discipline and the general good conduct of members of Lloyd's. That security was to be kept separate to meet all claims on non-marine business of those classes. It was optional to the underwriter to give that security either by deposit or by guarantee given by somebody else, or by both, and the amount of the guarantee or the deposit was to be not less than the aggregate of the whole of the premium received by him in respect of those classes of business during the preceding year.

Thirdly, there was to be an annual audit by an accountant approved by the committee of Lloyd's, and that accountant was to give a certificate of his audit to Lloyd's and also to the Board of Trade. Those three provisions, as the House will observe, are very stringent provisions, which must ensure a security or guarantee that the conduct of the business generally by the individual members of Lloyd's will be satisfactory to the Board of Trade, or if the Board of Trade approve or direct, and I believe in most cases they do, satisfactory to the committee of Lloyd's. It is important to remember, in view of some of the provisions of this Bill, that the Board of Trade do recognise that the committee of Lloyd's is a body recognising its great responsibility to the public and carrying out that responsibility in a manner worthy of its position and consistent with the interests of the public that have to be protected. Thus in the 1909 Session of this House Parliament recognised two things. It recognised the modern development of Lloyd's business since the year 1871, and it made provisions suitable for non-marine business which Parliament considered adequate for the protection of the public. Secondly, Parliament recognised the committee of Lloyd's as the governing body of Lloyd's and trusted it as the guardian of public interests. Therefore it follows that at the present day the description of Lloyd's as a society engaged only in marine business, as was contemplated by the Act of 1871, and as was expressed in that Act, has become archaic, and untrue, in the development of modern commerce. The Bill which is before the House to-day for Second Reading, and which, I may say, has passed the House of Lords, and has been through Committee there, proposes to alter this untrue description of the character of Lloyd's and of its objects, and to eliminate the limitation of the word "marine" and to recognise the fact that Lloyd's at the present day and its members do business to a large extent which is non-marine business.

Accordingly, the objects of Lloyd's are by this Bill enlarged. It is asked by this Bill that Parliament should recognise the society as a society whose members carry on to a large extent other business than marine business. Clauses 3, 4, and 5 of the Bill do that, but it should be borne in mind, I venture to think, by the House that whilst the Bill recognises the fact that the members of Lloyd's have increased, and as the exigencies of modern commerce have required it, have extended their business from marine business to other classes of business, nothing has been done which was not authorised by the Act, for the very simple reason that the Act of 1871 dealt with the Society as a society, and did not in any way purport to limit the powers of individual members of Lloyd's. The natural result has been of the non-recognition of the business done by individual members of Lloyd's as individuals, is that except in so far as they are governed by the Assurance Act of 1909, that business is, so to speak, non-official. One of the main objects of this Bill is to convert that business from non-official business into official business, by the members of Lloyd's as members of Lloyd's, and bring them within the purview and control of the committee of Lloyd's. Clause 12 of the Bill proposes for that purpose to make more effective the powers of the committee. Under the Act of 1871 the disciplinary powers of the Committee are limited to expulsion for disreputable conduct. It has been felt that as ninny associations, for instance, Stock Exchange Associations throughout the country, corn associations, cotton associations, and so on, have powers vested in their committees of suspension as well as of expulsion, of their members for conduct which does not meet with the approval of the general members of the committee as being inconsistent with the public interests, it has been felt that the power or suspension should be added to the power of expulsion. In consequence, Clause 12 proposes to vest in the committee powers of suspension under certain rigorous conditions, which hitherto the committee had not had.

Clause 11 is merely a question of drafting to carry out the general purport of the Bill by way of giving to Lloyd's the power of doing non-marine business, and deals with the powers of the Committee for the purpose of carrying out the general object of the Bill, the power to use the funds of the society for the purpose of investigating frauds and generally protecting the interests of members of the Society, not only in relation to shipping but in relation to other classes of business. Under the Act of 1871, Section 32 allowed the society to devote its funds for the purpose of investigating shipping frauds, as for instance, deliberately scuttling ships and so on, and as it was thought right that the objects of the society should be generally extended in this Bill, in order to bring them into consonance with modern conditions, it was also thought that this power should be made general and applicable to the general classes of business which are in fact carried on by members of Lloyd's at the present day. Clauses 6 and 7 are minor Clauses. At present the stock and funds of the society are vested in the name of the trustees. It was thought that there was no need at the present day why that should continue, and the stock and funds, if the Bill be passed, may be vested in the society itself. Similarly Clause 8 proposes to give Lloyd's society power of acting as trustees, which power it was doubtful whether they had under the present Statute. The next point on the Bill is this. The usual method of giving security under the provisions of the Assurance Company's Act of 1909 to satisfy the Board of Trade requirements, or the requirements of the Committee, have been what are known as Lloyd's Guarantee Policies. That is to say, when any individual member of Lloyd's has underwritten a risk in these various classes of non-marine business he has given a policy which is not, strictly speaking, an insurance policy, but is a contract of guarantee entered into by some other member of Lloyd's, guaranteeing the due performance by him of the obligation under his policy. For the better protection of the public, Lloyd's members put a Clause into the 1909 Bill, so that power should be given to the committee under stringent regulations, to which I shall refer, to make good any deficiency in the guarantee or deposit on the part of a member for the purpose of carrying out the provisions of the Assurance Company's Act of 1909. It is contingent, because it covers an infrequent case, and it is for the protection of the public. But it is obviously a very great advantage that the society itself should be in a position, as a matter of law, to give and to make good any deficiency under one of those guarantee policies. At any rate, the public can do nothing but benefit under it, and if it be suggested that the committee are likely to give such assistance improvidently, the answer is that the assistance is only to be given pursuant to special by-laws passed by Lloyd's and passed under special conditions. The ordinary by-laws can be altered by a majority at a general meeting, but these by-laws can only be passed under special conditions as regards majority and so on. The last provision of the Bill with which I have to deal is a provision which I think the House will generally recognise as being also to the advantage of the general public and certainly not unbeneficial to Lloyd's. With regard to the obligation under the Assurance Companies Act, which I have explained to the House, to give a guarantee equal in amount to the aggregate of the premiums received by the individual underwriter in a particular class of business during the preceding year, it provides that guarantee may be given by the society itself. It is not an individual guarantee, or an individual policy, but simply a guarantee that the particular underwriter shall carry out his obligations under the Act of 1909.

Mr. J. SAMUEL

Is that in addition to the £20,000?

Mr. LESLIE SCOTT

No. The £20,000 under the Act of 1909 is a provision by Parliament which imposed an obligation upon companies. But it was felt that the £20,000, whilst it would be a suitable deposit to require from a large company for the whole of its business as a general fund available for claimants under the whole of the policies issued by it, would be a prohibitive requirement to exact from an individual underwriter, and therefore the section of the Act which dealt with Lloyd's, that is the Act of 1909, says that the Act shall not apply to a member of Lloyd's who carries on an assurance business of that class provided that he complies with the requirements set forth in the eighth schedule of the Act which is applicable to that class of business. I will refer to the schedule in a moment. As I said before an individual member of Lloyd's is excepted from the requirements of the Assurance Companies Act which is applicable to a large company in regard to the whole of its business if he carries out these stringent requirements which were considered very carefully in Committee in this House and amended in Committee in this House and are expressed in the eighth schedule.

It is given in an alternative form. The option is given to the individual underwriter—firstly, that he shall deposit, and, if deposited, in such manner as the Board of Trade may direct, a sum of £2,000 in respect to each class of his business. Hon. Members will remember that these classes are fire, life, accident, Employers' Liability, and so on. Secondly, he shall furnish for the use of the Board of Trade a statement in such form as may be prescribed by the Board, showing the extent and character of the fire and accident insurance business effected by him. This alternative is given to the underwriter to carry on fire, insurance, and accident insurance, but in lieu of complying with the above requirements he may comply with the undermentioned. The first condition is that all premiums received by him shall be placed in a trust fund, in accordance with the provisions of a trust deed, approved by the Board of Trade. Secondly, he shall also furnish security to the satisfaction of the Board of Trade, or if the Board so direct, to the satisfaction of the Committee of the society, which shall be available solely to meeting claims on policies issued by him in connection with accident business or other non-marime business carried on by him, and the requirements laid down for this security may be either a form of deposit or a guarantee, or both, but the amount of security to be furnished shall never be less than the aggregate premium received and receivable by the underwriter in the last preceding year in connection with such fire, accident, and non-marime business.

Mr. J. SAMUEL

Will the hon. Member explain Clause 8. Does it deal with the consolidation of these guarantees? Does it state the actual amount to be invested as a guarantee under that Clause?

Mr. LESLIE SCOTT

Clause 8 of the Bill does not relate at all to that question.

Mr. J. SAMUEL

Not to that point?

Mr. LESLIE SCOTT

No. It is merely, with all respect to the profession to which I have the honour to belong, a formal clause put in to meet the fears of some people, in fact of some intelligent lawyers, who seemed to think it was necessary, as, under the Act of 1871, the society itself had not power to act as Trustees for certain purposes, and to meet that legal view Clause 8 was inserted. That does not in the least touch the question of the amount of the security. The amount of the security under the Assurance Companies Act of 1909 is regulated solely by the amount of business which a man does in his particular class of business. For some of the purposes of the Income Tax Acts, it is anticipated that the previous year's business may be some guide to the amount of business the underwriter is likely to do in the present year. If in the last year he has done £20,000 worth of business then he has to give security to the extent of £20,000. If he has done only £500 worth of business he has to give security to the amount of £500. This varying of the amount is intended to meet the case of particular underwriters; to measure up the extent of the business, and the particular class which a man is likely to be doing. As hon. Members will appreciate, members of Lloyd's doing particular classes of business to a large extent are known as doing that class of business, and if a man is doing a small trading business he will not have a big business liability—and conversely. The amount is fixed suitable and adequate to the exigencies of the case; adequate to the particular sort of business that the individual underwriter is likely to do.

Under Clause 9, which is the one I am dealing with, the society is given the right of guaranteeing, under the Act of 1909, the general liabilities incurred by the individual member. The only other thing I have to add for the information of the House is that that power also can only be exercised, subject to those very stringent conditions imposed as regards the making of the bye-laws, and lastly, subject to certain expressed conditions which were inserted in Clause 9 of the Bill in the House of Lords pursuant to the suggestions of the Board of Trade. Clause 9 of the Bill proceeds:—

  1. (A) The Society shall not guarantee the payment by any one member of the society of any such claims and demands 1763 as aforesaid for a greater amount in all in any one year than the estimated aggregate of the premiums received or receivable by such member in the last preceding year in connection with policies of insurance including guarantees underwritten by him or on his account.
  2. (B) No such guarantee as aforesaid shall be given by the Society in respect of any member of the society whose premiums shall not have been placed in a trust fund in accordance with the provisions of a trust deed approved by the Board of Trade on whose account for the last year preceding the year to which such guarantee may relate shall not have been audited by an accountant, approved by the committee, or who shall not have furnished to the committee and to the Board of Trade such accountant's certificate of such audit in a form prescribed by the Board of Trade.
There are also further provisions as to by-laws. The result of those provisions is that the Bill will give the Committee a complete control over the business done by every one of their members. They will know what business their members are doing. They will know whether the premiums received by their members justifies the further business they are undertaking. The result will be that the public will be adequately protected. These conditions were, as I say, approved by the Board of Trade after consultation not only with Lloyd's, but with a committee outside of the assurance companies. They were inserted with the full approval of the Board of Trade. I am authorised on behalf of Lloyd's, and I am authorised by the Board of Trade, to say that this Bill in its present form has the approval of His Majesty's Board of Trade.

The PARLIAMENTARY-SECRETARY to the BOARD of TRADE (Mr. Tennant)

We have listened with pleasure to the ample and illuminating history of the corporation of Lloyd's from the hon. Gentleman opposite. I approve every word that he has said. The only omission, I think, he made was one of which I would remind the House, and that is that all these provisions which the hon. Member has drawn the attention of the House to in the Act of 1909 were the subject of long negotiations between the Board of Trade, representatives of the various companies concerned not only in London, but all over Great Britain, and Lloyd's themselves, conducted with great ability by the Controller of the Companies Department of the Board of Trade. I believe it is no exaggeration to say that there were at least one hundred such meetings held before agreement could be arrived at. That agreement, that compromise, has in the opinion, I think, generally speaking, of the insurance world, met with general acceptance by every business concerned in insurance. It has met with the assent of all parties, and I think it would be a great pity if we were to do anything now or at any other time to upset the agreement then arrived at, which is a great protection to the public. This Bill follows that of two years ago. A deputation came to see my right hon. Friend the President of the Board of Trade from the outside companies. They made certain suggestions. I am glad to be able to inform the House that every one of those suggestions were adopted by the Committee of Lloyd's, and have been inserted in this Bill. I particularly call the attention of the House to Clause 9 to which the hon. Member opposite has called attention, and to Subsection (3) of that Clause, as well as to the Schedule of the Bill. The Schedule provides machinery by which both a revenue account and a balance-sheet shall be submitted under the Act. Inasmuch as this Bill gives increased protection and security to the public, and has been through the House of Lords, and inasmuch as the fire offices have been met, I believe, in every particular which they have drawn the attention of the Board of Trade to, I recommend this Bill to the House and ask for it a Second Reading.

Mr. ELVERSTON

In spite of what has already been said by the hon. Member for the Exchange Division, I think this House should have some more information about this concern, and should consider still more carefully what security is being offered to the public by Lloyd's underwriters before they pass this Bill in its present form. I would remind the House that hitherto it has always been the excellent practice of Parliament when considering insurance matters to require that the public should have full information as to the business standing of every company. After the House has secured that full information shall be obtainable, it follows the wise plan of leaving the public to decide, the matter for themselves. In other countries it is the custom of the authorities to take responsibility for the financial soundness of insurance companies. They demand a pro rata deposit of funds, and they specify what basis of valuation and the like shall be adopted. In this country, and with excellent results so far, the very good axiom of "Let the buyer beware" has always been adopted. But in the Act of 1909, with all respect to Lloyd's underwriters, this very good rule is being departed from for the first time. The hon. Member for the Exchange Division, I think everybody will admit, drew very careful and very full attention to the two alternatives which Lloyd's underwriters may comply with to satisfy the Board of Trade at the present time. The first alternative is that a deposit of £2,000 should be made with the Board of Trade along with a, full statement of the affairs of each individual underwriter. The second alternative given the underwriter is that instead of facing the searchlight of publicity, instead of giving full account of his affairs, he merely supplies an auditor's certificate, and along with the auditor's certificate certain guarantees.

The day before yesterday I put a question in the House as to the number of Lloyd's underwriters who had faced the searchlight of publicity and the number who had chosen the alternative of no publicity at all. I was very much surprised to find that not one single underwriter of Lloyd's had chosen the first method involving publicity, but that something like 501 underwriters had chosen the alternative under the Act of 1909. In view of that I think it is only right that this House should very carefully consider this Bill which is designed to further extend the powers of Lloyd's.

Mr. LESLIE SCOTT

If I may interrupt for a moment, this Bill does not in any way affect the right of individual members of Lloyd's to issue policies. They have issued policies in their individual capacity absolutely independent of any Act of Parliament whatever, and that right is left intact and cannot be touched by any Act of Parliament.

9.0 P.M.

Mr. ELVERSTON

I agree that individual members of Lloyd's have been issuing policies to the public, and that they have been entering into contracts with the public, but I wish to point out that the same individuals under this Act are going to guarantee each other. They will be acting in a dual capacity. It seems to me to be another case of Dr. Jekyll and Mr. Hyde, or perhaps what we sometimes see happening in the case of the Chair where the Deputy-Chairman or the Chairman of Ways and Means will report to himself as Deputy-Speaker what he as Chairman of Ways and Means has just been doing. I should be much more satisfied if the hon. Gentleman who had introduced this Bill had given us some information about what Lloyd's underwriters had been doing in the past. The public has no information on that point at the present time. The day before yesterday I asked the President of the Board of Trade for some information as to the number of Lloyd's underwriters who had failed to meet their engagements during the past year. I do not know whether they are many or few, but I do know this, that since this Bill was introduced the announcements have appeared that two underwriters of Lloyd's have had to call their creditors together. [An HON. MEMBER: "Can the hon. Member give a single case of where obligations have not been met?"] No, I cannot at the moment, but there are cases where Lloyd's underwriters have certainly disputed their claims. I will mention the two cases where members of Lloyd's have had to call their creditors together— that is if you wish me to give the names to the House. [HON. MEMBERS: "No, no."] Since this Bill was introduced two of Lloyd's underwriters have unquestionably had to call their creditors together, and that is evdence that they have not been able to meet their liabilities.

Mr. FRED HALL (Dulwich)

Is the hon. Member aware that the statement he made about Lloyd's underwriters has been disputed?

Mr. ELVERSTON

Two Lloyd's underwriters have called their creditors together since this Bill was introduced, and yesterday, when I asked how many of Lloyd's underwriters had failed to meet their liabilities during the past year the hon. Member was obliged to tell me that he had no knowledge. Personally, I consider that the competition of Lloyd's is an excellent thing for the public. I am in no way antagonistic to Lloyd's, but I want this House to be satisfied that Lloyd's are giving a full security before the House passes this Bill. We hear what an excellent name Lloyd's has up and down the world, but I have in my hand a copy of the "Coast Review" of San Francisco, which is a very sound business paper, and this is what it says about Lloyd's:— Much of the business undertaken by Lloyd's underwriters is not subject to the rules and regulations of the committee. What has been the effect? The losses of late have been extremely heavy, claims have been disputed in the law courts in such numbers as to make the name of Lloyd's almost a by-word, and the old reputation for integrity has been lost. That quotation is taken from a sound American journal. I think the House ought to have more information before it passes this Bill and puts the seal of Parliament upon this system of guaranteeing each other and the drastic change in the policy of the Local Government Board.

Mr. C. E. PRICE

The name of Lloyd's is a household word in this country. It was largely concerned with marine business, but of late years it has taken on other classes of business and it is this that has placed Lloyd's in a peculiar position. It will be within the recollection of the House that in 1909 there was an Insurance Bill passed through the House whereby certain conditions were laid down under which companies could carry on insurance business. Lloyd's were referred to in the Act, but the statement made by the Secretary to the Board of Trade was that being an agreed Bill it was only agreed to because it contained many things which were advantageous to insurance companies and to the public. Unfortunately there were many things in it to which insurance companies took objection and Lloyd's in particular, but rather than lose the advantages which were in that Bill and in order to secure them to the public it was thought better to let the Bill go through. It is quite wrong to say that the Bill as it became law was acceptable to all parties. I should like the House to realise that under the 1909 Act Parliament laid down that every insurance company, or anybody carrying on insurance, should state distinctly the conditions under which they are carrying on business. If a company did fire business it had to show its Liabilities and assets under fire, and the same thing applied to fidelity, sickness, accident, and every other class of business. The result is that you have in the Act a provision that in its balance-sheet every insurance company is obliged to fill in a schedule showing the condition of its funds, liabilities and assets, and showing whether under each section of business the company has made a profit or a loss.

There has recently been brought up the fact that under employers' liability various companies have shown a loss. When you examine an insurance company's balance-sheet you can see whether you have made a profit or a loss on any particular department. Therefore you have the security to the public demanded from every company that it must fill in this sheet showing the condition of its funds. If you turn up the balance-sheet of Lloyd's you will find that they make no such return, and they are not asked to show to the public the conditions under which they carry on business under the separate headings of fire, life, accident, sickness, indemnity guarantee, or anything else. They are not called upon to make those returns. How comes it that this one insurance company should be allowed to carry on business as insurers under conditions which are contrary to the law of the land? You have laid down conditions to the effect that the public shall have some guarantee from every company of its bona-fide character. First of all, you ask them to deposit £20,000. Lloyd's are not called upon to do this, and they are not called upon even to reveal the condition of their funds. On these matters they simply make a general statement.

I think this House ought to be very careful about giving to any single body of men conditions which it would not give to anybody else. Here you have this corporation carrying on business on exceptional terms. I very much regret that the Board of Trade has assented to this Bill in the House of Lords. I condemn this practice. A private body appeals either to the Board of Trade or to some other Department, and there they adjust the terms on which they will allow a Bill to go through. The result is when it is presented to this House we have not a free hand in the matter. I think this is a very reprehensible practice against which the House should guard. You ought not to give any body of men in the country the privilege of carrying on business on terms which you cannot extend to anybody else. You laid down certain conditions in 1909 for insurance companies, and under this Bill Lloyd's are allowed to carry on the same business without fulfilling those conditions. I regret extremely that the Board of Trade has lent itself to adjusting the terms of this Bill, and has gone so far as to pronounce a benediction upon it.

Mr. J. SAMUEL

I find that it says in the circular sent out by the promoters of this Bill that under Clause 2 the members of the society are required by the Act of 1909 to snake a deposit of £5,000.

Mr. LESLIE SCOTT

That £5,000 relates solely to marine business, and it has nothing to do with the Act of 1909. It was simply a regulation in regard to marine business only.

Mr. J. SAMUEL

There is nothing in Section 9 which deals with the guarantee of Lloyd's. When the society come to aggregate the whole of the deposits made in the past by the underwriters there is nothing to indicate the amount of the guarantee which Lloyd's are prepared to deposit. There is nothing provided for except a general statement. I find in this statement there is something which shows that the Board of Trade have neglected their duty. One of the reasons given why this Bill has been promoted is that in 1871 this society of Lloyd's permitted the underwriters to deal entirely in marine insurance, and up to the present time it has been extended to all classes of business; that is to say, Lloyd's have been permitted to issue policies for all classes of business. Under Clause 4 of this Bill they take power to undertake every description of insurance business. Since 1871 any body of men starting life assurance in this country have been prevented from issuing policies unless they deposit £20,000 with the Board of Trade. Why is it that Lloyd's have been permitted from that time; if this description is true, to issue policies upon life without being compelled to deposit £20,000 with the Board of Trade, and without being placed in exactly the same position as all competing insurance companies? I think, in addition to the guarantee of the individual underwriters which they propose to give now under Clause 9, we should have some undertaking from the Board of Trade that when this Bill goes to a Committee they will be compelled to subscribe this £20,000, and will be placed on the same footing as the other companies. I think that is a very grave omission in this Bill. It is quite evident Lloyd's are widening their scope very much in the class of business they propose to do, and, if they propose to do all kinds of business, and are going to do it in the name of the society, then I hold they ought to come within the same provision as other companies dealing in life insurance business.

Mr. POLLOCK

I desire to say a very few words on behalf of Lloyd's in support of this Bill. I understand that what the House is considering is whether the Bill should be read a second time or not. I have heard a great many reasons given why it should be read a second time, and as soon as possible sent to a Committee, before whom a number of the points which have been suggested, almost entirely, I think, from the other side, can be investigated. Is there any reason why the Bill should not be read a second time? Some criticisms have been passed upon the Act of 1909. Those criticisms are really belated. What is the position to-day? Lloyd's do a great number of different classes of insurance. That cannot be stopped. It is not proposed that it should be stopped, and it is for the benefit of the public they should do these various classes of insurance. It is proposed under the Bill that the jurisdiction of the committee of Lloyd's should be extended over all classes of business which are done at the present time, and which cannot be stopped so as to control their members in whatever class of business they are engaged. An interesting quotation was read from the "Coast Review of San Francisco," and the opening sentence of the quotation was:— Many classes of insurance are now carried on which are not subject to the Committee of Lloyd's. It was in consequence of that statement some further statements were made, and it was suggested, I think very improperly, that the same security was not now held by the public who insured with Lloyd's as hitherto. If the "Coast Review of San Francisco" is to be taken as our leading light, the opening sentence is a complete justification of the Bill before the House, and gives a cogent reason why it should be given a Second Reading and sent at once to a Committee. The hon. Member who spoke last put a good many questions, which I should desire to answer at once. He asked why Lloyd's are not subject to the Act, which requires that there should be a deposit of £20,000 before life insurance business can be undertaken. If he will look at the Statute, he will find it applies to companies and to companies who start life insurance business.

Mr. J. SAMUEL

And accidents since 1909.

Mr. POLLOCK

Yes, but the Statute which provides for the deposit of £20,000 is an old Statute—of 1856, if I remember rightly.

Mr. J. SAMUEL

It is 1871.

Mr. POLLOCK

I will not differ, because I do not happen to remember the exact year it was passed. It applied to companies. The Act of 1909, whether it was an agreed Act or not, is a Statute of the Realm, and, under it, I agree certain obligations are cast upon all persons engaged in any form of insurance, but it is really provided by Section 58 and by the schedule that the members of Lloyd's have a right to conduct their various classes of insurance provided they comply with that Schedule. If we were discussing the Act of 1909, a good deal might be said in the spirit of the observations of the hon. Member, but we are not discussing that. We are not discussing the terms on which the members of Lloyd's can conduct their business. We are discussing the question whether the committee of Lloyd's shall have jurisdiction over its members in respect of business which neither the committee nor this House can prevent the members of Lloyd's undertaking. The Schedule of the Act of 1909 gives two alternatives. There can either be a deposit of £20,000, or you can have the very excellent method of putting all the premiums received into a particular trust fund and ear-marking them. Business can be carried on in accordance with that alternative. It is a more businesslike method, and it is the way in which the members of Lloyd's have been carrying on the insurance. It seems to be thought by some hon. Members this Bill is to enable Lloyd's to carry on insurance. It is no such thing. It is a Bill to enable the committee of Lloyd's to have jurisdiction in respect of various classes of business, and under Section 9 enabling powers are taken for the committee to guarantee some of their members up to a specific amount, and that amount is represented by the actual amount of premiums received. The committee have not, nor have Lloyd's as a corporate body, got to do the business themselves, nor to guarantee their members beyond a certain amount. I differ from one or two hon. Members who have suggested that under this Bill Lloyd's are enlarging their powers. I do not think that they are. They are enabling certain things to be under the control of the committee; this Bill enables Lloyd's to indemnify some of their members up to a certain point of the amount of the premiums received in the previous year. But there is no effort on the part of Lloyd's to engage in business on its own account. Under the schedules contained in this Act in respect of guarantees, there will be a complete revenue account showing the underwriters' guarantee fund, and therefore it will be known how far the guarantee is given, and it will be known, too, that the guarantee is a good one. I think nobody would suggest that any business man should be called upon to reveal to the public all his business with the person he is guaranteeing. I have drawn the attention of the House to the fact that there is a schedule which, so far as Lloyd's take power under Section 9 to guarantee their members in respect of that, there is a return, so far as the actual position of the persons who are guaranteed is concerned.[HON. MEMBERS: "Agreed, agreed."] I have no desire to detain the House. I am only endeavouring, on behalf of Lloyd's, to answer one or two points which have been raised.