§ LORD SYDENHAM rose to ask His Majesty's Government whether it is proposed to take any steps in consequence of the unanimous Report of Lord Parmoor's Committee on Industrial Insurance.
§ The noble Lord said: My Lords, I have raised this Question because it is one which very gravely affects the interests of the working classes, including many poor people. It has long been known that there was a seamy side to industrial asurance, but until a full and searching inquiry had been made it was impossible to verify the facts. 82 The Committee of which the noble and learned Lord, Lord Parmoor, was Chairman has now reported unanimously, and it reveals a state of affairs which is so shocking, to my mind, as to demand the immediate attention of His Majesty's Government. The transactions in question are very large indeed. In 1919 the premiums received by the companies and societies exceeded £25,000,000 and the number of industrial policies in existence was then about 51,000,000. That huge business is obtained by a large army of 70,000 agents and collectors, whose proceedings are fully explained in the Report. It is really a touting system of a most objectionable type.
§ The Assurance Companies Act, 1909, was intended to remove some of the evils recognised in the system at that time. But the Committee are doubtful whether, even now, the issue of illegal policies has stopped, and they have satisfied themselves that in many cases premiums continue to be paid on illegal policies effected before 1909, to the advantage of the company and their agents, but with doubtful security to the holders of the policies. One of the most significant features about industrial assurance is the wholesale lapse of the policies of these poor people. The Committee found that in the ease of the Refuge Company, between 1909 and 1910, 9,322,336 policies were taken out, and 6,426,313 lapsed. That is a most significant and a very grave fact, in my opinion.
The Committee reports that—
taking all the offices together it is probable that lapse of policies in the year of issue or in the year following reached an annual total of 5,000,000.
It goes on to add that—
this figure can only mean that there is a section of the population which is repeatedly induced by the pressure of agents and canvassers to take out policies, and which discontinues payment the moment that pressure is removed, having lost nearly the whole of whatever premiums it has paid, since the benefit assured at the outset is a mere fraction of the sum named in the policy.
That seems to me to be a most serious statement, as it implies a huge loss of the hard-earned savings of poor people who wish to make provision for their future. The Committee report that for every shilling paid in premiums 5¼d. goes in expenses and only 6¾d. goes back to the assured person in the form of benefit. What a disastrous investment that is to press upon very poor and often very
ignorant people! Not many years ago the Prime Minister offered to the working classes what was called at the time the "refreshing fruit" of 9d. for 4d., but what the companies are now offering to the working classes is the dead sea fruit of 6¾d. for 1s.
Turning to the other side of the account, the profits which are made by some of these companies really seem to go almost beyond the dreams of avarice. In the case of the Prudential Company the shareholders received before the war £600,000 in dividend on £1,000,000 capital, and subsequent to the war £400,000—in both cases free of Income-tax—and by far the greater part of these profits came from the industrial branch of these societies. The Refuge Company used to have seven directors, and now has eight directors, and the Committee report that—
In addition to very ample dividends on the share capital, of which, as the company states, they own the greater part, these directors have latterly divided between themselves in directors' fees (voted by shareholders), directors' salaries (voted by themselves), and salaries as officials (authorised by themselves as directors) something like £70,000 a year.
I hope I have said enough to show that remedial measures are urgently needed to meet the very serious circumstances of this case; and if your Lordships will read the excellent Report of the Committee you will find much that will surprise, and certainly shock, you.
There is another question with which the Committee did not directly deal but of which I have given private Notice to the noble Viscount. I am informed that some companies are now using proposals with "£5 War Bonds" printed upon them. The effect of that is to make a spurious appeal to patrotism and grossly to mislead the people. The only connection between national saving and these policies is that when the policies mature the policy holder can, if he chooses, take out his benefit in War Certificates or in cash, as he may please. But after what I have said about lapsed policies, your Lordships will see that, in a comparatively large number of cases, the Certificate stage will never be reached. How this system works is explained by a witness whose statements have been sent to me. I should like to quote his words in two out of many cases which I have in my hand. In one case he says—
In the street in which I reside, a young girl lives at home with her mother. Some weeks ago
two men, representing a big insurance company, called upon her and induced her to pay them 25s., which she was led to believe was the first instalment on some War Bonds. Shortly after an industrial assurance policy was brought to her which she refused to accept as she had no intention of taking out any such policy. As she had been so grossly misled, she wrote to the company for the return of the money, but they refused to give her one penny of it.
Here is another case—
A servant girl was induced to take out two policies for 12s. per month, on some industrial branch policies, although in my possession now is the first receipt given to her upon which is printed the words, 'War Bonds Certificates.' In this ease the mistress intervened, or the persons who did the business would have induced the poor girl to hand over to them some War Savings Certificates for investment in the company they represented. About £7 has been paid in this case, all of which the poor girl loses.
If those statements are correct, the transactions which they record seem to me to be distinctly fraudulent. I therefore hope that His Majesty's Government will say whether they have any information as to this proceeding, and, if not, whether they will inquire into the truth of the facts I have stated. I will, of course, supply them with the means of verifying those particular statements which I have quoted.
§ After reading the Report of my noble and learned friend I am amazed that someone has not risen in another place to protest indignantly against the facts which the Committee's Report records; and I earnestly hope that the Government will declare that they will take immediate action to put in force the unanimous recommendations of the Committee and thus put an end to grievances which must produce a bitter sense of hardship and injustice amongst some very poor people.
§ THE PARLIAMENTARY SECRETARY OF THE MINISTRY OF HEALTH (VISCOUNT ASTOR)
My Lords, I have been asked to reply to the noble Lord on behalf of the Board of Trade and the Treasury, which are the Departments affected by this Question. As the noble Lord has said, a Committee was appointed under Lord Parmoor a year ago, and it reported early this year. It was a strong Committee. It evidently went very fully iuto the whole case and, if I may say so, it has submitted a very suggestive and careful, as well as a unanimous, Report on the whole subject of industrial assurance. I am sure that all who are interested in the general welfare and position of the people who have these 85 Policies must be grateful to the members of the Committee. The Report, I think makes some action inevitable. I will not, go into the Report in detail. The noble Lord who has just spoken has briefly referred to some of the things brought out—the fact that out of 1s. paid in premiums, 5¼d.—
§ VISCOUNT ASTOR
—goes in expenses, and only 6¾d. goes in benefits. And that in one particular case quoted by the noble Lord, out of more than 9,000,000 policies taken out over 6,000,000 lapsed. That reveals a state of affairs which makes some action inevitable.
§ VISCOUNT ASTOR
But no one knows better than your Lordships the pressure of business. The exact time when the legislation will be introduced, or the exact nature of the legislation. I am not now in a position to state. All I can assure the noble Lord on this is that the Departments concerned, and the Government, are giving very careful consideration to the Report and to its recommendations. As regards the last point, I have made careful inquiries both of the Treasury the Board of Trade on this question of War Bonds. I can find no information that the practice exists now. I know it did exist at one time. If the noble Lord can supply me with any information I will pass it on to the Departments, who will take it up and see if it is, in fact, being practised to any extent.
§ LORD PARMOOR
This is not the time of course, to discuss the general principles suggested in the Report of the Commission on Industrial Insurance; and, as far as I know, no steps have been taken, at any rate up to this point, to give any legislative sanction to the proposals which have been made. But I gratefully accept what the noble Viscount has said that the Report is not to be pigeon-holed for good—as happens to many Reports of Commissions and Committees—and that there is a hope that, at any rate within due time, some legislative provisions may be suggested in order to carry out the recommendations of the Committee. There can be no doubt whatever that a very serious 86 disability is imposed upon poor and ignorant people at thin present time by the conditions of industrial assurance. I think it was from that standpoint that the Committee was appointed. At any rate, I was approached and asked to preside over it on the ground that there was a serious difficulty in the way of these poor and ignorant people, and that the matter must be carefully inquired into order that if possible, a remedy should be suggested.
The Committee conducted a very long Inquiry. In the first place, they had to draft a series of questions, which took a considerable time. Then in public meetings we gave an opportunity for every one to bring forward any grievances, and, after all those grievances had been considered, we gave full opportunity to the friendly societies or the companies concerned to deal with the misdeeds which had been alleged against them. Having received all that evidence we carefully considered it. Most of us gave up our summer holiday, and a large part of the succeeding Christmas holiday, in order that we might put the recommendations of the Committee into a concrete form. Whether those recommendations are in themselves good or bad I am not, of course, discussing now; but I want to impress upon the noble Viscount that which I am sure was the absolute conviction of every person who served upon that Committee—namely, that the existing conditions ought not to be allowed to continue. Some people suggest nationalisation in regard to matters of this kind. We did not suggest that, because I think if it had been suggested it would apply also to compulsory insurance, But we did suggest some very drastic changes indeed; and, of course, every day that the old system goes on and these drastic changes are not introduced the old difficulties arise and the old misdeeds may recur.
I would whit one word further. The Committee consisted of four or five members of the other House, a representative of the Board of Trade, the Chief Registrar of Friendly Societies and the Government Actuary, and a member of your Lordships' House presided over it. I should like to refer particularly to the Government Actuary, Sir Alfred Watson, and the Chief Registrar of Friendly Societies, Mr. Robertson, who knew this question from top to bottom, and I do not, think any Committee, certainly no Committee with which I have 87 been associated, has ever had more loyal support and better assistance given to them than was given by those two gentlemen I feel no doubt that other members of the Committee would corroborate what I am saying, that we had far more confidence in our recommendations owing to the advice and assistance we received from those two very eminent experts upon a question of this sort.
As the noble Lord, Lord Sydenham, has pointed out, we were unanimous on our recommendations, although we were a body of people who approached questions of this kind from very differing standpoints. I do hope most cordially—not from any feeling of pride in the work of the Committee, but from the feeling that there is a great scandal going on from day to day as regards these poor and ignorant people, and that this scandal ought to be removed as soon as possible—that something may be done. That was the object with which the Committee was appointed. Various questions have been asked from day to day, particularly in the other House, regarding these matters, but they were postponed in order that the Committee might report. Now that the Committee has reported, it seems that no time ought to be wasted until some 88 attempt is made to give their proposals legislative effect. However, I am grateful to the noble Lord for what he has said, because up to this moment, although I was Chairman of the Committee, I was not aware really that the Board of Trade had received our Report. The Report left our hands and there it apparently ended and disappeared. I am very glad to hear from the noble Lord that there is still a chance that some effect may be given to its recommendations.
§ LORD SYDENHAM
I beg to thank the noble Viscount for his sympathetic reply, from which I gather that the Government is aware of the existence of this very grave scandal and will introduce remedial measures as soon as the state of public business renders it possible. As regards the statement of the attachment of War Bond Certificates to proposal forms, I will supply him with the means of verifying it. I should like to point out that the statement I quoted from is dated May 19 last, so that the practice seems to be rather recent.
§ House adjourned at five minutes past five o'clock.