§ Order of the Day for the Second Reading read.
§ 4.9 p.m.
§ THE LORD CHANCELLOR (VISCOUNT CALDECOTE)
My Lords, the position of the holders of life assurance policies has engaged the attention of the Government for some little time. Very soon after the outbreak of the war it became apparent that a number of people who had paid sums of greater or less amount in respect of life assurance policies were in danger of losing the benefit of those policies if they were prevented by circumstances, in view of the war, from continuing to pay the premiums. A Committee was very soon set up for the purpose of considering what relief could be provided for these persons. My right honourable friend the Attorney-General in another place early in January announced that arrangements had been made with the insurance companies that dealt with ordinary life policies. He then stated that the circumstances of the holders of what are generally called the industrial 597 assurance policies were being considered, and that some protection would if possible be devised for them also. In the case of the life assurance policies, with which most of your Lordships are familiar, the arrangements were made with the consent of the companies. It has not been possible to pursue quite the same course in the case of the industrial assurance companies because they are largely regulated by Statute, and therefore it is necessary to give them powers to do what this Bill now proposes.
Noble Lords who have looked at this Bill might think it dealt with very small matters. Thai is true in one sense, because this Bill will affect life policies taken out for amounts of only a few pounds, where the premiums are collected in sums of a penny or two pence per week from house to house by the collectors for the societies; but I am sure your Lordships will agree that it is no objection to this Bill that it seeks to protect the interests of these people of small means to whom the surrender value of the policies is just as important as the surrender value of larger policies of more wealthy persons. The Bill will apply to policies not: exceeding £50, and I can, I hope, state quite briefly the reason why that limit has been fixed. In general, these industrial assurance policies are taken out for what are called funeral benefits—that is to say, to cover the funeral expenses of the person in whose interest the policy exists. The limit permitted by the law on such policies is £50, and therefore that seems a suitable line to be drawn between the policies protected by this Bill and the policies which will not be protected. Such policies form the great majority of industrial assurance policies.
The Bill applies to policies of three different kinds, and some of your Lordships may, perhaps, be a little puzzled to know why it is necessary to divide them into three categories. Ordinary industrial assurance policies, as by law denned, are policies in respect of which the premium is payable at intervals of less than two months and is collected by collectors of the society from house to house. There are registered friendly societies that carry on this business. They are called collecting societies, and the policies issued by these friendly or collecting societies are mentioned in Clause 598 1 (b) of the Bill. There are also registered friendly societies other than collecting societies which issue policies. In most cases the premium is paid on something other than the life of the policy-holder, but in some cases there is a specific or separate premium in respect of the life of the policy-holder, and that class of policy issued by registered friendly societies which are not collecting societies will be covered by the Bill.
Quite briefly, without troubling your Lordships with a technical statement, the scheme of this Bill is to provide that in the case of all these three bodies which issue life policies, it shall be incumbent on them, in the case of arrears, to give a notice specifying the arrears and also a notice that the holder may, if he is unable, owing to circumstances arising directly or indirectly out of the war, to pay the premiums, apply to the society for protection. If, having received such a notice, he then applies to the society for protection, the company may give him protection—that is to say, the policy will not come to an end merely because the premium has not been paid. If the society refuses to give protection, he may appeal to the Industrial Assurance Commissioner, who will decide the matter in accordance with what he considers to be the equity of the transaction. There is one clause, Clause 3, which, on the face of it, is formidable because it provides what is to happen when there has been such a default in paying premiums on the policy which, by the procedure I have mentioned, will be a protected policy. I am sure your Lordships would not desire to be troubled with these details, but there is to be separate treatment of a policy in respect of which a claim arises while the policy is protected and premiums therefore are unpaid. Another class of protection is to be given in the case of a policy which is a whole-life policy but in respect of which no claim has matured. Thirdly, provision is to be made in the case of an endowment policy which is in force at the expiration of the period of protection. If, for instance, an endowment policy is for a period of twenty years, and premiums are not paid for one year, the maturing date for the policy will then be twenty-one years from the time it was taken out, not twenty years.
The other provisions are based upon actuarial considerations with which I 599 need not trouble your Lordships. There is one clause in the Bill—Clause 4, for which it will be proposed to substitute another clause—regarding the case of a person who at first is unable to pay the premiums owing to circumstances connected with the war, and then comes into a position in which he can pay them. It would be wrong to give him protection in these circumstances. Another clause will be moved, in pursuance of an undertaking given in another place, to provide for the policy being put back on its ordinary basis. There are one or two other clauses which deal with such matters as the right of a policy-holder to apply after the statutory period in which he is entitled to apply has expired. The Commissioner is, in these cases, given a discretionary power to allow application for protection, notwithstanding the expiry of the time.
There is only one other thing I need say. The Bill, as I have told your Lordships, was designed to deal with policies of not more, than £50, but it was also only intended to apply to policies which were effected at least two years before September 1, 1939, the reason being that policies which have not been operating for at least that period of time have very little surrender value. However, in pursuance of an undertaking by my right honourable friend the Attorney-General in another place, an Amendment will be proposed to your Lordships providing that policies in respect of which two premiums have been paid before September 1, 1939, will be protected. This is a measure which has to be effected by Act of Parliament, but it has been the result of consultations with the various societies concerned. A number of interests have been consulted, and I think I am right in saying that it has had a great deal of consideration, both in another place and by the people directly concerned. I hope your Lordships, therefore, will give it a Second Reading, and that it will be passed into law at an early date. I beg to move.
§ Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
§ 4.20 p.m.
§ LORD SNELL
My Lords, my noble friends and I venture to support this Bill which has been moved by the noble and 600 learned Viscount on the Woolsack. It has, as he has told your Lordships, been thoroughly examined in another place, and it is, on the whole, an agreed Bill. We have some feeling about it, because it does give to poor people some assurance that efforts at thrift that they have made are not suddenly to be rendered useless. We have to remember that, under existing circumstances, a very serious injury may be done to thrifty people who suddenly find themselves unable to continue contracted payments. Unemployment overtakes a poor family and immediately its whole financial position is undermined, and unemployment which occurs through no fault of the person concerned is a most serious matter. Your Lordships, I am sure, will be anxious to save such persons from as many of the disabilities attaching to that situation as possible. In regard to insurance as a whole, we desire to say, in giving our assent to this Bill, that we also believe that the whole insurance system is in urgent need of reconsideration; but that does not arise at the present time, and therefore, because this Bill seeks to help poor people in the circumstances mentioned, and because it is an agreed Bill, we have pleasure in commending it to your Lordships' House.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.