REVIEWS
| Date | 01 June 1938 |
| DOI | http://doi.org/10.1111/j.1468-2230.1938.tb00396.x |
| Published date | 01 June 1938 |
76
MODERN
LAW
REVIEW
June,
1938
REVIEWS
mus-
]aJsmm:
h
mhOd
.nd
CritiOd
StOQ.
By SIR
ARNOLD
WILSON,
M.P..
and
PROFESSOR
HERMANN LEVY.
Pp.
xxxiii
&
519. 1937.
Oxford. Oxford University Press. 2lh.net.
This
is
a valuable example of a work which is
all
too rare, for
it
is
a
serious
study of
part
of the borderland temtory where law,
economics,
sociology and politics meet.
It
is an interesting and,
on
the whole, success-
ful attempt to explore and bring into the light
of
day
a
very
murky
area.
The authors make a useful team. They might have done even better
if they
had
had
assistance from a lawyer and from an analytical economist,
for it
is
clear that their grasp of some of the dScult legal problems involved
in the subject of industrial
insurance
is uncertain, while excellent
as
is
their study
as
a piece of descriptive economics, there is
an
absence of
that searching analysis of which the subject clearly stands in need.
The historical survey brings out many interesting facts and reveals
that the so-called industrial insurance, which
is
in essence provision by
working-class people for funeral expenses, goes back to the
fall
of the
guild system which necessitated makeshift substitutes in the form of
local
burial clubs. These developed into the Friendly Society,
a
number of
which still
of
course carry
on
the work, but the tendency
is
for them
to be displaced by insurance companies of which much the most important
is the famous Prudential-incidentally the pages of
this
book
show
that
this great organization
is
much the
best
managed and go-ahead
of the concerns engaged in this type of business. The most significant
fact which emerges from this historical study
is
the length and comparative
lack of success of the legislative attempts which have
been
made to control
the system, commencing with an interesting but abortive Bill of
1807.
What are the evils
that
have called for action? Undoubtedly the
most serious of them
is
the enormous number of lapsed policies with
a
grave consequent wastage of the exiguous incomes of working-class people.
It
is
not generally realised
that
something like half the policies taken out
are
not kept up. Their holders, of course, belong to that section of the
community in which employment is uncertain and some failure to pay
premiums is. therefore, to be expected. There
can,
however, be
no
reasonable doubt that the excessive rate of lapses
is
correctly diagnosed
by the authors of this book
as
being due to the high pressure salesmanship
which exists in the business.
It
is
an essential feature of industrial
insur-
ance,
as
practised in this country and in the U.S.A., that the work of
obtaining business and collecting premiums
is
carried
out by house-to-house
canvassing, mostly among the women. The agents with significant excep-
tions
are
paid by commissions which are especially high at the inception
of the insurance. These agents
are
for the most
part
ill-educated and
untrained for their work, coming to it after failure in many other
walks
of life. The chances of unscrupulousness are, therefore, high, and
it
is
clear that the average of practice could only be acceptable in
a
business
where low standards prevail. The authors give numerous examples which
leave one with the feeling that radical reform
is
imperative. making
it
quite clear that
a
very large number of people are persuaded to take
out
policies which
it
is very unlikely that they
will
be
able to keep up.
The system just referred to is naturally exceedingly expensive;
at
one
time over half the premiums collected went
in
costs and profits
ad,
REVIEWS
77
although this figure has now been reduced to an average of about
35
per
cent; among many of the collecting societies (Friendly Societies)
it
is
still over
40
per cent. Another evil which follows inevitably
from
this
system,
as
organized
in
this country, is the illegal policy. There are said
to be eighty million policies in existence, and
it
is
quite obvious that
in
the majority of these cases there can be no valid insurable interest. Until
the present century, indeed, practically the whole of the business
was
carried on on a basis which
was
technically an illegality, because the moral
obligation to provide a funeral for one’s near relations was not insurable.
That was no doubt a defect
in
the law, and most people have welcomed
its
reform. The various statutes which legalise these practices, however,
bear too much the stamp of whitewashing to be altogether satisfactory.
Moreover, they are couched in such vague terms, allowing insurance to
a
reasonable amount for funeral expenses that, combined with the long
history of illegality, a situation has resulted which almost appears to
be
beyond immediate control. The English are particularly prone to gambling,
and this evil has never been rifer than at the present time. Many of those
who take out these policies often on the lives of not very close relations
might be indignant at such an accusation, but when,
as
is often the case,
we find one man holding ten or more policies on different relations-not
because he ever expects to pay for their funerals, but simply
in
hopes of
a windfall-it is not only gambling, but gambling of a particularly vicious
tupe.
It
is
clear that in certain respects progress has been made, particularly
by the Prudential.
A
good deal of it, however, is little better than window-
dressing
as
in
the case of the automatic issue of paid-up policies in respect
of lapsed policies when premiums have been paid over a certain period.
These are
in
so many cases worth no more than a few shillings, and can
hardly be worth the trouble of claiming payment. Even
so
progress has
been slow, and it is not easy to see how it can be carried much further
so
long
as
the business is conducted by house-to-house canvassing on
commercial lines. Our authors realise this and can find no other solution
but the nationalisation of the business through an extension of the benefits
conferred by the National Health Insurance Acts, a conclusion which
must be regarded
as
of considerable significance coming from
so
eminent
a
Conservative as
Sir
Arnold Wilson,
M.P.
The obstacles to reform are
enormous. In the
first
place, the funds held by insurance companies and
societies are as much as one-fifth of the total capital of all the trading
companies registered under the Companies Acts. This means that they
wield a great financial power and are able to bring considerable pressure
to bear on any Government.
It
is significant that at the time of the
introduction of national health insurance, when they were much less
financially powerful than to-day, they were able to force Mr. Lloyd George
to drop his proposals for including funeral benefits
in
the National Health
Insurance Bill, of which they formed an integral part. On the other side
are the insurance agents,
a
well-organised and powerful body of men,
numbering some seventy thousand, who have obtained a vested interest
in the present system. In view of their close relationship with the electorate
they constitute a political power whose importance has perhaps been
overlooked, for neither a Conservative nor a Labour party can afford
to quarrel with them.
Space does not permit me to touch on many of the interesting matters
raised
in
this
very thorough study of the problem, one which is likely to
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