FRIENDLY SOCIETIES BILL.
[TO TRH EDITOR OF THE SPECTATOR."]
your leader of Saturday last on this Bill, you have brought charges against us in reference to our issuing stamped policies for infantile insurances based upon an entire misconcep- tion of the evidence which. I gave to the Royal Commissioners, and I trust to your sense of justice to insert the following explanation :— When I gave my evidence, I was under the impression that I should see the proofs of what I stated before the printing of the short-hand writer's notes ; and if I had seen them, I should have presented myself for further examination upon this and one or two other minor points.
I intended to convey exactly that which Mr. Scudamore said in reply to Question 27,786, namely, that " the seal of the Post- master-General would carry an appearance of security with it "; and in drawing the distinction between our stamped policies and the system of burial clubs, all I intended was that the insurer has a stamped policy in our office as a contract between him and the Company, while in a club no document whatever was issued.
Further, we never allow any agent to canvas for business even indirectly infening that there is any Government guarantee, and we do all we can to see our directions carried out ; and I entertain personally the strongest possible objection to the idea that Government could give better security than a prudently managed Company, unless the Government is prepared to impose a tax upon insured and uninsured alike, to make up any deficiency which might-at any time be found to exist.
Again, as an example of our entire bona fides in the matter, directly the Fourth Report was issued, we instructed counsel to draw a Bill providing for the legality of those policies -which the Commissioners seemed to fancy might be issued ultra vires ; and we placed ourselves in communication with the Chancellor of the Exchequer, for the purpose of obtaining its passage this Session ; and while he was prepared to legalise them in the ordinary Friendly Societies Bill, which was provided in clause 65, section 7, he did not feel himself justified in doing so by a separate enact- ment, •until he could lay down other provisions in the Bill when the whole subject is to be dealt with.
The policies which the Commissioners have stated are appar- ently worthless- do not exceed £10 each, varying from thirty shillings up to that amount; and as this sum, according to the age of the person; is only sufficient to cover the funeral expenses, we were under the impression, and still are so, that an insurable interest does 'exist to that extent.
Many years ago, a Company, called the Safety Life Office, was started by Messrs. Wilson, Cobden, Bright, Sir Joshua Walmsley, and other leaders of the people, for the purpose of transacting business precisely similar to ours. Another Company, of which an eminent Churchman was a Director, transacted similar business,
and many of these latter policies are still in ens' tence. None- of these leaders of the people thought they were acting contrary- to the spirit of the Act when they attempted (but, unfortunately, failed) to provide means for remedying the admitted defects of the Friendly Societies which were then in existence.
In conclusion, directly we read the Commissioners' Report, in which they misconstrued what I stated about stamps on policies, we gave instructions for an alteration in our prospectus, a copy of which I now enclose you, and which, as you will see, contains the following words :—" A stamped policy will be issued to every assurer, but it must not be supposed that such stamp affords any guarantee," thereby- removing any possible miscon- struction in future.—I am, Sir, &c., HENRY Hammy, Resident Director.
Prudential Assurance Company, 62 Ludgate Hill, London, July 7.
[To the greater part of Mr. Harben's letter it will probably be a sufficient answer to reprint that portion of his evidence which bears upon the subject :— " 25,965. With regard to the question of stamps, what is the amount which you pay in stamps ?—Between £3,000 and £4,000 a year for- policy stamps.
"25,966. Do you desire to be relieved of that expenditure?—Us-- questionably not.
"25,967. What do you consider that you gain by it ?—It is a very curious thing, but the people imagine that if the policy has the Govern- ment stamp it has some peculiar guarantee about it. We would noti, dispense with the stamp upon any consideration.
" 25,968. Supposing that all the Friendly Societies. were required. also to have their policies stamped, you would lose that peculiar-ad- vantage ?— We should lose that peculiar advantage, but .I myselfi believe that the people themselves would prefer it. One of our great canvassing features is that we issue a Government-stamped policy." (Third Report of Friendly Societies' Commission.)
The Report from which the above passage is taken has been before the public for a twelvemonth, and Mr. Harben has never yet complained, and does not now assert, that it is inaccurate. But there are two questions involved. That of the supposed Goverrek, meat guarantee implied for the ignorant in the use of the-stamp,. may be met by such an alteration in the prospectus as Mr. Harben speaks of. The other is that of the intrinsic worthlessness of the policies in cases of purely family, insurance, as-the Commissioners term- it,—i.e., where there is no insurable interest. Mr. Harben says- his Company are under the impression that up to £10 at least such policies are valid to cover funeral expenses. The Commissioners,_ referring to Mr. Bunyan's work, which we believe is considered to: be an authority, and which certainly bears,them out, say that they are void : non nostrum componere lites. But it is certainly very curious, supposing. Mr. Harben and his Company are right, that the Legis- lature should, by a series of measures, have specifically authorised Friendly Societies to enter into such contracts,—and that, latterly at least, precisely within those limits as to infants within which' the Prudential deem themselves justified in entering into there without any, authority at all. And even assuming, with Mr. Harben, that a parent may have as such an insurable interest to , the extent of 210 in his child's life—although, in a, case quoted- by Mr. Bunyan, the Judge declared such interest-was worth " not one farthing"—he can hardly contend that there is such in the case of an uncle or aunt, who, by his own statement, is allowed (Q. 25,915) to insure his orphan nieces or nephews. The use of a stamp on such a policy can only be to give a colour of validityto that which is intrinsically void. The Prudential must know that the pay- ment of money upon the policy will be a purely voluntary act on their part, that it can never be exhibited against them before a Court of justice, and that therefore there is absolutely no ground for- stamping it. No disclaimer of a Government guarantee, as- implied in the stamp, can clear this misuse of it. And if the Commissioners, the law-books, and the Legislature are right as against the Prudential, then the same applies to the great maas of their infantile and other insurances of the family description._ Mr. Harben will also allow us to say that the policy of encouraging such assurances, in the case of infants at all events, is at least doubtful, and that whilst it would be, no doubt, advisable to give validity to all insurance contracts already entered into by Com- panies, or other non-authorised bodies, within the limits of Friendly-Society Assurance, which would-be void for want of an insurable interest, we trust the Chancellor of the Exchequer will not allow the extension of the practice in favour of purely trading bodies, except under the most stringent guarantees, moral and, material.—ED. Spectator.]
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