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Employers' Liability (Insurance Companies) Bill

Volume 181: debated on Wednesday 21 August 1907

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As amended (by the Standing Committee) considered.

moved to leave out Paragraph (ii) of Clause 1. He did not make this Motion in any spirit of hostility to the mutual liability associations of employers, but because his acquaintance with these matters taught him that a danger existed, if this paragraph was left in the Bill, of discouraging such associations. Every prudent man who had a liability in connection with his employees would effect an insurance against it, and therefore it was the duty of the House in dealing with this Bill to see that every encouragement was given to these employers mutual liability insurance associations and at the same time to safeguard the people against bogus associations. As the matter stood at the present time there was nothing to prevent insurance touts or insurance mongers going about among small employers in various districts and proposing to them that instead of paying the rates charged by insurance companies to cover these risks they should form mutual associations and thus save some of the premiums they would otherwise have to pay. The result of such proposals if acted upon would be that the premiums paid would be inadequate to cover the risks, the funds available would not be sufficient to meet the claims, the workman would have to have recourse to law to recover against the employer, the employer not having the resources to meet the claim would fail and the workman would not get that compensation for his injuries which Parliament had said he should have. The consequence would be that the employer would be ruined and the workman might have to end his days in the workhouse because in his maimed condition he would be unable to gain his livelihood. He did not wish to throw any stone at employers, because he believed that on the whole, taken throughout the country, it was their desire to give adequate compensation to workmen injured while in their employ. The argument had been put forward that workmen desired that the associations of employers should be encouraged for the purpose of meeting their liabilities, and it was therefore deprecated that words should be introduced into this clause which would in any way hamper or discourage that spirit among employers. But by moving the omission of this paragraph he desired to obtain from the Board of Trade some assurance that they would prevent bogus mutual associations from being formed, not by employers, but by others who would make tools of the employers. He was anxious not only to do that, but to go a step further, and have such regulations as would ensure that these mutual associations had adequate funds, and that application should be made to the Board of Trade before such associations could be formed. This was not a matter, as some people thought, of small importance; indeed, in the Standing Committee they were very much exercised about it, and he, therefore, raised the question again that evening in the hope that, even at the eleventh hour, the hon. Gentleman in charge of the Bill would be able to give him a more definite and business-like assurance, so that the fears which found expression in his Amendment might be removed. Amendment proposed—

"In page 2, line 1, to leave out Paragraph (ii)."—(Mr. Claude Hay.)
Question proposed, "That the words proposed to be left out stand part of the Bill."

said that this Bill did not affect the mutual associations, and for the very best of reasons, that they had never been suspected in any way of being anything but thoroughly sound and solvent, and they had not exhibited any symptoms or desires which rendered necessary any interference. All the big trades of the country had their mutual associations—for example, the mining associations of Great Britain, which represented nine-tenths of the mine-owners of the Kingdom. Then again, they had the shipowners, a good many of them at all events, who had their own mutual associations. He had received through Members of that House representations from all parts of the country pointing out that these mutual associations should not be subject to the provisions of the Bill. He cordially agreed with that view. It was the object of this Bill that they should anticipate and be prepared against the upspringing of mushroom companies. But in connection with these existing mutual companies there had never been a single word of suspicion against the method in which they carried on their operations. On the contrary, the House knew perfectly well that they represented strong bodies of first class financialstatus, and to call upon them to make annual statements of their accounts to Parliament, and to subject them to actuarial overhauling every five years, would be to harass them and to prevent their carrying on the most useful work in which they were engaged. The danger which they had to apprehend in the future was the upspringing of mushroom companies and the combining of insurance offices into what would be neither more nor less than a trust which would clear off the ground any competition in the shape of mutual companies. That would be one of the worst turns which they could do to working men, who were indirectly affected. Therefore, when he remembered that he had received during the last six months representations from important Members of that House representing societies like those in Birmingham Sheffield, and other centres, and had received important deputations which represented chiefly the employers' federations, all pointing out that the obligations of this Bill, if imposed, would be a most serious and harassing interference with the work of these mutual associations, he could not for a moment consider this Amendment. As he had said, what they desired to do in future was to protect the country against the upspringing of mushroom companies; but it would be an offensive thing to suggest for a single moment that these mutual companies, which were in existence everywhere, which did not apply to the public for money, and which carried on their own work mutually, should, forsooth, simply because they were passing a Bill, be subject to its provisions. There was neither call nor justification for it. Although the hon. Gentleman had said that he had dealt with the Amendment in an airy manner in Committee, yet he had given him then, as he did now, full and complete reasons why they could not include mutual associations in the Bill. Had they attempted to do so they would not have been successful in carrying the Bill. But apart from that consideration altogether, he took it that it would be unjust to include them, and he certainly could not see his way to accept the Amendment.

said he could not understand the motive of the hon. Gentleman in moving the omission of the Sub-section. Certainly no instance could be pointed to in which these mutual societies had not fulfilled their aims or had failed in the ignominious way which the hon. Member seemed to suggest. If the hon. Gentleman were able to point to a case of that kind he could understand the Amendment, but it was admitted there was no such case. The society mentioned by the Parliamentary Secretary was the Birmingham Mutual Assurance Society, which had been in existence for some years—almost as long as the Workmen's Compensation Act. During the whole of that time the Society had given entire satisfaction, not only to the Board of Trade but to the employers and also to the workmen of the district which the Society covered. He thought he was right in saying that they dealt with something like 200,000 working men in the district; they were going on most successfully, and their funds were in such a condition that there was perfect security to all concerned. If the parties interested, namely the employers and the men, were quite satisfied with these societies, he could not see what was the motive of the hon. Member in submitting the Amendment. One argument which the Parliamentary Secretary used was a great one. Why should a number of men, two or three or half-a-dozen, or twenty, or 100, be prevented from establishing a mutual society among themselves? It was well-known that the tendency at the present time was to form these mutual associations. When it was remembered that the compensation was becoming a very serious burden on employers, who had to expend hundreds and thousands a year in compensation, he thought that ought to be sufficient inducement to employers to see if they could not in some way minimise the responsibilities coming upon them. They could do so by mutual societies, which were fectly safe and sound, and satisfied the Board of Trade. He could not see why they should be prevented from doing so. The existence of such societies for many years had proved that they could be carried on upon a perfectly sound and safe basis, satisfactory to everyone, and he could not see what objection there could be to their existence. Therefore, he did not understand why the hon. Member, who professed such good feeling towards employers, should for a moment take away the protection which would be afforded them by the Bill.

hoped the Amendment would not be pressed. He quite sympathised with the object which the mover of the Amendment had in view, viz., the prevention of the springing up of mushroom companies. But he would point out that the Amendment would strike at some very large mutual insurance institutions. The Durham and Northumberland Coal Owners' Association had a mutual insurance of this kind, conducted through a joint committee. They never had any litigation. The workmen on one side and the owners on the other met together, with a chairman, and managed to do all their business, and nobody ever heard anything about it. He could not for the life of him see what benefit would result from the Amendment. Besides trade institutions of this kind, there were certain religious denominations which insured amongst themselves. For instance, the minister insured his servants, the chapel keeper and the like. If in the case of such institutions they demanded that £20,000 should be put down, in order to secure theirbona fides, that would simply be to strike a blow at their existence. No doubt the omission of the section would safeguard the public from bogus institutions which insured their own workmen as a blind, but carried on business amongst workmen elsewhere, who were not connected with the institution. He and his colleagues as workmen would have been the first to have jumped upon a clause of this kind if they had thought it would be to the detriment of the men they represented. He, therefore, trusted that the Amendment would be withdrawn and that the Government would stick to their clause.

said the Secretary to the Board of Trade had somewhat misrepresented his remarks. He had not stated that he wished this provision to apply to existing mutual associations nor did he say anything about their being brought within the scope of the Bill. What he said was that the danger was in regard to associations which might be created hereafter in consequence of the passing of the Workmen's Compensation Act. It was the small industries and the small people he wished to protect, and the remarks of the Secretary to the Board of Trade were no answer to his case. This question of insurance under the Workmen's Compensation Act was a very serious matter. He was quite content with what had passed, although he felt that the right hon. Gentleman might make some regulations which would frighten evil-doers. He asked leave to withdraw his Amendment. Amendment, by leave, withdrawn. Bill read the third time, and passed.