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The British National Insurance Act of 1911 and the Commercial Insurance Lobby*

Published online by Cambridge University Press:  16 January 2014

Bentley B. Gilbert
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Extract

By any measure, the National Insurance Act of 1911 ranks among the major legislative achievements of the Liberal administration that held office in Great Britain before World War I. One section of the act founded the world's first national system of compulsory unemployment insurance. Another section brought government-sponsored health insurance to five sixths of the families of the nation and established the precedent of state concern for the physical welfare of the individual citizen, of which the National Health Service Act of 1946 would be only an extension. By requiring beneficiary contributions toward welfare programs, the act settled the financial pattern for most of Britain's present social legislation. In a less crowded period, the National Insurance Act would rank as an imposing parliamentary monument, comparable, for instance, to the Education Act of 1902. Sandwiched between the Parliament Act and the Home Rule Act, it has been lost from sight. The measure is not mentioned in the standard biography either of Asquith or of Balfour. It earns one sentence in G. M. Trevelyan's History of England in the Nineteenth Century, where through successive editions and revisions it is called “the National Health Insurance Act of 1912.” R. C. K. Ensor's England, 1870-1914 gives it a couple of paragraphs.

This study is an examination of an important, perhaps crucial, aspect of the evolution of the health insurance section of the National Insurance Act that has remained unnoticed for half a century: the lobby activity of the British commercial insurance industry by which the companies modified health insurance proposals for their own benefit.

Type
Research Article
Information
Journal of British Studies , Volume 4 , Issue 2 , May 1965 , pp. 127 - 148
Copyright
Copyright © North American Conference of British Studies 1965

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Footnotes

*

The author is grateful to the National Institutes of Health and the American Philosophical Society for their support of his research behind this article.

References

1. For the traditional interpretation see: Levy, Hermann, National Health Insurance, a Critical Study (Cambridge, 1944), p. 12Google Scholar. Following Levy see: Bruce, Maurice, The Coming of the Welfare State (London, 1961), p. 186Google Scholar, and Eckstein, Harry, The English Health Service (Cambridge, 1959), pp. 24–25Google Scholar.

2. New Statesman, March 13, 1915, “Special Supplement on Industrial Insurance,” pp. 3, 7-10.

3. The Liverpool Victoria, for example, with total receipts in 1908 of £1,199,574, spent in that year £390,355 on benefits and £489,606 on management. The remainder went to swell a £3,471,460 reserve. “Report of the Chief Registrar of Friendly Societies for the year ending 31st December, 1909,” App. C, pp. 15, 92. Parliamentary Papers, 1910, No. 171.

From 1909 to 1913 the industrial branch of the seven largest insurance companies and societies spent the following percentages of total premium income on: (1) agents' commissions and new business bonuses; (2) agents' costs and indoor managerial costs together:

The Royal Liver Collecting Society refused to give any information on this matter. “Report of the Departmental Committee on the Business of Industrial Assurance Companies ad Collecting Societies” (“The Parmoor Committee”), Cmd. 614, 1920, p. 21, Table V. (The so-called “collecting friendly societies,” such as the Royal Liver and the Liverpool Victoria, were not friendly societies at all, but mutual insurance companies run for the benefit of their officers and agents. They registered as friendly societies under the Friendly Societies Act of 1896 in order to take advantage of certain tax exemptions available to friendly societies. Their interests were wholly with the commercial insurance companies. They had nothing in common with the true friendly society movement.)

4. Typical advertisements for the sale of books: “Royal London — £6 book, inclusive two days; West London; 30 times. Apply Superintendent, 62 Cricklewood Lane, N. W.,” Insurance Mail, June 3, 1911.

“Book, £8 or part; good business, 25 percent, collected in three days; 30 times cash; Liverpool Victoria, Romford. Apply ‘H’, 8 Clarissa Road, Chadwell Heath,” Insurance Mail, July 15, 1911.

5. Library of London School of Economics, “Memorandum of the Chief Registrar of Friendly Societies. (Founded on the Proceedings at Conferences between the Chancellor of the Exchequer and the Committee of the National Conference of Friendly Societies, held 17th November and 1st December, 1908.) Strictly Confidential,” p. 7, Braithwaite Papers, Pt. 2, Item 2.

6. Library of London School of Economics, “Notes by Mr. J. Lister Stead on Suggested Scheme of Insurance with Estimates of Probable Cost. Handed in at Conference of December 15th, 1908. Confidential,” p. 2, Braithwaite Papers, Pt. 2, Item 3.

7. Library of London School of Economics, “Report of the Actuaries in Relation to the Proposed Scheme of Insurance Against Sickness, Invalidity &c. Confidential,” Mar. 21, 1910, Braithwaite Papers, Pt. 2, Item 4. Much of this report is printed in Bunbury, Henry N. (ed.), Lloyd George's Ambulance Wagon, the Memoirs of W. J. Braithwaite (London, 1957), pp. 73–76Google Scholar.

8. See statement of R. W. Moffrey, Parliamentary Agent of the Manchester Unity of Odd Fellows friendly society. “Supplementary Report of the Parliamentary Agent,” found in the Report of the Annual Movable Conference Held in Drill Hall, St. Mary's Road, Southampton, May 16-19, 1910, p. 147.

9. There is no contemporary evidence of this, but a pamphlet published twenty years later by the Guild of Insurance Officials makes clear that such a meeting occurred. Wilkie, G. B., Nationalization of Insurance (London, 1931)Google Scholar.

10. Ibid., p. 36.

11. Mrs. C. F. G. Masterman, who, with her husband, helped to edit the coalition memorandum, has assured the writer on several occasions that Lloyd George's chief interest in the coalition in 1910 was to obtain the help he deemed necessary for a comprehensive system of national insurance.

12. The coalition memorandum is printed in full at the end of the first volume of SirPetrie, Charles, The Life and Letters of the Right Hon. Sir Austen Chamberlain (London, 1939), I, 381–88Google Scholar. One of the innumerable minor mysteries of recent British historical writing is the consistent misinterpretation of the memorandum of August 17. The references to health insurance are invariably missed. See for example: Jenkins, Roy, Mr. Balfour's Poodle (London, 1954), p. 110Google Scholar.

13. Pensions would have taken nearly half, £.773, of the £1.634 annual contribution planned by Hardy and Wyatt. Library of London School of Economics, “Report of the Actuaries,” Mar. 21, 1910, p. 24, Braithwaite Papers.

14. Bodleian, Crewe to Asquith, Oct. 22, 1910, and Grey to Asquith, Oct. 26, 1910, Asquith Papers, Box 12, ff.197, 198, 214, 215.

15. It seems clear that David Jones, secretary of the National Association of Prudential Agents, hoped to see his own company nationalized. There is no evidence that the Government took his proposals seriously, but the story of government funeral benefits may have begun here. Plaisted, H., The Prudential, Past and Present (London, n.d. [1917]), pp. 94–103Google Scholar.

16. Assurance Agents' Chronicle (organ of the National Union of Assurance Agents), Nov. 26, 1910; Daily Express, Nov. 28, 1910; Financier, Nov. 29, 1910; Insurance Mail, Dec. 31, 1910.

17. Clegg, Cyril, Friend in Deed, a History of the Refuge Assurance Co., Ltd. (London, 1958), p. 69Google Scholar.

18. Insurance Mail, June 24, 1911.

19. Financier, Dec. 2, 1910. Now combined with Financial Times.

20. Daily News, Dec. 2, 1910.

21. Insurance Mail, Dec. 17, 1910. The Mail, the voice of the Combine, concluded that day's leader by saying: “We heartily congratulate those who have worked so earnestly during the past three weeks.”

22. “At the present moment the proposals reported out by the Actuaries have been modified by dropping out the provision for widows and orphans, [inserted in Bradbury's handwriting, ‘subject to further negotiations with the Societies.’] and by giving up the State's claim upon the friendly societies for an apportionment of their existing funds.” Library of London School of Economics, MS note by W. J. Braithwaite, corrected by John Bradbury, Jan. 21, 1911, Braithwaite Papers, Pt. 2, Item 11.

23. Insurance Mail, Jan. 14, 1911.

24. Bunbury, (ed.), Lloyd George's Ambulance Wagon, pp. 95–98Google Scholar.

25. Paper delivered to the Law Society at Bristol, Sep. 27, 1910. Post Magazine and Insurance Monitor, LXXI (1910), 792–93Google Scholar.

26. In addition to serving the Combine confidentially as its chief negotiator with the Government, Kingsley Wood worked as the public interpreter of Combine policy to the collecting agents. In this office he made innumerable speeches and wrote two pamphlets during the first six months of 1911. They were State Insurance vs. Industrial Insurance Institutions, published in February, and The National Insurance Bill and the Industrial Insurance Agent, published in June. These pamphlets are not available in any of the important British national libraries, nor are they in the files of their publisher's successors, Stone & Cox. None of Kingsley Wood's official biographies mentions his important services to the insurance industry.

27. Braithwaite, who had many dealings with Rockliff, “warned the 1912 officials never to interview him except with a witness.” Bunbury, (ed.), Lloyd George's Ambulance Wagon, p. 97Google Scholar. Toward the end of the year when Rockliff's name began to appear frequently in the papers, it came to be spelled more fashionably, “Rockcliffe.”

28. For an account of Booth's work for the insurance industry see “The Insurance Man's M. P.,” in Insurance Mail, June 10 and June 17, 1911.

29. On Jan. 20, the Cabinet decided “after considerable discussion” to combine health and unemployment insurance plans in a single bill. Bodleian, Asquith to George V, January 20, 1911, Asquith Papers, Box 6, ff. 1, 2.

30. Library of London School of Economics, “Draft of a Bill to Provide for Insurance Against Invalidity,” Feb. 16, 1911, printed, Braithwaite Papers, Pt. 2, Item 19. For the origin of this draft see Bunbury, (ed.), Lloyd George's Ambulance Wagon, pp. 103–06Google Scholar.

31. Library of London School of Economics, MS Memorandum, Bradbury to Braithwaite, Feb. 3, 1911, Braithwaite Papers, Pt. 2, Item 14. Miss Rosemary Braithwaite has told the writer that her father regarded the failure to exclude the commercial insurance companies as the most important defect of the National Insurance Act.

32. Library of London School of Economics, W. J. Braithwaite to David Lloyd George, Mar. 10, 1911, Braithwaite Papers, Pt. 2, Item 34.

33. “The Bill itself contains much that is good and excepting the fear of the ‘thin edge of the wedge’ there appears little to object to in it.” Insurance Mail, May 13, 1911.

34. Insurance Mail, May 27, 1911.

35. Quoted in Assurance Agents' Chronicle, July 1, 1911.

36. Insurance Mail, June 24, 1911.

37. Letter, n.d., sent by secretary J. Walsh of the Rochdale Fraternal to H. T. Cawley, M. P., Lib., Heywood, Lancs.; Sir Ryland Adkins, M. P., Lib., Middleton Div., Lancs.; Alexander G. C. Harvey, M. P., Lib., Rochdale; Insurance Mail, July 22, 1911.

38. Insurance Mail, Aug. 5, 1911.

39. Bunbury, (ed.), Lloyd George's Ambulance Wagon, p. 168Google Scholar. Braithwaite adds surprisingly that he is unsure whether the agents' protest was organized by the companies. Ibid., p. 169.

40. Christopher Addison has written that C. F. G. Masterman and Lloyd George were “a good deal taken aback” by his disclosure about the middle of May that the doctors would not want to serve under the friendly societies. Addison, Christopher, Politics from Within, 1911-1918 (London, 1924), I, 20–21Google Scholar. This statement cannot be accurate. Lloyd George had been aware well before the bill was introduced that the doctors disliked the societies. Cabinet memorandum, “Insurance Scheme, D. L. G., 30 March, 1911, Confidential,” p. 18, in Bill File, National Insurance Bill, 1911, Part I to the Second Reading (Commons), Ministry of Pensions and National Insurance. For many reasons the name “Addison Amendment” for the transfer of the medical benefit and the establishment of the panel system appears to be inappropriate. The amendment was in fact drafted at the Treasury. Bunbury, (ed.), Lloyd George's Ambulance Wagon, p. 179Google Scholar.

41. The Mail introduced Kingsley Wood as the best known solicitor in the insurance business. “It is an open secret that he has been acting for our offices in the recent negotiations connected with the National Insurance Bill, and has been advising them … on points arising out of the bill.” Insurance Mail, Aug.12, 1911.

42. 5 Hansard, XXX, 496 (Oct. 27, 1911). Without the local management committees, Lloyd George had said in his introductory speech, “it will be quite impossible to distribute benefits, and it will be very difficult to arrange about doctoring and other matters.” Ibid, XXV, 632 (May 4, 1911).

43. “The Conservative Party is pledged up to the hilt to support the Friendly Societies.” Bunbury, (ed.), Lloyd George's Ambulance Wagon, p. 209Google Scholar. Braithwaite made this assertion about the middle of October.

44. During September and October, Kingsley Wood and Booth undertook a speaking tour through the Midlands and North in behalf of the industrial insurance interest and the bill. Kingsley Wood also warned the Unionists against offending the insurance companies by supporting the friendly societies. See his letter to the Times, Aug. 28, 1911.

45. See for instance the pamphlet, The National Insurance Bill as it Affects You as a Member of the Manchester Unity of Odd Fellows, sent early in September to every one of the nearly 800,000 members of the Manchester Unity.

46. The Nation, Oct. 14, 1911.

47. Library of London School of Economics, “Conference on the National Insurance Bill (Clause 18), October 19, Private and Confidential, Transcript from Shorthand notes of R. D. Shedlich,” Typescript. Braithwaite Papers, Pt. 1, “Memoirs, part 3,” following page 79.

48. Ibid., pp. 8-10.

49. Ibid., p. 8.

50. Ibid., p. 19.

51. Ibid., p. 17. With renumbering, this proposal became section 23 (2) (ii) of the act. In place of the prohibition of the distribution of funds other than as benefits, the first paragraph of the section, 23 (2) (i), came to read simply: “It must not be a society carried on for profit.” This change did not figure in the discussion, probably because with the growing complexity of the measure the friendly societies could see growing administrative costs for themselves.

52. “Conference on Clause 18,” p. 20.

53. Ibid., p. 25. Rockliff tried to obtain a plaice on the committee, but was refused.

54. Ibid., p. 30.

55. Bunbury, (ed.), Lloyd George's Ambulance Wagon, p. 212Google Scholar.