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EXPLANATION TO THE READER.
The design of this work is that it shall be, as far as possible, self-interpreting. All technical terms used in its pages are explained in its pages, in their alphabetical order.
The arrangement of subjects is strictly Alphabetical.
The arrangement of articles is, as far as possible, Chronological. Dates are given whenever possible. Writers on Insurance subjects generally have a great disregard for chronological exactitude.
Words in Small Capitals placed in brackets, as [Usury), mean that the subject will be further treated of under that head.
When Small Capitals are used in the text without the brackets, it signifies that the subject is, or will be, treated as a separate article.
Offices founded in London or books published there, are not individually so designated in the following pages. The rule we have followed is to state all the exceptions. Therefore, where it is not specifically stated otherwise, London is to be assumed.
We are especially desirous of noticing all INSURANCE PAMPHLETS. Many of these are privately printed, or only accessible through their authors. Our thanks will be due for any contributions of this description.
A Table of the principal Abbreviations used in the work is given on the preceding page.
ENCYCLOPÆDIA OF INSURANCE.
FRIENDLY SOCIETIES ADVOCATE.-A monthly publication under this title was carried on
during the year 1836, after which date we lose sight of it. It was very well edited, and
appeared to be the organ of the F. Sos. Institution, founded 1835. FRIENDLY Sos. Asso.-Founded about 1863, by an union of the officers of the three
county F. Sos. of Hants, Wilts, and Dorset. Its first ann, meeting was held at Salisbury in 1864, under the Presidency of the Rt. Hon. T. S. Estcourt.
The Association afterwards removed to Lond. and enlarged its scope and interests by admitting all F. Sos. into membership who desired it.
It still holds its ann. meetings in the country, the location being determined according to the nature and bearing of the questions to be discussed.
Several valuable papers have been read before this Asso. FRIENDLY SOCIETIES DISCHARGE ACT, 1854.-The 17 & 18 Vict. c. 56, passed especially
to prevent the issue of nomination policies by Life Ins. offices registered under the
Friendly Societies Acts,-See FRIENDLY SOCIETIES, this date. FRIENDLY Sos. INSTITUTION. - An asso. for the encouragement and protection of
Friendly Sos. founded 1835 for the purposes stated in our hist. of F. Sos. at that date.
The period of its existence was, we believe, very brief. FRIENDLY SOCIETIES, MORT. AND SICKNESS EXPERIENCE OF.–Our purpose is to bring
together in their chronological order all the authentic data which has been from time to time made available in regard to the Mort. and Sickness experienced by F. Sos. The history and other details regarding the T., etc., here given, have been already referred to in more or less detail in the preceding art. We only add such supplemental details as are essential to the understanding of the data presented.
It is no part of our design here to attempt to elucidate a “Law of Sickness.” It is certain indeed that the experience of F. Sos. can very seldom, if ever, represent the true Law of Sickness. The experience of F. Sos. is limited by the operation of the rules of such Sos. Thus, members are hardly ever “free of the box” until after 6 months of membership. Then, again, after 6 months' benefits at any time, they are usually put upon a lower scale of payment, which some members will not claim for. Finally, they are reduced to “superannuation,” under which they count as being always sick. Again, some of the members never claim (especially the honorary class) upon the funds. These circumstances specially modify the Sickness Experience of F. Sos.
1771.—The first attempt at calculating the rates of contribution for certain specific benefits in regard to F. Sos. was made this year by Dr. Price. We have already given an outline of his proposal under this date, in the preceding historical art. F. Sos.
1789.—Dr. Price's Hypothesis in regard to sickness was propounded for the purposes of a Gov. Bill in respect to the poor, this year. The details of its assumptions we have given in the preceding art. under this date. We refer to it here because there was a traditional belief that the assumption as to the rate of sickness under age 32 was based upon actually observed experience; but where or how the experience was obtained is not recorded.
It is to be remarked that the average of Dr. Price's assumptions for all ages up to 64 gives i sick out of 33'96—say I in 34 members annually. This unit of comparison will be found valuable in regard to other estimates and T. which follow.
1820 (or earlier). - An inquiry was instituted in the village of Methvin, Perthshire, for the purpose of ascertaining the sickness for 1 year among the whole male pop. of the parish over the age of 15, in view of estab. a F. So. upon correct data. One of the results of the inquiry was to ascertain that i in every 21 of the male pop. of this parish could not at any time, in consequence of mental or bodily imbecility, have gained ad
mission into any F. So. requiring entrants to be of good constitution, and capable of earning a livelihood, vide Rep. of Highland So. 1824.
1823.—This year T. were prepared for the Southwell F. So., under the advice of Mr. W. Morgan and Mr. Frend, which, while based upon the assumptions of Dr. Price in 1789, were so graduated in the light of more recent experience as to be regarded as entirely safe.
The average proportion of sickness up to age 64 assumed in the construction of these T. was I in 28-74 persons annually. Or dividing the periods of life, the following were the results assumed in its construction :
Proportion of Sick Members. From 10 to 25 years
I'1250 weeks' sickness i in 46'222 25 » 30
I'3750 30 , 40 ? 166250
32' 40 ,, 501 and to 65 1.8795 This was the Northampton Sickness T.; but with some modification of the assumptions of Dr. Price. (See 1825 and 1829.)
1824.–The first actual data drawn from experience in regard to the rate of Sickness experienced by F. Sos. was pub. by the Highland So. of Scotland this year, in its Rep. on Friendly or Benefit Sos., the materials for which had been obtained under the circumstances we have stated in the preceding historical art. This data was contributed by 70 F. Sos. situated in 16 out of the 33 counties of Scotland, viz. Ayr, Berwick, Cromarty, Dumfries, East Lothian, Edinburgh, Forfar, Lanark, Linlithgow, Peebles, Perth, Renfrew, Ross, Roxburgh, Selkirk, and Stirling. The experience of the different contributing Sos. ranged over periods of from 3, 10, 20, 30, 40, and 50 years. The observations did not extend to Deaths (which was afterwards a source of regret to the Committee), but to Sickness only, in relation to age.
Viewing the results generally, it appeared that from 20 to 50 years of age, the sickness increased gradually, with the advance of age. The quantity of sickness was pretty nearly, although not exactly one-tenth part of a week for every 5 years of age. Thus in the decade from 40 to 50, it amounted to something more than one week ann. to each individual; but in the next decade, from 50 to 60, the sickness approached to double this amount, being nearly 2 weeks ann. to each individual. In the decade from 60 to 70 the advance in the rate of sickness was still more rapid, as compared with the former decade, being in fact nearly trebled-it was nearly 6 weeks ann. to an individual. The total sickness for 50 years, viz. from the commencement of the 21st to the completion of the 70th year of each individual, was nearly 2 years p. member.
The number of '“Free Members” included in the obs. was 104,218.
It was found that in some of the contributing Sos. it had been the custom for some of the members—viewing the Sos. in the light of charitable inst.--not to claim the sick allowance to which they were entitled under the regulations. A correction was accordingly made in this respect; or, in the words of the rep., “The persons reporting the returns of sickness have corrected them by suppositions, making an add. to the quantity of sick allowances actually paid, for that sickness for which it is supposed no allowance was demanded."
It was further pointed out that the sick allowances—or rather the different descriptions of sickness to which different allowances are in practice assigned-varied in different Sos. “Some distinguished bedfast, walking, and superannuation, or permanent sickness, assigning distinct allowances to each ; while others distinguish the sickness according to its continuance, assigning different allowances for sickness of the 1st, 2nd, 3rd quarter, etc., or for other periods recognized by the particular rules.” The proportions which these different descriptions of sickness bear to each other had not been generally given in the returns to the Highland So. Thus it had been necessary to found the computations on one uniform average rate of sick allowance; suggesting at the same time means by which existing Sos., from their own experience, might ascertain the average rate corresponding to their particular rates of allowance ; and submitting approximations to enable new Sos. to reduce the particular rates they proposed to adopt, for each species or duration of sickness, to an average rate; and thence to ascertain from the computations the contributions requisite to defray the particular rate which they meant to adopt.
The Committee further say that the objects they had kept in view in the preparation of these T. were:-1. To enable F. Sos. to calculate the proportion which, upon an average, their contributions ought to bear to their allowances-reference being always had to the age of admission. 2. To ascertain how far their means are equal to their engagements. 3. To show the proper increase of contribution to meet a deficiency of fundsor (4) the increased distribution which a surplus can afford—so as to enable them to accommodate their arrangements to their circumstances.
The returns to the Highland So. of sickness among persons over 70 years of age had been considered too limited to be the basis of any computations of sick allowances which could be safely relied upon.
It was deemed desirable to show separately the rate of ann. contributions for each class of allowance usually made by F. Sos. their members, viz. :
1. Of weekly sick allowances from 21 to 70. 2. Of life annu. (superannuation) during future life to each member reaching 70. 3. Of endowment to be paid at the death of each member for funeral expenses or
other purpose. 4. Of annuity to the widow of each member. The rate of 4 p.c. int. was assumed in the calculations of the money values of the T.
It will be sufficient for our present purposes here to reproduce the following T. showing the quantum of sickness, expressed in weeks, and thousandth parts of a week, which an individual was found to undergo, taking an average life, during each year of life from 20 to 70. It may be noted that in the returns made by the Sos. the sickness was only given for periods of 10 years; but as it was found to receive an increase in each period, it was concluded that if it had been given for each year instead of each decade, it would have been found to increase annually. An ann. uniform increase was therefore assumed through each decade.
T. showing the quantum of sickness which an individual, on an average, experiences each year from 20 to 70 years of age, shown in weeks and decimals of a week. Weeks of Weeks of Weeks of
Weeks of Age. Sickness at Age. Sickness at
59 2 230 22
1186 60 2346 23 36 .688
1272 61 2 500 24 37 *702
1361 62 2.736 25
3*100 26 39 737
3700 27 40 *758
4'400 28 +603
1726 66 5.400 29 .611
1.821 67 6-600 30 -621 43
1918 68 79900 31 .631 44 -902
2018 69 9 300 32 -641 45 1962
2 122 70 10701 33 -652
46 1'032 Note. From this T. it is seen that the quantum of sickness increases very slowly for many years at first, but afterwards very rapidly. Thus in the 21st year of age it is a little more than 4 days to each individual. This quantity increases gradually till it becomes 621 of a week, or 43 days in the 30th year of age-making the average of the 10 years from 20 to 30, '5916 of a week, or 477 days, as the returns give it. In the 50th year of age the quantum of sickness is only 1'361 weeks, or 1 week and 2 days, and in the 6oth 2.346 weeks, or 2 weeks 24 days; but in the 70th year it amounts to 10 701 weeks, or 10 weeks and 5 days nearly.
This T. shows the sickness to be expected during the earlier periods of life to be considerably less than that assumed by Dr. Price in 1789, or by the Southwell T. in 1825 (which in fact was the same). Whether this difference was owing to a defect in the form in which the statement of facts was required, to the defective mode in which the requisition was answered, to the superior healthiness of the districts to which the returns applied, or to what other cause, has been the subject of much speculation ; and was especially so to the witnesses examined before the Parl. Committee of 1825-many of whom were indeed prejudiced in favour of Mr. W. Morgan's and Mr. Frend's T. based upon the hypothesis of Dr. Price already referred to. The differences in the two T. are shown in the following short summaries : DR. PRICE.
HIGHLAND So.'s T. Under 20 years results not given
Under 20 years *3797 weeks of sickness 32 years 1'0833 weeks of sickness
From 20 to 30 +5916 From 32 to 42 1'3514
„ 40 6865 43 , 51 106249
40 » 50 1'0273 51 - 58 1.8957
50 60 1.8806 58 64 2.1660
60 70 5-6337
HIGHLAND SO.'s T.
Proportion of Sick Members. Under 20 years not stated
i in 131 69
30 , 40
50-61 51 58
Under 20 years
Thus the quantum of sickness given by Dr. Price is greater in every period except the two last.
Mr. W. Fraser, in his Remarks on the Principles and Defects of the present Asso. for Life Assu., etc., 1831, gives us some insight into the difficulties which the Committee had in determining the Mort. T. to adopt. They had examined the Northampton T., the Carlisle, and Milne's Swedish T.
In this state of matters the Committee : : . , were much puzzled with regard to the rate of mort, to be adopted. It was, however, agreed by all, that the Northampton 1. was inapplicable, and therefore by the advice of several scientific gentlemen, well qualified to decide, the Committee ultimately resolved to take an average of the Northampton, Carlisle, and Swedish T.; and a new Mort. T. was calculated from these accordingly.
We do not give the mort. rate so deduced because it was not based upon the experience of F. Sos. : it was indeed only applied to their purposes pending their own true rate being ascertained.
See note on another point as affecting this T. in our review of Mr. John Finlaison's T. 1829.
It may be well to state here that about 1851, the Highland So., having discovered that these T. were not to be depended upon, gave notice of their withdrawal. This fact was communicated to the Select Parl. Committee on F. Sos. which sat in 1852. [Rep. p. 62.]
It may be useful to note at this point that in Appendix B. of the 3rd Rep. of the F. Sos. Commission (pub. 1873, p. 222) there is included a paper “On our present knowledge of the Mort. and Sickness of Members of F. Sos." This is by Mr. Neison, jun.-an experienced authority upon the subject. It consists mainly of criticisms upon the preceding and some of the following data, and contains many instructive points. As our present purpose is to review the various authorities from an independent standpoint, we have not deemed it necessary to quote Mr. Neison's comments here.
1825.-Mr. John Finlaison, who was examined before the Select Parl. Committee on F. Sos. which sat this year, handed in to the Committee some T., which are pub. in the Appendix of the Rep. [B. 9), which show the contributions required by a F. So. in order to safely grant the following single or aggregate benefits at the ages stated : Benefits : 1. Weekly allowance of ios. in sickness.
2. Weekly allowance of 5s. for life after 65 [Table 1), or of 45. after 60 [Table 2].
3. Ten pounds for burial money. The following 1. show the total value of the 3 benefits—the yearly prems. ceasing at the age of 65 [Table 1.], or 60 [Table 2].
18 20 22 24 26 28 30 32 34 36 38 40 42 44 46
£ s. d. | £ s. d. | £ s. d. £ s. d.
I 5 92 I IO II
I 13 5 27 14 45 36 13 of I 10 ot I 16 og 30 91 38 15 10 I 12
I 19 O 32 7 of 41 2 31 I 15
2 34 7 3
67 I 18 0 2 6 36 10 10 46 7 4
2 5 41 2 15
9 10 3 o 93 43 19 3 55 17 4 2 15 19 3 7 24 46 18
59 13 7 3 I 35 3 14 9 50 2 91 16 87 3 8 7 4 3 72 53 6 68 0
3 16 11 4 13 83
5 5 int
5 15 7 6 1995
6 16 41 8
d. £ s. d. £
s. d. £ s. d. 27 17 3 34 15
I 14 21 29 11 57
I II 55
2 31 6 5.) 392 4 I 14 0 2 0 31 33 5 II
41 9 1 I 16 II 2 3 103 35 912 43 19
2 7 II 37 14 11
7 40 4 68 49 14
3 II 4+ 48 14 21 60
3 19 II 52 1 41
4 IO 2 55 15 64 68 17 of 4
2 78 59 9 88 73 9 4
18 63 10 9
78 91 5 13 9 6 16 37 67 19 5 83 1982
6 14 43
42 9 13 78 4 14 96 10 10 2 33 12 0 1
42 16 67
The sums herein given can be divided into weekly or monthly contributions.
Mr. Finlaison shows the advantage attending the calculation of the prems. in single sums as follows:
It remains only to mention to your Hon. Committee the very simple means by which Benefit Sos. may, in any stage of their progress, ascertain, from the T. before set forth (of which the above is only an abstract, in reference to the class of benefits therein named), whether they are solvent or otherwise.
To judge of this, they have only to state the number of members whom they have on their roll at each age, and consider themselves as beginning a new So. at that moment.
They should insert the single prem. which each member would have to pay if he were to enter the So. at his then age, for the sickness allowance, for the superannuated allowance, and for the burial money, united together, and cast the whole into one sum. They may then . . , value the yearly contribution of every member at his advanced age; and in like manner cast the whole into one sum, and abstract this amount from the former. The remainder is the capital
that ought to be in their box. Mr. Finlaison concludes by remarking that if, “in present uncertainty as to the fact of the frequency and duration of sickness among the labouring classes,” we were permitted to assume what may seem a reasonable hypothesis, the following might perhaps be hazarded merely as speculation :