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pol., individuals who may have been afflicted with “gout, asthma, fits, rupture, hæmorrhage, complaints of the liver, spitting of blood, vertigo, or any other disease," being in many cases a source of fraud on the one hand and of litigation on the other, it is expedient that some method should be devised for guarding against the evils of such an inefficient regulation. Medical practitioners, in extensive employment, cannot fail to know, that at the several offices where these exemptions form a part of their rules, persons afflicted with gout, asthma, rupture, and the other complaints commonly specified, do, notwithstanding, obtain pol.; and upon such terms as would only be granted upon healthy lives. These persons necessarily incur the risk of forfeiture, and leave their successors exposed to great hazard in the event of their claims being litigated.
Yet in such cases circumstances may occur which may render it extremely disadvantageous to individuals to be entirely excluded from the benefit of L. assu. In order, therefore, to meet the public convenience in a fair and impartial manner, and to remove every pretence for deceit and fraudulent concealment respecting the actual state of the health of the assured, this So. proposes to extend the advantages of L. assu. to persons subject to such deviations from the common standard of health as do not essentially tend to shorten life, upon their acceding to the following conditions:-1. That they make an affidavit stating the nature of their complaints, the dates of their first attacks, and the names and addresses of the medical practitioners who attended them then, or in any subsequent returns of their disorders. 2. That they pay an increased prem. proportioned to the increase of hazard. The premium on the lives of persons deviating from the common standard of health will be regulated according to the amount of hazard; the risk being calculated upon a minute investigation of each individual case by the board of directors. The prem. on healthy lives will be regulated according to the rate fixed by the T. calculated for this inst.
The management of the So.'s affairs will be vested in a board of 18 directors, of whom 3 will be dignitaries of the Church, and directors ex-officio. Of the remaining 15 directors, not less than 9 will be members of the medical profession. The attendance of such a body of eminent medical practitioners, on every occasion of granting an assu., will afford the most effectual means of ascertaining the actual state of health of the assured; and will form a distinguishing safeguard, which, it is presumed, will greatly conduce to the permanent prosperity of this So.
It was stated that the bus. of the Co. would commence as soon as "1500 shares shall be subs. for," due notice of which would be given in the public newspapers. Bus. was commenced on 23rd June, 1824.
The Co. in its more mature form presented a most powerful cast of office-bearers and directors. The Marquis of Huntly was President; while among the vice-presidents were two bishops, four lords, and numerous baronets and M.P.s. The chairman of the board was George Pinckard, M.D.,—the actual founder of the inst. ; while among the directors were many of the leading members of the medical profession at the period. The "Hon. Director or Visitor" was the Venerable the Archdeacon of Lond. There was also a board of "Provisional Directors for the County of Buckingham.' The leading points in the former prosp. were adopted. Attendance was to be given daily, Sundays excepted," at the office, 32, Gt. Russell-st., Bloomsbury, from 10 till 4. The "peculiar features" of the Co. were declared to be,-1. A diminished rate of assu. [prem.], especially on the younger lives: "calculated upon the improved state of public health and the increased duration of human life." 2. One-half of the board of directors being members of the medical profession. 3. Extending the benefit of L. assu. to all classes of persons; calculating the prem. at a just ratio with the amount of hazard, instead of excluding those afflicted with " gout, asthma, rupture," and the other diseases usually specified. 4. Giving the option to the person ins. to share the profits. 5. Purchasing the int. of the assu. whenever circumstances may chance to require it. "Ň.B.Attorneys, brokers, and agents, bringing bus. to the office, will receive a liberal commission upon the payments." Among the classes of bus. undertaken was this: "9. Receiving investments of property for accumulation."
At a general meeting of the shareholders held 1st Dec., 1825, the name of the Co. was changed to that which it now bears.
The D. of Sett. of the Co. was not completed until some time after bus. operations had been commenced. It was desired to test some of the new features before they were embodied into a formal instrument. The deed was at length prepared, and bears date the 14th Feb., 1827-St. Valentine's Day. It is clearly and well drawn. We shall notice only its more special features. Proprietors holding not less than five shares may vote at gen. meetings (c. 24). Pol.-holders of two years' standing, and ins. for £500 and upwards, whole term, may vote on election of auditors, or in respect of dissolution of the Co. (c. 27). "No proprietor, except an unmarried female, or a Member of Parl., shall be entitled to appoint a proxy to vote or act for her or him at any general meeting or ballot" (c. 28). Co. not to be dissolved without previous consent of directors (c. 42). General meetings to be adjourned unless 12 proprietors be present, or if ballot be demanded (c. 43). The remuneration of the directors was orig. fixed at 8 guineas, to be divided amongst the directors in attendance at the weekly board. It is now very properly modified to 2 guineas to each director for each attendance, and 3 guineas to the chairman (c. 71). Then the following:
74. That it shall be wholly left to the board of directors to accept or refuse proposals for assu., endow. and annu. to be effected and granted by the So.; and it shall be lawful for the board of directors to accept proposals for assu. on the lives of persons who may be afflicted with such complaints as have been or may be generally considered to render their lives uninsurable: provided, nevertheless, that no proposal for any assu. or endowment to be effected by the So. shall be accepted unless two at least of the directors present at the board shall be medical practitioners, or unless two at the least of the directors who are medical practitioners shall have previously examined the person on whose life such assu, or endow, shall be proposed to be effected, and shall have reported to the board of directors the state of the health of such person.
The sum to be ins. on any one life was orig. limited to £3000, except under special
circumstances, when any board, at which there should be nine directors present, might extend the limit to £5000 (c. 75). The limit may now be increased by any board at which six directors are present to £10,000. Pol. to contain a declaration limiting the individual responsibility of proprietors to the amount of their shares (c. 78). Then the usual clause in the deeds of the early offices, that the payment of claims might be deferred in case of plague, famine, or invasion, "until such time as the funds in the hands of the So. shall be sufficient for the payment of all the sums to be claimed under pol. issued by the So., in respect of deaths which may so happen as aforesaid " (c. 81). Claims were orig. made payable three months after proof-they are now payable one month after (c. 82). Regarding the special branch of bus. to which we have already drawn attention:
85. That it shall be lawful for the board of directors to receive, on behalf of the So., investments of money for the purpose of accumulation, on such terms as the board shall think proper.
Two separate funds to be kept, viz. "The Proprietors' Guarantee Fund" and "The Consolidated Fund." The first to consist of the paid-up cap. and all bon. added thereto. The second to consist of all the other moneys of the Co. (c. 86). Then follow a series of clauses regarding the ascertainment and distribution of surplus; but as these have been modified under the Co.'s special Act, we shall not enter into details now. The "Proprietors' Guarantee Fund was to be increased by bonus add. to £50,000 (c. 91). Co. may purchase its own shares, never retaining more than 100 in hand (c. 103).
109. That the So. shall always be provided with a house in Lond. or Westminster, or the environs thereof, fit and proper as to size and situation for the office of the So., and the board of directors shall provide the same..
132. That it shall be lawful for the honorary director or visitor, or honorary directors or visitors, of the So., when and as he and they shall think proper, to be present at and attend the meetings of the board of directors and the general meetings of the So.; but no honorary director or visitor shall be entitled as such to vote either at the meetings of the board of directors or at the general meetings of the So.
No proprietor to hold more than 50 shares (c. 170). Directors signing pol. and other instruments not to be personally responsible to pay moneys thereunder
Nor shall any claim upon any pol., or deed, or other instrument as aforesaid, be enforced against any person or persons assured by the So., his, her, or their executors or administrators; anything contained in these presents to be had, done, or executed by the board of directors or other officers or proprietors of the So., or by any general meeting of proprietors or otherwise, to the contrary thereof in anywise notwithstanding (c. 200).
The "Consolidated Fund" primarily liable for all engagements of the Co. "Proprietors' Guarantee Fund" only secondarily so (c. 201).
We have never met with a more clear, explicit, and carefully-drawn D. of Sett. The founder of the Co., as we have seen, was the late Dr. Geo. Pinckard; and the scheme of its foundation was that it should undertake the ins. of lives presenting such deviations from the common standard of health as, while perhaps not essentially tending to shorten life, yet could not be insured under ordinary circumstances and at ordinary rates. The difficulty at starting was the non-existence of any data from which to deduce tables of rates at all adapted to the circumstances of the more special classes of bus. proposed to be undertaken. The founder considered that this difficulty could be best surmounted by selecting a considerable section of the board from the medical profession. The number was fixed at eight. In the selection of these medical directors, especial care was taken to secure men of eminence, distinguished by their attention to some particular class of diseases. Thus one medical man was selected who was considered particularly conversant with diseases of the lungs; another was chosen for his skill and experience in the ailments with which females are chiefly affected; and the rest on similar grounds. By this arrangement, whatever might be the complaint with which any applicant had been afflicted, there was always the chance of there being present at the board a medical director peculiarly qualified by previous study and practice to estimate the increased risk caused by the complaint in question. Results have confirmed the wisdom of this course. It must not be supposed, because the scheme of the asso. was so skilfully laid, and its promoters were so eminently respectable, or even because it introduced a new and most important extension of the bus. of L. ins., that its progress was at all rapid, or that it escaped the ignorant prejudices which too often surround young offices. On the contrary, its progress was very slow; and by reason of its "diseased life" feature, it was often designated by jealous opponents as "the rotten office." Yet it survived all this: and is now unquestionably one of the most solid Ins. institutions of our country.
In 1828 it took over the L. connexions of the Herts, Cambridge, and County, which had been founded in the same year with itself (1824); and in 1829 it took over the L. bus. of the Berkshire, Gloucestershire, and Provincial, which had been also founded in 1824. In 1840 it took over the L. bus. of the Leicestershire and Midland Counties, which had been founded in 1834. The following statement of facts regarding these so-called amalg, from the pen of the Act. of the Co., appeared in the Pall Mall Gazette in 1869-a period when much attention was being direced to amalg.:
In neither case was there an incorporation of the interests, or a purchase of the business of the retiring office. On the contrary, in each instance we had the proper money consideration for under
taking the risks; which were, moreover, trans. without any cost to us whatever. When I have stated that the total bus. of the three offices consisted of but 69 pol., assu. £34,100, and that the last of the trans, took place in 1840 (the others having been in 1828 and 1829 respectively), it will be manifest that the influence of these transactions on this So. has been infinitesimal, though it is but fair to say that, such as it was, it has been for good, the assurances having been profitable and the connexions valuable.
The first investigation of surplus was made in 1831, and similar investigations have been made quinquennially as follows. The distribution to the whole-term pol.-holders had been orig. fixed by the D. at “three equal sixth parts"; but this proportion was increased by the special Act of the Co. in 1850. A T. at the end of this art. will show the large amounts of surplus which have been from time to time distributed.
In the report presented to the proprietors for the year ending 30th June, 1839, special attention was drawn to the following facts:
1. That the profits realized from forfeited, lapsed, and purchased pol. during the past year has amounted to 11,042 18s. 2d. 2. That the sum received for prems. on new pol. issued during the same period was £10,040 115. 11d. 3. That the income of the So., which is steadily and progressively increasing, now exceeds £86,600 p.a. 4. That after defraying the claims on account of deaths, and all other expenses, £52,004 have been carried, as a clear saving, to the Consolidated Fund during the 12 months embraced in the present report.
The directors desire also to state, as indicating the estimation in which this So. is held by one of the best classes of assurers, that the number of pol. granted on the lives of clergymen has been greater by 50 p.c. during the last than during any preceding year.
The first item would not now be brought into any prominence in the reports of the Co., even if it existed; but the more enlightened principles upon which L. ins. bus. is now conducted renders such a source of profit happily small.
The 3rd distribution of surplus took place in 1841. The reserve fund, which in 1831 had been £5000, and in 1836 only £6500, was now increased to £29,500. In 1846 the 4th distribution took place. The sum divided amounted to £154,500. The ann. income of the Co. had then reached £116,300. The reserve fund stood at £51,500. The provisions of the D. were modified in several respects by the resolutions of general meetings held in Jan., 1847, viz. the range of securities in which the funds might be invested were extended to railway securities-mortgage, bond, or debenture; but such investments could only be made at a board at which not less than five directors were present. Advances might also be made on the pol. of the Co. to the extent of nine-tenths, instead of two-thirds of their value, as provided in the D.
In 1850 the Co. obtained a special Act-13 Vict. c. ix.-An Act for better enabling the Clerical, Medical, and General L. Assu. So. to sue and be sued; and to alter certain Provisions of their Deed of Constitution; and to give further powers to the So. This Act received the Royal Assent 17th May, 1850. It recites the preceding D. of Constitution, and also the alterations which had been made therein, as already stated. Also, "And whereas the So. hath been very successful, and the funds thereof have been very much increased in value." The "Consolidated Fund" was said to exceed £746,657 17s. 8d. ; and the "Proprietors' Guarantee Fund" amounted to £50,000.
And whereas it would be greatly for the benefit of the said So., and of the public at large, that the said So. should be able to sue and be sued in the name of the So., and should be empowered to alter the present mode of division and application of the profits of the So., and also to lay out and invest their funds in and upon other property and securities, in add. to the funds and securities in and upon which investments are directed to be made by the D. of Consti., and that certain other provisions of the D. of Consti. should be altered and further powers given to the said So.; but the several purposes aforesaid cannot be effected without the authority of Parl.: May it therefore please Your Majesty, etc. It was enacted that all suits and proceedings on behalf of the So. be in the name of the So. (s. i.):
III. And be it enacted, that in every case where any answer, affidavit, oath of verity, or solemn declaration may be required on behalf of the So., the same shall and may be made and taken by the Act. for the time being, or any director of the So., in the name and for and on behalf of the So.; and the same being so made and taken shall to all intents and purposes whatsoever be equally valid in law as if made or taken by all the members for the time being of the So. on their own behalf.
Members may sue and be sued by the So. (s. iv.). Shareholders sued on behalf of the So. to be reimbursed (s. ix.), by contributions to be recovered from other proprietors (s. xi.). Proprietors and pol.-holders may inspect share regis. at office of So. (s. xv.). Memorial of the name of the Act., Trustees, and Directors to be enrolled in Chancery (s. xvi.). Power to directors to invest in securities other than those already named (s. xx.). So. to be deemed a co. formed for granting and purchasing annu. pursuant to 53 Geo. III. c. 141 [ANNU. ON LIVES] (s. xxi.). Power to directors to effect re-insurances (s. xxii ). Power to directors to effect " 'non-participation" insurances (s. xxx.). Upon division of profits in 1857, and ever after, five-sixths to go to assured, and one-sixth to proprietors (s. xxxi.).
XXXII. Provided always, and be it enacted, that nothing in this Act contained shall authorize the application as divisible profits in 1857, and upon every division of profits which shall afterwards take place, of any larger sum than shall remain, after leaving in the Consolidated Fund the value of £50,000 sterling over and above what may be sufficient to make provision for all the then existing claims and demands on that Fund.
Power to pay bonuses in cash, or to apply them in reducing prems. or in limiting the
periods of payment, etc. [LIFETIME POL.] (s. xxxiv.). Nothing in Act to affect powers of deed to alter provisions of D. of Sett. (s. xxxv.). Act not to incorp. So. (s. xxxvii.). At the first general meeting after the passing of the preceding Act, it was resolved to appropriate £50,000 "as a permanent security for the proprietors and the assured, the int. of which will be ann. added to the profits of the So." This fund was in add. to the proprietors' cap.
In 1851 new scale of prems. for L. ins. was adopted; and non-parti. pol. were first issued. The days of grace were extended from 21 to 30 days. The system of "credit prems." was introduced. Claims were to be paid 30 days after proof. Limits of foreign travel and residence increased. Ins. up to £10,000 granted; and a wider range of investments adopted. The Co. was in fact "modernized." The expenses of man. at this date were stated to be 34 p.c. on the income. Nothing had ever been lost by "bad securities" [investments]. In the quinquennium the "expected" mort. was 604 deaths— actual deaths 482. The reserve fund had become increased to £60,000, but was then permanently reduced to £50,000.
In 1851 Mr. George H. Pinckard, the then Act. of the So., read before the Inst. of Act. a paper, The Practice and Experience of the Clerical, Medical, and General L. Assu. So., chiefly with Reference to Invalid Lives. This paper, which is full of interest, will be spoken of under CLERICAL, MEDICAL, AND GENERAL, MORT. EXPERIENCE OF, and also under DISEASED LIFE INS.
At the general meeting in 1854 the directors recommended that alterations should be made in the D., by which pol. of twelve months' standing should not be affected in case of death by suicide, duelling, or the hands of justice. These alterations were adopted; and whole-world pol. were issued from this date. In the year ending 31st May, 1854, there were issued 605 new pol., insuring £299, 508, and yielding in new prems. 10,567-the largest bus. the Co. had ever transacted in any one year, and nearly double the average of the three preceding years. It is a remarkable feature that this asso. did not owe its wonderful prosperity to a very large bus.
An apparent discrepancy requires a word of explanation. The asso. is called in its D. of Sett., Act, and official documents a "So." We call it a " Co.," from the fact of its being organized with a proprietary cap. In 1856 the 6th investigation took place. The report stated, "In estimating the amount of liabilities, the net Carlisle T. has been adopted, and 3 p. c. has been the rate of int. used in all the calculations." The T. at the close of this art. embodies all the leading financial facts in the hist. of the Co., and it deserves careful consideration.
The general features of the Co. are liberal—especially in the matter of foreign residence and travel. Whole-world pol. are issued. Pol. of twelve months' standing are not forfeited by suicide. Surrender value given on pol. of three years' standing, commencing at a minimum of 33 p.c. of prems. paid. For purposes of surrender, pol. on diseased lives are treated as though granted at ordin. rates. Claims payable 30 days after admission. The successive chief officers of the Co. have been, Mr. Joseph Pinckard, first Sec., succeeded by Mr. G. H. Pinckard in 1839. Mr. Cutcliffe became Act. and Sec. of the Co. in 1858; and he is now [since 1864] ably assisted by Mr. Newbatt.
The following T. embodies the leading financial features in the hist. of the Co., given at the period of each quinquennial investigation into the affairs of the Co. It seems almost superfluous to add that the Co. is in every respect first-class.
278 £200,843 £7298 £35,635
968 £740,730 71,588 2202 1,581,725 1841 220,079 | 7759 97,932 3160 2,112,538 418,903 1846 401 227,860 7441 116,383 4122 2,599,726 639,797 1851 275 162,359 5521 136,190 4792 2,950,411 864,328 1856 597 296,100 9967 166,834 6457 3,637,687 1,154,276 195,000 302,560 9891 195,406 7559 4,287,611 1,422,191 237,000 375,164 12.577 215,237 8331 4,786,062 1,619,540 430 260,013 8187 236,563 8679 5,084,255 1,826,459 270,000 515 275,740 9851 247,111 8884 5,207,557 1,810,557
CLERICAL, Medical, and General, Mort. Experience of.—The circumstance of this Co. having undertaken the ins. of "impaired " lives, as already explained, naturally caused a considerable amount of interest to be manifested in its mort. experience; and whatever the degree of curiosity felt by outsiders may have been, we might take it for granted, if we did not know it as a fact, that at least a similar degree of interest was felt by the managers of the undertaking.
At the end of 1834—that is, when the Co. had been in operation for 10 years-Mr. George H. Pinckard, who was then Assistant Act., made the "best investigation which the facts at his disposal would admit, into the mortality that had prevailed as regarded both the healthy and the unhealthy lives assured up to that date." The result is shown in the following T.:
CLERICAL, ETC., EXPERIENCE.
All Lives Healthy Unhealthy
One in One in
20 to 29
30 to 39
It thus appeared that the mort. on the unhealthy lives for the whole period from 20 to 69 had been more than double that on the healthy. At the same time, the average additional prem. paid by the invalid class did not exceed 30 p.c.! The above results, although derived from the small number of 650 unhealthy lives, were nevertheless considered to militate so strongly against the acceptance of unhealthy risks, that the directors from that date exercised much greater caution than theretofore in accepting unhealthy lives, and, as a necessary consequence, many persons who before would have been admitted were then rejected. This we are told by Mr. Pinckard.
In 1843 Mr. Pinckard made another investigation, with a view to test the results of the more cautious line of action adopted since 1834. This last investigation was brought down to June, 1843. Mr. Pinckard describes his mode of proceeding on this occasion: First, every invalid case was regis. under the head of the particular disease on account of which an add. prem. had been charged. Thus, all persons afflicted with disease of the liver were grouped under one head; those suffering from disease of the lungs, under another; and so on, until all were classified under 56 different heads of disease. By the aid of the medical directors, these 56 distinct diseases were comprehended under eight classes; each class consisting of diseases having an affinity for each other. There was also a 9th class, termed miscellaneous, embracing persons who had been charged an increased prem. on account of their occupation, or on other grounds unconnected with any specific disease.
These 9 classes were then formed into one, which exhibited in a synoptical view 1297 invalid lives, being all who had been assu. at an add. prem. (exclusive of those charged for foreign climates), from the foundation of the So. up to the year 1843. This being completed, a comparison was then made as to the per-centage of loss by deaths on the whole prems. received both from the healthy and unhealthy pol. The next step was to ascertain the rate of mort. which had occurred during the 18 years from June, 1824, to Jan. 1843, on the diseased cases taken by themselves. This is shown by the annexed T.:
By a comparison of the preceding tables it will be seen that the increased care exercised during the 9 years 1834-43 produced a very beneficial effect; the deaths on the unhealthy lives between the ages of 20 and 69 having been in the proportion of 1 in 31 in the former T., against I in 52 in the latter T.
These favourable results gave renewed courage to the management, and diseased lives were again accepted more freely, but only in the light of the experience gained.
In 1849 another investigation of the mort. was made, on the same principle as that of 1843. "All persons on whose lives an increased prem. had been charged have now been arranged under 79 heads, viz. 65 of different diseases, and 14 heads of miscellaneous. These have been grouped into nine classes as before, and the whole again comprehended in one synopsis: thus exhibiting the exp. of the So. for a period of 25 years, from June, 1824, to June, 1849." Mr. Pinckard says:
With respect then to the last six years, during which the system alluded to has been in operation, I have only to state that 826 pol. on invalid lives have been issued; and that the claims by death have amounted in that period to 24'9 p.c., or in round numbers to one quarter of the whole prems. received. Whether this loss is greater or less than has been sustained by those offices which have been transacting this kind of bus, for the same period of time, I have no means of ascertaining: but, in my judgment, the result is not otherwise than satisfactory.
These facts were made known by Mr. Pinckard in a paper which he read before the Inst. of Act. in 1851 : The Practice and Experience of the Clerical, Medical, and General L. Assu. So., chiefly with reference to Invalid Lives. The paper enters more minutely into details regarding this class of risks; but we reserve these further facts for our art. DISEASED LIVES, INS. OF.
The Co. has not pub. its more recent mort. experience in a distinct form. It was one of the offices contributing data for EXPERIENCE T. No. 2. We observe in the Rep. on the Investigation of Surplus as at June, 1871, the directors, speaking of the increasingly large sum for distribution, say:
This surplus is matter for hearty and unmixed congratulation, and justifies the preference shown by the board for a well-selected business tending to profit. It must, however, be remembered that although owing in the main to ordinary recurring causes, and to sources of profit having every prospect of permanence, it is, nevertheless, certain that its unprecedented enlargement is due to a condition of mort. favourable beyond previous experience, to be probably compensated under the law of averages by an increase of deaths hereafter beyond those allowed for in the calculations.
This is very fairly and honestly put.