Departmental Committee appointed to Inquire and Report what Amendments are desirable in the Assurance Companies Act, 1909.

Presented to Parliament by
Command of His Majesty.
March, 1927.

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1927.

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Cmd. 2820.

MINUTES OF APPOINTMENT.

The Board of Trade are hereby pleased to appoint the under-mentioned gentlemen to be a Committee to inquire and report what amendments are desirable in the Assurance Companies Act, 1909

*MR. A. C. CLAUSON,

Mr. S. J. H. W. ALLIN, C.B.E.,
Sir GILBERT GARNSEY, K.B.E.,
F.C.A.,

Mr. C. M. KNOWLES, LL.B.,
Mr. J. C. MCBRIDE, M.B.E.,†
Mr. O. MORGAN-OWEN,

*Now Mr. Justice Clauson.

C.B.E., K.C. (Chairman).

Mr. W. P. PHELPS, F.I.A.,
Mr. G. STUART ROBERTSON, K.C.,
Mr. A. L. STURGE,

Mr. H. M. TROUNCER, F.I.A., and
Mr. H. M. WINEARLS, O.B.E.

O.B.E. (3rd July, 1926), since deceased.

The Board are also pleased to appoint Mr. WALTER J. SMITH to be Secretary to the Committee.

BOARD OF TRADE,

30th July, 1924.

(Signed) SIDNEY WEBB.

Read this Board's minute, dated the 30th July, 1924, appointing a Committee to inquire and report what amendments. are desirable in the Assurance Companies Act, 1909.

The Board of Trade are hereby pleased to appoint the undermentioned gentleman to be an additional member of the said Committee::

Mr. L. A. J. GRANVILLE RAM, Third Parliamentary Counsel to the Treasury.

BOARD OF TRADE,

20th October, 1925.

(Signed) P. CUNLIFFE-LISTER.

NOTE. The estimated cost of this Report is £312 3s. 2d., of which £66 128. 2d. represents the estimated cost of printing and publishing. This estimate does not include the cost of printing preliminary proofs of the draft Bill, which would, normally, have been incurred after presentation of the Report.

To the Right Honourable Sir PHILIP CUNLIFFE-LISTER, K.B.E., M.P., President of the Board of Trade.

SIR,

THE Committee have the honour to submit their Report, to which they have appended a draft Bill embodying their recommendations for the repeal of the Assurance Companies Act, 1909, and its re-enactment with very extensive modifications.

PART I.

1. The Committee were appointed under the Minute of your predecessor, the Right Honourable Sidney Webb, M.P., dated 30th July 1924, "to inquire and report what amendments are desirable in the Assurance Companies Act, 1909."

2. Upon their appointment the Committee were furnished with a Memorandum prepared by the Board of Trade, which is printed at length as Appendix "A" to the minutes of evidence taken before the Committee. This Memorandum referred to suggestions which had been made that more detailed information of the assets of insurance companies ought to be furnished than is at present obtained under the Act of 1909, and to the failure of the "Bevan" group of companies and of two life assurance companies, and drew the Committee's attention to the following topics which appeared to require consideration :

(i) Suggested powers for the Board of Trade to intervene in cases of insolvency;

(ii) Separation of (a) balance sheets, and (b) assets in regard to particular classes of business, and, notably, in regard to Life assurance business;

(iii) Modification of the information required under the Act of 1909 from Life Assurance Companies so as (a) to dispense with unnecessary detail, and (b) provide fuller information in regard to the development of and changes in the business done;

(iv) Dangers arising from the imperfect information available as to Bond Investment and Sinking Fund business; (v) Uncertainty as to the application of the Act of 1909 to re-insurance business;

(vi) The existing exemption of certain Mutual Employers' Associations from liability to furnish returns, &c.;

(vii) The position of Marine Insurance business, as exempted from the Act of 1909, in so far as carried on by purely Marine Insurance companies, but not exempted in so far as carried on by composite companies;

(viii) Information as to holdings of one insurance company in shares of another and other information as to details of assets held;

(ix) Various following:-

miscellaneous matters including the

(a) As to requiring further security beyond the usual deposit from foreign insurance companies operating in this country;

(b) As to deposits hypothecated abroad by Fire Insurance companies under local legislation;

(c) Delays in publication of returns owing, in part, to differences in the financial years of the various companies; and publication by companies of statements framed otherwise than in accordance with the statutory returns;

(d) Depreciation in value of statutory deposits; (e) Method of dealing with "not taken up" policies in the statutory returns;

(f) Novel methods of insurance, e.g., Insurance" and "Group Insurance."

"Newspaper

3. After a preliminary meeting to settle procedure the Committee held 75 meetings at 30 of which evidence was taken. The names of the witnesses and, in the case of representative witnesses, the bodies which they represented, will be found in Appendix No. 1 to this Report.

4. Pending the completion of the evidence the House of Lords decided (in the case of National Insurance Company of Copenhagen V. Attorney-General, [1925] A.C. 639) that, in the Act of 1909, the expression "insurance" covered re-insurance. In view of this decision the Board of Trade requested the Committee to make an interim report dealing with the question whether British or Foreign Insurance Companies or both should be required to make a deposit in respect of re-insurance business of any class.

5. In an interim Report, dated 30th June, 1925 (reprinted for convenience of reference in Appendix No. 2 to this Report) the Committee reported that they had reached the conclusion that companies which transact re-insurance business only, whether fire, accident, or employers' liability, ought not to be treated as doing these classes of business for the purpose of the 1909 Act, that the Act should be amended so as to secure this result, and that, if the law is altered to give effect to these recommendations, provision should be made for releasing their deposits to such companies of this class as have made deposits under the Act of 1909. The Committee added that they did not recommend that companies (if any there be) which do Life assurance business as re-insurers only should be exempted from the 1909 Act.

6. The Committee, on further consideration, see no reason to depart from these recommendations and they have accordingly embodied them in the draft Bill (see Clause 36).

7. As the hearing of the evidence progressed the Committee formed the view that while a great many detailed amendments

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