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and national health insurance activities, and accordingly transferred its State side engagements to a new unregistered society which is to transact national health insurance business only.

In the course of the year seven Scottish branches transferred their engagements. The main consideration in these transfers was the increased efficiency and security resulting from amalgamation. It was interesting to observe that in certain cases the Branch Committee of Management had had difficulty in finding, or indeed had failed to find, a member willing and at the same time competent to perform the responsible duties of branch secretary in his spare time.

The following table gives details of the various classes of society operating in Scotland as at 31st December, 1926.

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The number of Scottish branches is now 406. Of these 42 are branches of purely Scottish societies, the remaining 364 belonging to International societies.

7. Membership of Approved Societies.-The figures in the following table are based on returns furnished by societies, and show the approximate membership in Scotland of the various classes of approved societies :

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8. Transfers of Membership.-The great majority of transfers between societies are carried through with the consent of the society from which the member is transferring, and without reference to the Board.

Where, however, the society from which transfer is desired refuses consent, or fails to complete the prescribed procedure for either allowing or refusing the transfer, the case comes before the Board for decision. The number of decisions issued under the procedure established by the National Health Insurance Act, 1918, is as follows:

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The number of transfers that required a formal decision was thus 128, as compared with 219 in 1925. There is no reason to believe that the total number of transfers between societies carried through during the year shewed any similar decrease as compared with the previous year. It is probably the case that societies are realising more generally that since the Board are empowered to refuse to allow transfers only when satisfied that prejudice to the administration of the old society would be involved, no useful purpose is served by referring for decision an application for transfer where the circumstances are such as would not justify the refusal of the application on the ground stated.

Of the seven cases in which transfer was not allowed, the insured persons had, in two cases, been overpaid benefit, and it

was considered that the societies concerned should be allowed a reasonable time in which to recover the overpayment. In other two cases the members had not paid a levy imposed in respect of a deficiency in the Administration Account of the society, and were on that account subject to a reduction in the rates of cash benefits to which they would otherwise have been entitled during the year. In the remaining three cases the members had not paid fines imposed for breaches of the society's rules, and were subject to a similar reduction of benefit as at the date at which the transfer would have taken effect.

In six cases the old society objected to transfer on the ground that the member had been induced to transfer by the offer by the new society of certain additional "treatment "benefits, such as dental benefit. These benefits were being provided to members of the new society through the medium of a charitable institution to which the society had made donations under Section 26 of the National Health Insurance Act, and so were not subject to the waiting period which is imposed on new members by schemes of additional benefits framed under Section 75 of the Act. After considering all the circumstances the transfers were allowed.

9. Expulsions.The number of notifications of termination of membership by expulsion received is :

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The fluctuation in the number of expulsions in the last three years-98 in 1924, 135 in 1925 and 99 in 1926-is almost entirely due to a parallel movement over the same period in the number of expulsions arising out of two causes, viz.: (a) cessation of trade union membership, and (b) omission or misrepresentation on application for membership. Otherwise experience remains more or less constant, a feature being that the low level of expulsions for violation of pledge has been maintained. The causes of expulsion from approved societies during the last three years and the subsequent insurance history of the expelled members are indicated in the following table :

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10. Prolongation of Insurance and Arrears.-Industrial conditions still being far from normal, special provision was again made for assisting members of societies whose position in insurance would otherwise have been seriously prejudiced by unemployment. The original provisions of the Prolongation of Insurance Act, 1921, reinforced by those contained in the Prolongation of Insurance Regulations, 1925, were continued to 31st December, 1927, and it was also decided to repeat for the contribution year 1925-26 the credit to the genuinely unemployed of sufficient free contributions to bring their total credit to a minimum of 26, being the number required to secure the minimum rates of cash benefits under the Arrears Regulations. The latter concession was not withheld from persons who had been genuinely unemployed during the earlier part of the contribution year, but whose unemployment in May and June might have been due to the industrial troubles of that period. The cost of the free credits was, as previously, met out of unclaimed moneys in the Stamp Sales Account.

It was recognised that certain classes of insured persons, particularly miners and iron and steel workers, would have great difficulty in discharging arrears for the 1925-1926 contribution year within the normal period of grace. Accordingly, a general authorisation was issued to societies to extend the period to 31st January, 1927, in respect of employed contributors whose failure to discharge arrears timeously was due to financial stringency caused by unemployment arising from the exceptional industrial situation.

11. Audit of the accounts and supervision of the book-keeping of Societies and Branches.-The 1925 Audit has been completed for 350 Scottish societies and branches, and the results are set out in comparison with those for the same units in 1922, 1923 and 1924 :

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At the end of 1925, only 303 audits for the year 1924 had

been completed. The overtaking of 350 audits in respect of 1925 during the year under review represents, therefore, a considerable speeding up of audit work, and it is interesting to speculate on the extent to which improved book-keeping methods on the part of societies and branches may have influenced the position. The comparative figures set out above certainly point to some general improvement in the standard of book-keeping in 1925 as compared with the immediately preceding years. In a number of cases, however, the registers, records, &c. are still badly kept, with the result that much unnecessary work is thrown upon the Audit Department and ourselves.

Twenty-eight special reports were issued during the period in respect of two societies and twenty-four branches; fourteen on account of failure to submit books and documents to audit, one on account of failure to comply with the Auditor's instructions, five on account of failure to reply to audit notes (four branches and one society), and eight regarding the defective condition of the Contribution Register (seven branches and one society). With one exception-a second special report has been issued since the close of the period in this case-a ready response was made to requests to the units concerned for remedial action.

12. Security arrangements and defalcations.-One hundred and eighty-five societies furnish security in one form or another in respect of their National Health Insurance intromissions. One hundred and fifty-five, with 737,000 members, contribute to the Approved Societies (Officers) Guarantee Fund (Scotland), and ten, with 667,000 members, to the corresponding Fund of the National Health Insurance Joint Committee. Seventeen, with 199,000 members, hold security bonds in outside Guarantee Companies approved by the Department; two, with 82,000 members, have Guarantee Funds of their own; and one, with 300 members, has deposited securities with the Department.

Nineteen societies, with 9,700 members, do not give security, National Health Insurance charges being met in the first instance out of Friendly Society or Trade Union Funds, and reimbursement made out of National Health Insurance Funds only after submission of proof of proper expenditure.

During the year five cases of malversation or misappropriation involving Scottish monies to the extent of £317, 3s. 3d. were reported. Of the three Scottish Fund cases, two were closed by the defaulters refunding the comparatively small amounts involved. In the third case the defaulter was prosecuted and imprisoned, and the claim will no doubt be admitted so soon as it is definitely ascertained that there are no monies due to the defaulter by the society and properly applicable towards reduction of the deficiency (£92). The fourth case involved a sum of £70, the claim lying partly against an Insurance Company under a security bond and partly against the Scottish Fund. The defaulter was criminally prosecuted and imprisoned and the claim admitted, the society adopting a suggestion made by the Department as to a slight change in their arrangements which would

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