—The Life Assurance Act of
usually referred to as the Gambling Act, is a highly important landmark in the history of life insurance. Speculation in the lives of other persons, particularly public men, had become something of a scandal.
The Act forbade the issue of policies in which the names of the persons interested did not appear and also prohibited the insuring of lives in which the insured had no interest ; the path was thus cleared for the development of life insurance for provi dent purposes only—its principal function.
The Equitable had the field to itself until towards the end of the century when the Westminster society was founded. This society instituted the principle of paying commission to agents for the introduction of business.
Many offices came into existence in the first half of the 19th century—a natural concomitant of the growth of the joint stock enterprise which marked that period : incidentally the Joint Stock. Companies' Registration Act of 1844 brought in a number of re cruits, but many of these were mushroom concerns and most of the leading offices had commenced business before that date.
There was little restraint or check on the earlier operations of the companies (the Act of 1774 was a check on the insured, not the insurer) and it is there fore not a matter of surprise that concurrently with many care fully-managed institutions, there should have grown up others whose existence was undesirable. The description given by Dickens in Martin Chuzzlewit of the business methods of the Anglo-Bengalee Disinterested Loan and Life Assurance Company suggests what may have been the state of affairs with certain offices; but it was not wholly a caricature. Matters were brought to a head by the'disclosure of the difficulties of two companies, the Albert and the European. Both these offices had been active in absorbing lesser concerns, and, in their greed for large figures, had in many cases paid unjustifiable prices to the shareholders of the companies absorbed, without regard to the interests of the original policy-holders or those to whom they subsequently became re sponsible. The Albert closed its doors in 1869, and although the European did not do so for another three years, its position was a factor in hastening much needed legislation. The provisions of the Life Assurance Companies' Act of 187o are essentially those which have governed the business in Great Britain ever since.
Like most acts of parliament, it has been subject to amendment as the result of experience and it will probably be further amended in certain important respects by the bill of 1927.
The Scottish Widows Fund Life Assurance Society, established in 1815, was the first life insurance office founded in Scotland, where the business has, in proportion to the population, acquired even greater importance than it has in England.
Life insur ance on the Continent, and in America, developed later than in Great Britain. The first successful venture in France was made in 1819, when the Compagnie d'Assurances Generales sur la Vie was founded. In Germany, branches of English offices were operat ing before the end of the 18th century, but the first German company was not founded until 1828. As for the rest of the Continent, just as the English companies had extended branches into Germany, Holland and Scandinavia, so the French companies pushed theirs into Italy, Spain, Belgium and Switzerland, and the existence of these branches gave an impetus to the formation of companies of national origin.
In addition to being served by English and Scottish offices, most of the British dominions and colonies have developed life insur ance institutions of their own and the dominion offices have also carried their operations with vigour into the mother country.
The first step in the taking out of a life insurance policy is the submission to the insuring company of a written statement called a proposal, setting out particulars as to the proposer's age, health, past illnesses and family history. The proposer warrants the correctness of his statements and the contract is voidable by the insurer should any of them prove untrue. In practice it is unusual for an office to make use of this power unless there has been a deliberate intention to defraud. If there is a medical examination, the truth of the statements made to the doctor is also warranted. In legal terms, an insurance contract is uberrimae fidei, that is to say based on the utmost good faith between the parties, and the proposer is bound to disclose all circumstances material to the risk, not excluding any in regard to which he may not be specifi cally questioned. The necessity for this arises from the fact that many matters essential to the contract can be only within the private knowledge of the person desiring to be insured.