By some of the 10 forms of social insurance above mentioned each one of these three causes of destitution can be met, and destitution pre vented by the insurance method of spreading the loss over a larger group, in fact, over the entire community concerned.
The admitted social insurance methods may be classified into four groups or graduations: (1) the establishment of state insurance funds or institutions through which insurance to the workingmen is made cheaper and more attrac tive; (2) substantial subsidy of the working men's insurance by the state offering to pay a part of the premium in further effort to attract the wageworkers; (3) the method of compul sion under which certain groups or classes are required to become insured by virtue of legis lative enactment; (4) the method of enforced contributions from employers or industry for the benefit of the insured wageworkers.
In some social insurance systems all of these four methods may be combined, while in others only one of the four may be utilized. Modern students, however, seldom feel justified in ap plying the term social insurance unless at least one of these four methods is used, while in popular use the term is being somewhat im properly restricted to the compulsory methods.
Considerable difference of opinion exists whether straight governmental pensions paid out of public funds may be included under the definition of "social insurance" since they op erate without any consideration of insurance principles or methods. This holds true of old age or invalidity pensions in some European countries and British colonies and widows' and orphans' pensions in many States in America.
Nevertheless textbooks of social insurance usually include these pension systems notwith standing their deviation from insurance prin ciples. Social insurance is not governed by the strict requirement of private insurance science. It emphasizes the "Assurance" rather than the mathematical accuracy of rates. It merges into what is known in France as "Prevoyance So ciale," in Germany as "Soziale Ffirsorge" and may he translated as "social care" of needy individuals.
The origin of social insurance, at least in its modern phase, is usually credited to Bismarck, and to the acts of 1883 and 1884, by which the German sickness and accident insur ance systems were established. But as a matter of fact, the elements of mutual insurance, em ployers' contributions, state subsidy and even compulsion were well known in Germany and partly in other countries before. The acts of 1883 and 1884 were important, however, as establishing the first national system. From Germany the social compulsory insurance move ment extended to other Germanic countries, and gradually to all other European countries, until perhaps Turkey remained the only country without any social insurance legislation. The extent, however, to which this branch of social legislation expanded in each country differs considerably. See WORKMEN'S COMPENSATION ; HEALTH INSURANCE; OLD AGE INSURANCE AND PENSIONS.
The compulsory principle met with consider able opposition outside of Germany and Austria Hungary for perhaps a quarter of a century.
In opposition to it, the Latin countries, Italy, France, Spain and Belgium, experimented with the method of subsidized liberty (liberte as sistee), i.e., by granting more or less substantial subsidies to stimulate voluntary insurance. The Scandinavian countries showed a tendency to follow the Latin principle. Great Britain re mained indifferent, leaving the problem to the spontaneous efforts of mutual insurance, and the Slavic world neglected this as well as other branches of labor and social legislation. Within the last 8 or 10 years there has taken place a very marked development in the attitude of all Europe to this question of compulsion in social insurance. So many compulsory insur ance systems against sickness, old age, employ ment, etc., were passed between 1909 and 1914, (when the European War put a temporary halt to all constructive social legislation), that it is highly inaccurate to describe the compulsory method as a Germanic method. Compulsory compensation for industrial accidents is fairly universal in Europe, compulsory health insur ance is found in 10 countries, while voluntary subsidized insurance exists in four. France and Sweden have followed Germany's example in establishing compulsory old age insurance. Great Britain marked a very important step in 1911 by establishing at once systems of com pulsory insurance against sickness, invalidity and unemployment. In many countries without a general compulsory system, partial systems for certain industries exist, and in several others many steps have been taken for an estab lishment of compulsory systems, and these were only postponed through the action of the war. Social insurance legislation was perhaps the most important topic of legislation in Europe during the last decade. The entire modern social insurance movement proceeds from the theory that not only is the individual wage worker unable to meet the hazards that face him, or the cost of insurance against them, but that also holds true of the wageworkers as a group. Financial assistance is, therefore a very essential principle of social insurance. In regard to industrial accidents the principle is fairly generally recognized that they consti tute a proper charge upon industry, and with a few minor exceptions, industry through the em.. ployer is made to bear the entire cost: That is also true of occupational diseases wherever they are specifically provided for. Health (or sickness) insurance has developed upon a basis of joint contribution of employers and em ployees in proportions varying in different countries. The more recent enactment added, however the principle of state subsidies so that in the Acts of Norway, Great Britain and some others, the cost is divided between em ployer and employee and the state. In invalid ity and old age insurance this method of con tributions from three sources has been recog nized in the beginning and gradually the ad vantage of distributing the cost between em ployer, employee and the state (or in some cases the local geographic and administrative unit) are gaining the position of a general social insurance standard.