Under Common Law an employer has always been liable to his workmen for his own personal negligence, but it was not until 1897 that there was enacted the first of a series of Workmen's Compensation Acts which introduced a remarkable change in the law, inasmuch as the workman was given a statutory right to compensation for accident without requiring him to prove any negligence whatever.

The evolution of the law relating to Workmen's Compensation is traced through the successive Acts of Parliament, and the provisions of the Workmen's Compensation Act 1925, which codifies the law on the subject, are summarised so far as they relate to the liability covered by an Insurance Policy. Under the Act the employer is liable for personal injury to his workmen by accident “arising out of and in the course of” the employment or by certain scheduled industrial diseases.

An Insurance Policy covers the liability at Common Law and under the Employers' Liability Act 1880 as well as under the Workmen's Compensation Acts, and in addition makes the Insurance Company responsible for the cost of defending claims. The injured workman may have to consider whether he is likely to recover a larger sum by way of damages than he would receive in compensation by arbitration proceedings under the Workmen's Compensation Acts, and he can then elect which course to take.

A description is given of the Returns of Compensations made by Insurance Companies to the Home Office on behalf of the employers in certain selected industries as required by the Workmen's Compensation Act 1925.

The requirements of the Assurance Companies Act 1909 relating to Employers' Liability Insurance business are stated. In the Annual Returns to the Board of Trade under this Act, an Actuarial Valuation of the Outstanding Claims that have been in existence for five years or more is called for on an annuity basis, but no regulations are laid down for estimating the Liability in respect of Outstanding Claims of shorter duration. The present method is to take each of such claims and after considering the facts—nature of injury, rate of compensation, etc.—to make the best possible estimate of the ultimate cost to the Insurance Company. Later developments of the injury, however, may cause such estimate to be wide of the amount which the Company is called upon to pay. A plea is advanced for an investigation into the liability in respect of Outstanding Claims, in the hope that it may be found possible to arrive at average factors which could be used, with a suitable grouping of the Claims, to determine the Liability under the non-fatal Outstanding Claims from the first occasion of their becoming outstanding. When there is no recognised method based on past experience of making such an estimate, judgment may be influenced by factors not solely relevant to the ascertainment of the liability.

All the leading Offices transacting Employers' Liability Insurance business are members of the Accident Offices Association. This Association was formed after the passing of the Workmen's Compensation Act 1906, by which the scope of workmen's compensation was widely extended. The Association controls the rates and policy conditions of the Tariff Offices, but as the regulations are in great measure confidential, detailed information can only be given regarding what is already common knowledge.

A further step was taken in Government supervision of Insurance Companies by the Agreement made in 1923 between the Home Office and the Accident Offices Association, the effect of which is to limit to 37½% the expenses and profits in respect of the combined figures of the members of the Association.

The trend of probable future legislation as recommended by the Departmental Committee in the Insurance Undertakings Bill is described, and the questions of Compulsory Insurance and State Insurance are touched upon.

An account is given of an Undertaking made recently by the Accident Offices Association to furnish the Government with workmen's compensation statistics in connection with a Home Office Scheme of enquiry into the Incidence and Causation of Accidents.

The subject is so extensive that it has only been possible to deal with it in broad outline, but in conclusion reference is made to various aspects that could with advantage be expanded.

This Paper is a review of the developments in the issuance of disability benefits in connection with life insurance policies which have taken place in the last ten years in America, since Mr. Hunter's Actuarial Study was written. It does not deal with accident and health insurance issued as a separate contract.

Disability benefits have been changed repeatedly to meet the needs of the policyholders, from the original waiver of premium benefit in event of permanent disability to the present liberal form known as the 90-day clause, which provides not only for waiver of premium but a monthly income payable during disability not reducing the face amount of the policy. Any sickness which renders the policyholder unable to work for a period of at least 90 days is considered as total and permanent disability.

Some companies have been more progressive than others in liberalising their contracts, and at the present time there is a considerable variety of different forms of disability benefit to be had.

Several years ago most of the States or the Union passed laws whereby certain standard provisions were made compulsory for all life insurance policies, and two committees have recently been working on standard provisions for disability benefits. The committees made a report which has been adopted, and commencing with July 1, 1930, most of the States will require standard disability provisions, which will result in a much greater uniformity of contract than at present. The standard provisions are set out in the Paper.

The question of premiums and reserves is next taken up, and a brief summary is given of the disability investigations which have taken place in the last ten years. There has been a feeling on the part of the companies that they were losing money on disability, but owing to the frequent changes in the forms of disability benefits issued sufficient time had not elapsed to obtain enough data to calculate reliable rates of disability and of death and recovery among disabled lives. Without these it was, of course, impossible to find whether the premiums charged were adequate and whether the reserves on active and disabled lives were too large or too small.

The New York Life Insurance Company made an extensive investigation in 1929, covering over 18,000 claims under policies with the 90-day clause, and the results showed that both the premiums charged and the reserves on active lives, based on Hunter's table, were much too small, whereas the reserves on disabled lives were in excess of the true values.

This investigation also showed that the loss on females was very much greater than on males, a fact which has also been brought out in the experience under the British National Health Insurance scheme. The ways in which some of the large companies have attempted to solve the question of granting disability benefits to women are outlined in the Paper.

The Paper includes rates of disability and premiums for a unit payable at disability and for an annuity of 1 per annum payable monthly during disability according to various experiences.

Reference is made in the introductory remarks to the appointment of Investment Research Committees by the Faculty and Institute of Actuaries to undertake, in the first instance, the compilation of a comprehensive service of Index Numbers relating to British Stock Exchange Securities which will be suitable for Insurance Companies, Trust Companies, and so on. The Committees have been at work for some time, and it is hoped that publication of the results will be commenced at an early date. The Paper discusses the purposes of such indexes and the most suitable form of index numbers for the purposes decided upon. The difficulties arise from two sources ; the variety of uses for which the index must cater, and the requirement that the results must be comparable between any two dates in the series.

At every point in compilation the objects of the results must be carefully kept in view. These objects are divided under three headings : (a) uses directly connected with current investment activities ; (b) investigation of the effect of economic financial and political events on the level of security prices ; and (c) assistance in measuring approximately changes in the value of a portfolio of investments. It is suggested that securities should be divided into homogeneous classes, and a separate index calculated for each class. The wide groups “Fixed Interest” and “Variable Dividend” are not suitable for the purposes involved. The weighting system should approximate to the distribution likely to be found in an Insurance or Trust Company's investments.

Within each class companies' holdings will tend to approximate more nearly to equal amounts of money in each security than to any other distribution for which a system of varied weights would cater. Simple weights are accordingly advocated.

Various methods of averaging are discussed and reasons given for preferring the geometric average of price ratios to other methods. The dangers of adopting the arithmetic average—where the resulting figures are always dependent on the base prices—are illustrated in Table I. The geometric results are independent of base. Even using the geometric average great care must be exercised in applying the results to valuation purposes in groups where individual price movements show wide divergencies. The “error” involved by the geometric method, however, is always in the same direction. Capital appreciation is never overstated and depreciation never understated.

The foregoing remarks refer to price indexes. To obtain maximum utility from the results yield statistics also are required. The very different nature of the problem of yields is stated and an arithmetic average of individual yields in each group is advocated. While the price index should be related to 100 at the starting-point it is obviously preferable to publish actual yield averages.

The Paper is a revised edition of that contributed to the Faculty in 1919. In the interval there have been developments in medico-actuarial science, and it seemed desirable that they should be recorded.

The use and abuse of statistics are dealt with, and reference is made to Primary Selection by Branch Officials and to Medical Selection.

The Section of Family History Impairments opens with a reference to Heredity, Mendelism and Eugenics. The influence of Tuberculosis is discussed, and suggestions made for the assessing of the lives concerned. In view of the circumstance that there exists among many a confident belief in the hereditary nature of Cancer, there are given reasons for holding the opinion that when the Cancer problem is solved it is probable that the influence, if any, of heredity will be found to be distinctly small, and possibly negligible. A number of other diseases are dealt with briefly.

The Section of Personal History Impairments opens with Heart Abnormalities. Blood Pressure is gone into at some length. It is pointed out that hitherto there has been no recognised Standard Table of Blood Pressure in use among British Offices, and there is now put forward one compiled from the record of 1444 first-class lives. It is regarded as a Tentative Table, and is given in the hope that it will stimulate the production of another founded on a broader basis. The method of ascertaining the Blood Pressure is explained in an Appendix. Various other impairments are referred to; and probably of the articles revised the most important are those relating to Glycosuria and Gastroduodenal Ulcers.

Weight in relation to Height and Age is gone into, and reasons given for retaining the Table of 1919 in preference to the later Table of Seven Offices.

Female Lives, Non-medical Examination Business, Children's Assurances, etc., are the subjects of other paragraphs.

The Paper concludes with a reference to the public benefit of Life Assurance Research.