Google
This is a digital copy of a book that was preserved for generations on library shelves before it was carefully scanned by Google as part of a project
to make the world's books discoverable online.
It has survived long enough for the copyright to expire and the book to enter the public domain. A public domain book is one that was never subject
to copyright or whose legal copyright term has expired. Whether a book is in the public domain may vary country to country. Public domain books
are our gateways to the past, representing a wealth of history, culture and knowledge that's often difficult to discover.
Marks, notations and other maiginalia present in the original volume will appear in this file - a reminder of this book's long journey from the
publisher to a library and finally to you.
Usage guidelines
Google is proud to partner with libraries to digitize public domain materials and make them widely accessible. Public domain books belong to the
public and we are merely their custodians. Nevertheless, this work is expensive, so in order to keep providing tliis resource, we liave taken steps to
prevent abuse by commercial parties, including placing technical restrictions on automated querying.
We also ask that you:
+ Make non-commercial use of the files We designed Google Book Search for use by individuals, and we request that you use these files for
personal, non-commercial purposes.
+ Refrain fivm automated querying Do not send automated queries of any sort to Google's system: If you are conducting research on machine
translation, optical character recognition or other areas where access to a large amount of text is helpful, please contact us. We encourage the
use of public domain materials for these purposes and may be able to help.
+ Maintain attributionTht GoogXt "watermark" you see on each file is essential for in forming people about this project and helping them find
additional materials through Google Book Search. Please do not remove it.
+ Keep it legal Whatever your use, remember that you are responsible for ensuring that what you are doing is legal. Do not assume that just
because we believe a book is in the public domain for users in the United States, that the work is also in the public domain for users in other
countries. Whether a book is still in copyright varies from country to country, and we can't offer guidance on whether any specific use of
any specific book is allowed. Please do not assume that a book's appearance in Google Book Search means it can be used in any manner
anywhere in the world. Copyright infringement liabili^ can be quite severe.
About Google Book Search
Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers
discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web
at |http: //books .google .com/I
11
I'
i
f
■
I I
fl
J!
. •■■!
Workmen^s Compensation
and Insurance
in
France^ Holland and Switzerland
• • •• » • • •
• • • • • • •
• •
(V- ♦
• • •.•.*.: •:
I «
\
of Letters
by
Hamld G. Villanf
Revised and Repfinted
Janttaryt 19)4
:fr.!.iiiif
liKK
1.^
• •
• • •
• • •
• • •
• • • *
• •
,••
• • • • •
• •
>•• •
•••
•_•
!■»
t • . i'» • •..
I •'
*if
^
Workmen's Compensation
and Insurance
in
France^ Holland and Switzerland
• •
• <» •* <• « * •
• • • ^« • • •
A Series of Letteis
HawU G. Vlllard
R«vlMd «ad Bcpfkitad
Jaamry, 1914
• •
.•• ••••••• •
• • • • • • • •C • •^*
. •••
A ::.*:♦.:• ••:: :•*.*•. :
;•*.: '.• :.♦;♦.•
■>i
The following letters, written from various points in Europe, be-
tween July, 1912, and June, 1913, contain the results of studies of the
practical operations of the French, Dutch and Swiss workmen'^s /in-
surance laws, besides a brief discussion of the recent Swiss legislation,
which is not yet in effect. No attempt is made at a complete analysis
of the various statutes discussed. For that information the reader
should consult the Reports and Bulletins of the United States Bureau
of Labor.
In this reprint a number of corrections and of additions to the statis-
tical data have been made.
HAROLD G. VILLARD.
206 West 67th Street, New York.
December, 1913.
G'/3980
* a
• * • •
FRANCE
• • •€««•• •• •• ••
Experience Under the Workmen's Accident Compensation Law.* — Prin-
ciples and Objects <tf the Law. — Misconstructions. — Grow-
ing Abuses. .
Following the example set by Germany in 1884, practically all the
leading industrial nations of Europe have, since then, passed laws af-
fecting the compulsory insurance of workmen against accidents arising
in the course of their employment. As is well known, this form of
legislation has all been based on the same general theory of partial
reparation and of a division of the loss arising from the accidents be-
tween masters and workmen. Instead of employers being liable, as
heretofore, only in cases where negligence could be imputed to them,
they are obliged to indemnify victims of accidents in all cases. On
the other hand, employees injured through no fault of their own re-
ceive, not full, but only partial, compensation, while those at fault
have their loss in earnings made partially good, instead of receiving no
redress from their patrons, as was the previous custom.
In every case, workmen are to forego full compensation, and in no
instance are employers to be mulcted to the full extent of their previ-
ous liability. To relieve the laborer from all loss or penalty in case
of accidents, one-half of all of which are usually due to his negligence,
would throw an unfair burden on the employer, and would tend to de-
moralize the workman by making him indifferent or careless. In order
to prevent the simulation of accidents, and to make the victims anxious
for their hurts to heal quickly, an employee should never be allowed
to turn an injury into a source of profit. The accident-insurance
statutes were, therefore, purposely intended to be only partially repara-
tive, and were not meant to be a means of bestowing alms or charity
on any one.
What the Object Is.
In discussing this class of legislation, another fact should be borne
in mind, namely, that its object is not to make amends for the mutila-
tion or disfigurement of the human body, but merely to compensate in
♦Reprinted from New York Evening Post of March 29, 1913, by per-
mission.
part for any reduction in wages resulting from that loss. A victim
may be terribly seared and scarred, but he is not entitled to receive
any satisfaction for the loss of his good looks, unless accompanied by
a diminution in his wage-earning capacity. No sentimental reasons, but
purel>^ jb'nsinesl^ ^fib^tpdes, should be applied in the interpretation of
accident' insurance* slatirtes. The probable salary after, as compared
with: th^f^araejt jt>e&)riL the occurrence of the injury, should be the
basW oh'#Kierh' any <i6mt)e]fi8ation is to be estimated. In the considera-
tion of French or any other legislation on accident insurance, these
general rules or observations should be kept in mind.
When the French statute was passed in 1898, its sponsors clearly
understood that it was based on the idea of give and take. As one
Senator defined it: ''The law is in the nature of a bargain; for, if it
obliges the head of an industrial undertaking to make good the loss in-
curred by the victim, without inquiry as to the ciEiuse of the accident,
on the other hand, it only makes the patron responsible for a part of
the damage suffered.''
Unfortunately this original basis of the law has been more and
more lost sight of, and the tendency is to construe and amend the act
as though intended to make the employers the ones to be held re-
sponsible for any damages resulting from accidents. Disregarding the
fact that the employees were to share the burden, too, both courts and
legislature are daily more inclined to interpret and to change the law
so as to aid the injured as much as possible in their efforts to obtain
compensation from their superiors. The statute has come to be re-
garded more as a species of class legislation and as a measure directed
against the employers in the interests of the workingmen. Hence the
feeling that the poor and unfortunate should be favored whenever pos-
sible in their attempts to recover from the well-to-do masters and that
the employees and physicians are acting quite legitimately and entirely
within their rights in endeavoring to turn the law into as great a
source of pecuniary profit to themselves as possible.
Other Grave Evils.
Besides becoming thereby a socialistic instrument of oppression,
this narrow construction of the law has entailed other grave evils. The
laborer no longer looks upon an injury solely as a great misfortune; his
principal thought now is how, by exaggeration or otherwise, to make
his hurts produce for him the largest monetary return. Forgetting the
place assigned to him of impartial arbiter between conflicting interests,
the physician has assumed the law to have been enacted for his pecu-
niary benefit, too, and feels justified in swelling his charges for treat-
ment to the maximum possible amount, basing his attentions more ac-
cording to the size of the employer's purse than to the victim's station
in life. Lastly, the reform of the law and the doing away with abuses
has become very difficult, because the radical socialistic majority in
the Chamber of Deputies is disinclined to adopt any amendment urged
8
by employers, fearing that it may in some measure interfere with or
curtail the rights or privileges of the workingmen. Indeed, the ten-
dency is all the other way — ^to let down the barriers still further and
to facilitate the mulcting and exploitation of the employing class.
Passing now to the interpretation of the law in French courts, com-
pensation in cases resulting in permanent partial disability is fre-
quently erroneously based on the bodily injury received. A workman
in a textile industry, we will say, meets with an accident entailing the
loss of the forefinger of his right hand. When the wound is healed,
the attending physician certifies that the victim is suffering from a
permanent injury which can never change or improve. On this state-
ment, the Court issues a decree naming the sum the workman is to re-
ceive. Now, while the loss of the finger was susceptible of reducing the
workman's earnings, he might yet in time have been able so to train
his other fingers that the output of his machine would be as g^reat as
before, and to earn the same salary as he originally obtained, in which
event, of course, he should cease to receive any payment on account
of his injury.
By being governed by the bodily state of the victim — ^by making
the law a sort of pretium doloris — and in overlooking the chance of the
injured party's regaining some of his accustomed skill through train-
ing other members to do the work of the missing part, the French
courts are putting a much heavier burden in the shape of compensation
for permanent injuries on French industrial heads than is the case in
other countries. In Germany, for example, the mutilation of the work-
man is disregarded. His loss in earning power is the sole criterion of
compensation — ^as his wages rise, the latter diminishes or ceases al-
together.
Rulings in Minor Accidents.
In the matter of minor accidents involving a disability of 10 per
cent or less, the rulings of the highest court is again placing the French
employers at a disadvantage, as compared with other competitors. In
Germany no compensation is granted in such cases — and some of the
lower French courts have followed the same policy up to a 5 per cent
limit. Within a few months, however, the court of the highest jurisdic-
tion has decided that the law directs the payment of an indemnity in
all cases where the disability inourred is susceptible of causing, under
normal conditions, a reduction in the victim's earning capacity, and
that it fixes no minimum below which an indemnity is not allowed.
The practice of refusing compensation in accidents of minimum im-
portance on the ground that the injury received is not susceptible of
causing any appreciable reduction in the injured party's earning power
is condemned and held to be erroneous.
This ruling of the Cour de Cassation appears very unfortunate for
many reasons. It construes the law from a narrow point of view and
leaves out of account the theory of reparation and the broader pur-
9
pose of the statute. Instead of holding that in cases of inappreciable
injury and of small fractional reduction in wages no indemnity is due,
the court preferred the view that every hurt, irrespective of size or
gravity, must be compensated for. Not the question of monetary loss,
but the occurrence of an injury is to entitle the workman to damages.
Now the fact is that in the vast majority of minor accident cases,
the workman cannot show any reduction in salary in consequence
thereof. Suppose him to earn fifty cents a day, and to lose 4 per
cent of his former efficiency — ^he will not be put in a class by himself
at 48 cents, but will continue to draw his full pay as before. To pay
the slightly injured laborer under these circumstances is to bestow an
undeserved gratuity on him and to encourage him to nurse and magnify
the smallest contusions which were unnoticed before. The law is
twisted from its original intention and becomes a source of profit to the
workman with an insignificant wound.
This regrettable interpretation is certainly bound to increase the
number of claims for petty accidents, which were excessive enough be-
fore. In 1906, almost 60 per cent of the accident cases settled in the
courts related to permanent disability of 10 per cent or less, which in
Germany would have been regarded as too unimportant to be worthy
of redress. While mulcting the employers, this insistence on compensa-
tion in minor accident cases has heretofore proven to be of little ulti-
mate benefit to the workmen themselves. Settlement is usually made
by paying the victim a lump sum, which he is only too apt to waste, in-
stead of applying his award to a good purpose.
Attention has already been called to the difficulty of securing any
legislation against abuses in the French accident insurance law. The
proposals of the employers are regarded with suspicion and only one of
the amendments recommended by them has been adopted by the ap-
propriate committee of the Chamber of Deputies. All the changes op-
posed by them have been almost uniformly adopted, and some will un-
doubtedly be finally enacted into law.
Crying Evils of French Law.
Unquestionably, the most crying evils in the French law are due to
the clause giving the injured workman the right to select his own
physician and pharmacist. Without going into the subject at length,
it is sufficient to say that, owing to an unholy alliance beween the
physicians and the laborers, the employers are exploited and fleeced
at every turn. False medical certificates, undue prolongation of and
unnecessarily expensive treatments, simulation of injuries, all these and
other dishonest practices are resorted to. So profitable has this sort
of practice become that many doctors in Paris actually pay the patients
who present themselves for treatment. The customary rate is five
francs for the first call and thereafter a daily stipend not to exceed two
francs until a cure is effected. In the end the employers have to make
good these improper outlays in one shape or another.
10
Physicians will at their own expense fit up clinics for the handling
of accident cases among trade-unionists, and rebate to the union with
which they are affiliated from 25 to 50 per cent of the fees collected.
Under the system of free choice, the workman suffers in that when
injured he seeks the practitioner who will pay him the largest retaining
fee instead of the one most skilled, who will cure him in the shortest
possible time. The employer loses through being swindled and over-
charged.
In the face of such patent abuses, common sense would indicate
that the most efficacious remedy would be to have only the employers
name the physicians in accident cases so that those who have to meet
the medical costs should have the means of controlling them. No
harm could come to the workingman for it is in the master's interest
too that any one injured be restored to health in as brief a period as
possible. But the French legislator is too timid to follow any such
course, or to restrict the laborer's liberty or freedom of choice in any
respect. Instead, a sort of half-way measure is finding favor and
stands the best chance of enactment, which calls for the appointment of
two physicians in all accident cases— one to represent each side. Ex-
perience alone would show how far this change would affect the pres-
ent abuses and whether it would reduce the item of medical costs ap-
preciably or not. Restricting the choice of physicians to the employers
would be a much more direct and efficacious way of controlling and
getting rid of the now existing evils.
How the law is losing its character of a partially reparative meas-
ure, where both masters and men are called upon to share the loss, is
illustrated again in the change already made and further proposed re-
garding the period which must elapse before the injured workman re-
ceives compensation. In the original act, this time was fixed at four
days, the idea being that, as a necessary check on simulation of acci-
dents, the laborer should stand the loss for this initial period. A new
distinction was made in 1905, however, when a clause was inserted pro-
viding that an indemnity was due from the first day on in cases where
the length of disability exceeded ten days.
Effect of New Indemnity Clause.
It does not require much calculation to foresee that this change was
bound to encourage simulation, and to result in a decided augmentation
of accidents purporting to have caused disability in excess of ten days.
If a slightly injured laborer resumed work on the fifth day he would
(allowing for a Sunday) have earned at the end of the eleventh day
six days' full pay. By claiming continued disability, however, he would,
under the law, be entitled to half pay for ekven days, or five and one-
half full days' pay, or practically the same amount he would gain by
working. Consequently, the workman is under every stimulus to ex-
aggerate the extent of his hurts, and not to resume work until eleven
days or more have expired. That the alteration in the law has had
11
this very effect is strikingly proved by the following table of the length
of disability in accidents settled by a certain group of French insur-
ance companies in the year just before and in the year directly after
the change in the law was made:
Number of Accidents.
Days
disabled. 1904.
5 1,753
6 2,448
7 2,697
8 2,965
9 3,132
10 3,095
11 3,037
12 2,909
13 2,866
14 2,814
15 2,802
16 to 20 9,051
21 to 30 8,349
31 to 40 3,586
41 to 50 1,771
51 to 60 977
61 to 70 676
Over 70 1,533
50,461
Difference.
1906.
Per cent.
2,196
+ 25
2,931
+ 20
2,063
23
2,439
18
2,479
21
3,570
+ 15
6,799
+123
6,625
+128
5,850
+104
4,216
+ 50
4,837
+ 73
14,151
+ 66
12,443
+ 49
5,471
+ 53
2,560
+ 45
1,399
+ 43
854
+ 26
2,019
+ 32
82,902
+ 47
15,678
3
19
18
67,224
-\- 96
Total No. of accidents not over ten days 16,090
Of total number accidents (p.c.) 32
Over 10 days 32,853
Although the total number of accidents increased 47 per cent in the
two years, those entailing disabilities of ten days or less actually showed
a decrease. Instead of forming almost one-third of all accidents, they
constitute less than one-fifth. The most striking feature in this table
is, of course, the abnormal increase in accidents causing a cessation of
work of from eleven to thirteen days.
Employers Desire Repeal.
As this amendment to the law has simply resulted in grave abuses
and encourages the workman to simulate the extent of his injuries and
to prolong his period of idleness, the employers have asked for its re-
peal. Far from their wish being granted, the committee of the Cham-
ber has just voted that the workmen's compensation shall run in all
12
cases, irrespective of the length of disability, from the first day. In-
stead of remedying a flag^rant abuse of the law, they would facilitate
its generalization. Even in the French Mutual Aid societies, where a
close inspectorship is maintained and self-interest impels the members to
keep tab on one another, it has been found necessary, in order to
guard against shamming, to refuse any sick or other benefits for the
first two days.
If no limit is imposed in accident cases, what way of preventing a
dishonest employee from feigning a petty accident in order to enjoy a
brief holiday on half pay? If all barriers are removed, the present
heavy charges imposed on the employers will be increased at least
25 per cent, even if the number of accidents remains the same as now
and without taking into account any possible increase through dishonest
practices on the part of the workmen. Losing sight of the f orfeitary
principle on which the law was enacted, the committee have frankly
stated that, in their opinion, the four days' provision gave the masters
an unfair advantage, which they desired to see done away with as in-
equitable. Again we find the erroneous conception that the law is in-
tended solely to ameliorate the condition of the laboring class and that
only the employers are to be called upon for sacrifices.
If the removal of the four-day limit will put a premium on fraudu-
lent practices and simulation, the same is true of another measure
favored by the committee, providing that in case the victim's injury be-
comes worse or aggravated, the payment of the indemnity allotted
when the wound was declared healed, shall be suspended. So long as
the new period of treatment lasts, the injured party is to draw again
instead his half-pay, and all medical and pharmaceutical expenses are
to be charged to the employer. The objection to this proposed amend-
ment is, of course, that it makes any permanent settlement difficult,
especially in cases of minor accidents. If the victim with a small
award becomes sick or is thrown out of work, how great then the temp-
tation to claim a relapse with the help of some dishonest physician and
to draw half -pay until employment is again to be had. In times of
trade depression the demands for a revision of indemnity would /be
especially numerous.
Where Heirs Profit by Death.
Where death occurs, the accident insurance law, as revised in 1905,
grants in certain cases indemnity to such of the victim's ascendantis
as can show that they were dependent on him for support. The com-
mittee has, however, just voted to do away with this requirement, in
which event the heirs of the victim would, in cases where they had not
previously received any of the earnings, actually profit by his death.
The basis of the present law — the idea of partial reparation for an
actual money loss suffered — is again entirely lost sight of. On what
theory except that it is a statute for the relief of the poor, should an
employer of a workman who has died from an accident, be compelled
13
to contribute to the support of his relatives, to whom the laborer while
alive never gave any part of his wages?
But there is no need of giving any further instances. In brief, it
may be said that all the evils against which an ideal law on the sub-
ject of accident insurance should guard, are to be found in France to-
day. Instead of being eradicated, abuses are being strengthened and
multiplied. The burden on French industry is steadily mounting, and
bids fair to be radically increased in the near future. At the same time
the demoralization of employees goes on apace. It is no wonder,
therefore that the leaders of industry look forward with grave ap-
prehension as to what the future has in store for them as regards the
compulsory insurance of their laborers against accidents.
The history and application of the French act as well as past and
prospective changes, all emphasize the necessity, in the interpretation
of accident insurance statutes, of keeping clearly in mind the under-
lying principles on which this form of legislation was originally based.
Once the idea of a just and equitable division of an unavoidable indus-
trial loss between masters and workmen is lost sight of, the inevitable
tendency arises to construe the law as a piece of class legislation di-
rected against the employers on whose shoulders the burden must be
placed wherever possible. If the mere fact of injury and not the
actual wage loss suffered be taken as the ground for compensation, the
workman obtains a false conception of the purpose of the law and
seeks, by resorting to simulation and exagg:eration of injuries, to de-
rive a profit from it. The ratification of abuses becomes increasingly
difficult because the laborer resists any projected legislation which
would take away any previously secured advantages, even if improperly
obtained. Lastly, where a wrongful interpretation prevails, the danger
is constantly present that the law will be turned more and more into a
sort of poor relief measure at the employer's expense with the conse-
quent disappearance of the idea of an equitable contribution by the
worldngmen.
INSURANCE UNDER THE FRENCH ACCIDENT COMPENSATION
LAW.*
Self, State, Co-operative and Corporate Insurance. — Employer's Op-
tions. — State Insurance Not in Favor. — Showing: of Private
Companies. — State Monopoly Idea.
With the passage in 1898 of the law making the insurance of work-
men against the risks of their employment compulsory, employers'
liability insurance in France first began to develop on an important
scale. The statute leaves entire liberty of action to the employer. He
can either be his own insurer or have himself insured directly by the
State, or by one of the various private organizations authorized by the
Government to underwrite employer's risks. A large number of em-
ployers, with nearly one-third of all the workmen affected by the law
in their pay, have preferred not to take out any outside insurance, but
to meet their own accident losses as they occur. As five out of every
thousand employers, it is estimated, will fail to meet their workmen's
liability insurance, the Government compels all employers to contribute
to a si>ecial g^uarantee fund to make good losses incurred involving
death or permanent disability to employees. If the trade is one requir-
ing a license, this contribution was originally fixed at 4 per cent of
the license tax; if not, the contribution became 2 per cent of the total
premium paid for insurance. If the employer was uninsured, he had
to pay in 4 per cent of the face value of all accident losses incurred by
him, as they arose.
With the exception of 1903, the guarantee fund has yielded each year
a surplus, the total of which reached 12,241,892 fr. at the end of 1911.
In view of this comparatively large surplus, the annual contributions
are to be determined hereafter on a sliding scale based on the losses
which the fund was called upon to make good during the year im-
mediately previous, but in no case are they to exceed the figures orig-
inally fixed. For the years 1906-11, the only years for which full
statistics are available, the operation of this guarantee fund shows the
following results:
Receipts 15,692,465.34
Expenses and losses 8,171,704.05
Losses 5,712,654.65
Account insured employers 2,151,801.87
Account uninsured employers 3,560,852.78
Recovered from employers 2,201,511.71
Recovered from insured employers 1,970,166.37
Recovered from uninsured employers 231,345.67
Net losses account insured employers 181,645.50
Net losses account uninsured employers 3,329,507.11
^Reprinted, with additions and changes, from New York Evening
Post of April 5, 1913, by permission.
15
What the Fifirures Rereal.
These figures are instructive in that they show that the losses,
which the fund is called upon to meet, are much larger-r-in the propor-
tion of seven to four almost — ^for uninsured than for insured employers.
Furthermore, nine-tenths of the losses assumed for the insured were
afterward recovered against only 6% per cent for the uninsured, show-
ing that the chances are very slight of recovering any sums paid out
for the latter. The net losses in the six years on account of uninsured
employers were eighteen times as great as those on account of those in-
sured. From the standpoint of affording security for the payment of
indemnities to victims of trade accidents, individual insurance by em-
ployers in France is therefore not nearly so reliable as that offered by
the cooperative societies or stock companies.
Next in order may be mentioned Government insurance against ac-
cidents as conducted by what is termed the Gaisse Nationale d' Assur-
ance en Gas d'Accidents. When the law of 1898 was enacted, the
authorities feared that, if left without any official competition, the
private companies engaged in employer's liability insurance would
form a combination among themselves and charge excessive rates.
They also believed that the companies might decline certain bad risks,
which would compel the employers in such cases to be their own in-
surers unless the State furnished them with a haven of refuge. Both
of these fears have proved to be absolutely groundless. As insur-
ance by the State was intended only to act as a curb on and as a sup-
plement to the operations of the private companies, the Gaisse onljy
insures employers against the more dangerous forms of risks involving
death or permanent disability. No profit was intended, and the aim
has been to have the premiums just sufficient to coves expenses and
losses.
State Insurance Not in Favor.
It will be seen at a glance that, unless some especial inducements
were offered. State insurance, covering only a limited number of acci-
dents, would not be apt to find much favor with employers, as com-
pared with that of an insurance company protecting against every kinc'
of disability. These inducements not being forthcoming, Government
insurance against accidents has always been a negligible factor in
France, as the following figures will show:
Wages insured, francs.
Private
Year. State. organization.
1901 10,561,858 2,828,498,832
1902 15,558,196 2,949,882,941
1903 17,071,954 3,056,854,767
1904 21,869,159 3,149,993,700
16
1905 26,568,928 3,329,454,708
1906 28,775,412 3,614,972,820
1907 40,169,428 4,189,346,269
1908 60,362,853 4,579,458,819
1909 74,143,699 4,856,040,803
1910 77,494,953 5,225,136,958
1911 80,840,511 5,664,146,910
Totals 453,416,946 43,403,787,522
In some respects, the French Government has a decided advantage
over individual competitors. It confines itself to death and permanent
disability cases, the cream of employers' liability insurance in France,
where the percentage of such accidents per 1,000 workmen has remained
stationary, and where the flagrant abuses which have developed in ac-
cidents involving only temporary disability are much less in evidence.
The Government has no commissions or agency force to pay, and is
under no expense for rent, as it makes use of already existing public
buildings. Consequently, in its insurance department, the expenses for
the last ten years have averaged only 8 per cent of premium receipts,
as against 26 per cent for the private companies. Yet in spite of
these advantages, the Government^ has not made as good a showing as
the latter.
With slightly higher premium rates, the Caisse d' Accidents shows
a steadily growing deficit, which amounted to over 677,000 francs at
the end of 1910, or a loss of 1,763 francs for every million of wages
insured, as against a loss of 666 francs recorded by the private com-
panies and societies. The Caisse should have raised its premium rates
8 per cent to have come out even, while the companies only needed to
increase their premiums 3^ per cent in order to have attained the
same result. Most unfavorable is the Government's showing in the
item of legal expense. This has averaged 9.4 per cent of all losses in-
curred, as against less than 4 per cent for the private companies. Evi-
dently, the latter have nothing to fear from the competition of the
State with its staff of routine officials, lacking all initiative and adapt-
ability.
Classification of Corporations.
The Government authorities classify the various corporations and
associations insuring against accidents to workingmen, into four
groups — French stock companies, foreign stock corporations, mutual
insurance associations or societies, and guarantee or trade syndicates.
These last are simply a special kind of mutual societies. In order to
obtain the necessary license to do business, a stock company or mutual
society must make a preliminary deposit of 400,000 francs with the
Government. Thereafter the deposit must equal 2 per cent of tlue
wages insured in the year preceding, with 400,000 francs as a minimum
and 2,000,000 francs as a maximum amount. If the company only in-
17
sures one kind of risks, or a similar group of trades, or binds itself^
where accidents occur, to purchase all annuities or pensions for the
benefit of the injured through the Government Caisse Nationale for
Old Age Pensions, the required deposit is reduced one-half. If the
company agrees to both, its deposit is reduced to one-quarter. At the
end of 1900, licenses to do business had been issued to 21 foreign and
domestic stock companies and to 17 mutual societies and g^uarantee
syndicates. On December 31, 1911, the figures were 23 and 40 re-
spectively, the number of stock companies remaining almost stationary,
while the mutual societies and syndicates more than doubled. In spite
of this marked increase, the two latter combined only secured 30 per
cent of the total business transacted in 1911, as compared with 24 per
cent in 1901.
The following table shows the operations of all the companies for
the years 1901-1911:
Year. Premiums. Losses. Expenses. Total.
1901 52,451,438 43,525,140 13,440,973 56,966,113
1902 54,048,626 49,670,079 14,494,312 64,164,391
1903 59,874,899 46,313,476 15,808,442 62,121,918
1904 63,871,456 46,684,493 16,093,760 62,778,353
1905 73,045,711 57,356,945 16,866,356 74,223,302
1906 81,785,576 67,098,085 18,771,411 85,869,496
1907 98,386,328 85,669,427 21,678,490 107,347,917
1908 105,068,828 87,759,083 24,414,239 112,173,322
1909 112,564,406 91,179,757 26,205,945 117^85,702
1910 122,154,812 100,003,766 28,195,168 128,198,934
1911 134,045,529 114,419,789 31,184,863 145,604,652
Sundry profits.
Interest, losses Prem'm
Loss. recovered, etc. Net loss. rate.
1901 4,514,675 307,936 4,206,739 1.854
1902 10,115,765 555,988 9,559,777 1.832
1903 2,247,019 1,504,892 742,127 1.958
1904 +1,093,103 2,583,245 +3,676,348 2.027
1905 1,177,591 2,733,528 +1,555,938 2.193
1906 4,084,020 2,686,111 1,397,809 2.262
1907 9,951,589 2,914,877 6,036,712 2.352
1908 7,104,495 4,162,983 2,941,512 2.294
1909 4,821,296 4,739,904 81,392 2.318
1910 6,034,122 5,810,976 233,146 2.337
1911 11,559,123 6,851,015 4,708,108 2.375
Total 29,897,322
With the exceptions of 1904 and 1905, every year shows a loss for
those engaged in this form of insurance. For the eleven years, the total
amounts to over twenty-nine millions francs. The heaviest losses oc-
curred in the years 1902 and 1907. The rise of 25 per cen(t
18
stock
Syndi-
COS.
cates.
2.09
2.94
1.67
2.66
80%
90%
26%
21.6%
Stock
Syndi-
COS.
cates.
2.28
2.69
1.89
2.19
83%
81%
25.5%
20.6%
in the average premium rate during the period covered should
also be noted. In 1911, the various organizations have again met with
severe losses.
Contrasting the operations of the various groups for the entire ten
years, 1901-1910, the following figures are of interest:
Mutual
cos.
Average premium 2.25
Losses to wages insured 1.92
Losses to premiums 85%
Expenses to premiimis 17.8%
For 1911 alone, the showing is as follows:
Mutual
COS.
Average premium 2.58
Losses to wages insured 2.41
Losses to premiums 93%
Expenses to premiums 17.8%
Private Companies Show Best.
It is evident from the foregoing tabulated statement that the private
stock companies make the best relative showing. Their ratio of ex-
pense is, of course, higher as it includes commissions to agents, which
their competitors are spared. But their premium rates are the lowest,
as is also their percentage of losses incurred. The guaranty syndicates
have fared the worst of all as regards losses, and their premium
charges are by far the highest. During the ten years under review,
six stock, two mutual societies, and two syndicates, or ten units in, all,
have either failed or ceased to write employers' liability risks. As
this branch of insurance has yielded no profits, it is not surprising
to find that the number of stock companies engaged therein has re-
mained almost stationary, rising to only twenty-three, as against
twenty-one in 1901. Although the total amount of wages insured by
these companies is 70 per cent larger, almost the entire increase has
gone to twelve of the bigger companies. Two concerns show a dis-
tinct loss, and the gains of the other nine are relatively unimportant.
As to the mutual societies, they record a gain from fifteen to
twenty-three in number and have more than doubled the amount of
business transacted by them. But the major part of this gain has
been absorbed by six of the larger societies. Mutual societies to carry
on an insurance business can be formed in France under general laws,
and the consent of the Government authorities is not required thereto.
They must, however, just as in the case of the stock companies, make
a deposit with the Government before beginning business, and are
19
obliged to collect reserves. They can issue policies either with fixed or
with unlimited premiumSy in which latter event the premium rate is
ultimately fixed by the amount of loss incurred. Members cannot be
bound for a longer period than five years, at the end of which time
they have the right to step out if they desire. As carried on in France,
the mutual societies frequently confine their operations to those en-
gaged in one certain industry or located in a given industrial area.
The Guarantee Syndicates.
In permitting the establishment of guarantee syndicates, the author-
ities desired to make it easy for the smaller trades-people and em-
ployers of minor importance to secure cooperative insurance against
workingmen's accidents, just as the mutual societies provide it for
the larger industrial plants. Thus, for example, one syndicate had
among its adherents builders, contractors, barbers, coffee-house keepers,
silk weavers, and grocers.
The syndicates must have their regulations and governing statutes
approved by the Government before they can commence business. On
the other hand, they are relieved from keeping any sum on deposit, as
in the case of the other organizations. This exemption should reduce
their expense account, as no interest charge on capital has to be met.
Two kinds of syndicates are allowed. One insuring 6,000 laborers or
over, working for ten separate employers, as a minimum, five of which
at least must have no less than 300 laborers. In the second class, peit-
mitted only since 1906, the minimum number of workmen is fixed at
2,000, that of the employers at 300, 30 of which must employ at least
three workmen each.
The grave objection to these syndicates is the fact that, unlike the
mutual societies, every member is individually responsible for any
losses incurred, and that there are no fixed or limited premiums. If
the provisional premium in any given year proves too low, an addi-
tional percentage can be levied up to any amount. In one case, the
supplementary premium was for 1907 95 per cent of the original amount
levied, and for 1908 66 per cent. Furthermore, members cannot with-
draw at will, but are bound for long periods. Unless, therefore, tl^
syndicates are well and economically managed, this form of employers'
liability insurance may prove exceedingly costly to those participating
therein.
Record Not Inspiring.
Unfortunately, the record of these syndicates has not been such as
to inspire confidence. As has already been stated, their average prem-
ium rate since 1900 has been 2.94, as against 2.25 and 2.09 for ithe
mutual societies and stock companies respectively, while their percent-
age of losses sustained is the highest of all in the three categories.
The latest reports of the Minister of Labor respecting their operations
20
are full of complaints regarding their loose bookkeeping and conceal-
ment of their real condition. One syndicate reported a loss of 358,603
francs in fours years. Actually, the true loss proved to be 3,450,580
francs, or almost ten times as great as at first stated. Doubtful
amounts, like overdue premiums from members, are put down as though
a cash asset, and losses are underestimated. Those of the syndicates for
1909 were understated 1,332,423 francs, against an overestimation of
1,052,507 and of 4,223,545 francs for the losses sustained by the mutual
societies and stock companies respectively. Several of the syndicates,
too, are behindhand in making final settlements, exceeding the period
of grace allowed them by law.
In spite of their relatively poor showing and high rates; the num-
ber of guarantee syndicates has of late years shown a remarkable
growth. Starting with a total of three in 1906, there were seventeen
transacting business on January 1, 1911. This anomaly is explained by
the fact that unscrupulous promoters find a good field for the ex-
ercise of their talents in the formation of these syndicates. No capital
is required to start them, all that is necessary is to drum up a suf-
ficient number of adherents. By misrepresentations as to the cost of
insurance, this is a comparatively easy matter. With the statutes or
by-laws so drawn that the governing board names its own successors,
without the members having any voice therein, the promoters are en-
abled to keep the management in their own hands. As the Minister of
Labor in one of his reports wamingly said: ''It is hard to conceive,
besides, of the imprudence of heads of industrial establishments, who
affiliate themselves with such guarantee syndicates without observing
that, under the guise of purely mutual insurance, they in reality only
constitute a lucrative form of insurance exploitation on the part of the
promoters for their own personal profit."
How true this statement is appears evident from the following
figures taken from the account of certain guarantee syndicates for
1909:
Total
Per Cent.
Premiums.
Elxpenses.
of Premiums.
228,286.80
114,133.30
40
223,136.15
94,120.19
42
81,933.85
40,452.20
49
34,832.28
34,723.25
100
The smaller the amount of business transacted, the higher the ex-
pense ratio is apt to be.
A Declining Tendency.
Despite their large increase in number, the total business transacted
by the guarantee syndicates shows a declining tendency. The highest
fig^ure was reached in 1907, when the sum total of wages underwritten
was 831 millions of francs. For 1911 the figure was only 294 millions.
21
Premiums dropped from 10^ to 8 millions. Three only of the syndi-
cates do business on a large scale, and one of these went into volun-
tary liquidation at the end of 1910 on account of excessive losses. In
1908 these three obtained four-fifths of the total business, the other
fifth being divided among twelve syndicates, with an average premium
income of only 140,000 francs. And with one of the large syndicates
finding it more advantageous to go out of business, with the minor ones
operating under an excessive expense ratio and not in fulfilment of any
public want, frequently, but more for the purpose of affording salaries
to their managers, the chances are all against the guarantee syndicates
obtaining much in the way of new business hereafter.
While the utmost freedom of choice has heretofore prevailed in the
field of employers' liability insurance in France, it should be stated in
conclusion that there is a more or less determined effort being made
to make the insurance business in all its branches a state monopoly.
If such a movement should succeed, accident insurance, where the
state is already a competitor, will in all probability be one of the first
branches to be taken over. That the state in such an event would
give better or cheaper service than any of the existing organizations is
not at all likely, if one may judge by the operations to date of th(e
Caisse d'Accidents. But everything takes time in France, and appar-
ently a considerable period will elapse before such a step is undertaken.
PRINCIPAL ABUSES UNDER FRENCH ACCIDENT C0MPBN8A
TION LAW.*
Increased Cocit.— litigation Over and Pensions for Trifling Injuries.-^
Medical Abuses.
Since its first introduction in 1898, the scope and extent of the
French Accident Insurance law has been greatly widened and increased.
While the sum total of wages insured under the act has thus been
greatly augmented, complaint is heard on all sides, from employers, of
the disproportionate gain relatively in the number and cost of acci-
dents incurred, for which indemnity must be paid and which is en-
tailing each year a constantly mounting burden on the French indus-
trial world. That this complaint is well founded will appear from the
following figures:
Acci-
Total wages Total losses dents per
insured. incurred No. of 1,000
Year. Francs. Francs. accidents. men.
1901 2,828,498,832 43,525,140 229,162 68.4
1902 2,949,882,941 49,670,079 223,286 60.6
1903 3,056,854,767 46,313,476 212,753 54.9
1904 3,149,993,700 46,684,593 222,124 52.8
1905 3,329,454,703 57,356,945 259,828 61.8
1906 3,614,972,820 67,098,085 306,860 70.7
1907 4,189,346,269 85,669,427 359,747 80.1
1908 4,579,458,819 87,759,083 354,027 77.9
1909 4,858,040,803 91,179,757 383,249 82.9
1910 5,225,136,958 100,003,766 412,278 87.2
1911 5,644,146,910 114,419,789
Thus, while from 1901 to 1910, the number of workmen insuredf rose
from 3,614,000 to 4,728,000, or a gain of 31 per cent, and the total
wages insured increased 85 per cent, the total number of accidents
causing losses increased 80 per cent, and the amount of losses sus-
tained more than doubled, or gained 130 per cent. On the other hand,
the number of accidents per 1,000 workmen insured increased in the
same period 37 per cent, and the losses incurred per 1,000 workmen 75
per cent, or practically three-fourths.
^Reprinted with additions and changes from New York Evening
Post of April 12, 1913, by permission.
tNumber of workmen insured —
1901—5,614,000
1906—4,340,000
1907—4,440,000
1908—4,544,000
1909—4,624,000
1910—4,728,000
23
Nature of Aceidents.
The following tables throw some interesting light on the nature of
the accidents incurred:
Permanent Temporary Unclassi-
Year. Total No. Deaths, disability. disability. fied.
1905 259,882 1,470 4,589 250,649 3,174
1906 306,860 1,499 4,655 296,339 4,367
1907 359,747 1,762 5,191 347,911 4,883
1908 354,027 1,609 5,018 342,017 5,383
1909 383,249 1,660 5,121 371,198 5,270
1910 412,278 1,650 5,452 899,769 6,407
(Accidents per 1,000 workmen.)
1901-8 62. .3 1.1 59.5 1.1
1905 61.3 .35 1.1 69.1 .75
1906 70.70 .35 1.07 68.38 1.
1907 80.10 .39 1.15 77.46 1.1
1908 77.9 .35 1.16 75.2 1.2
1909 82.9 .35 1.1 80.32 1.12
1910 87.2 .35 1.15 84.66 1.14
It is to be noticed that deaths and permanent disability cases show
practically no change in percentage throughout. The temporary dis-
ability or minor accident cases are therefore alone responsible for the
almost uniform rise in the number of accidents per thousand workmen.
The following statement of how the cases decided by the courts
since the inception of the law have been distributed, is likewise very
illustrative:
Perma-
No. of nent dis- Partial dis-
Year. cases. Deaths. P. C. ability. P. C. ability. P. C.
1899 899 534 59.4 13 1.4 352 39.2
1900 6,543 1,562 23.9 139 2.1 4,842 74.
1901 10,627 1,729 16.3 227 2.1 8,671 81.6
1902 12,241 1,613 13.2 198 1.6 10,430 85.2
1903 13,853 1,524 11. 179 1.3 12,150 87.7
1904 15,303 1,560 10.2 197 1.3 13,546 88.5
1905 19,802 2,138 10.8 171 .9 17,493 88.3
1906 24,547 3,144 12.8 149 .6 21,254 86.5
1907 26,138 2,413 9.2 141 .5 23,584 90.2
1908 29,632 2,491 8.4 156 .5 26,985 91.1
1909 28,300 2,395 8.4 137 .4 25,768 91.
1910 30,266 2,450 8. 128 .4 27,688 91.4
1911 33,088 2,613 7.9 139 .42 30,336 91.7
1912 37,433 2,828 7.5 144 .4 34,461 92.1
It is again to be noticed that the percentage of cases involving only
partial disability shows an almost uninterrupted increase, rising in ten
24
years from 74 per cent to over 92 per cent, while the proportioK o#
deaths and permanent disability cases shows an almost uniform decline.
Infrequent Appeals to Courts.
At this juncture it should be stated that employers in France have,
as a rule, not raised any unnecessary difficulties regarding the en-
forcement of the Accident Insurance law. It has been accepted in a
loyal spirit and appeals to the courts are infrequent. Since the law
went into effect, out of a total of 2,963,368 accidents reported up to
the end of 1910, all but 218,151 were settled for without having to call
in the help of the courts. Thirteen out of every fourteen accident
cases are thus privately settled without any litigation being started.
Nor are the appeals to the courts becoming more frequent relatively
than before in spite of the much larger number of accidents for which
claims are made. The general feeling on the part of employers seems
to be that the law has come to stay, and that it would work satisfac-
torily provided its provisions are not made more onerous and provided
the statute could be amended so as to do away with certain faulty pro-
visions which have allowed some serious and grave abuses to rise.
Concerning first the abuses against which the employers are pro-
testing, we find much complaint over the attitudes of the courts in
granting small life pensions of 10, 20, and 30 francs for slight injuries.
This tendency to grant relief for minor accidents is well illustrated in
the following table of cases judicially settled where the accidents re-
sulted in permanent partial disability. The percentage of disability has
been estimated as follows:
5-10 10-20 20-30 30-40 40-50 Over 50 Vari-
Year. 5P.C. P. C. P.C. P. C. P. C. P. C. P.C. ous.
1899 5.6 14.6 23.8 13.2 13.8 9.3 14.9 4.8
1900 10.5 17.8 25.5 11.7 11.2 7.8 12.9 2.6
1901 15.4 21.2 23.4 11.2 10.4 6.9 11. .5
1902 18.58 23.26 23.62 10.26 9.71 5.63 8.91 .3
1903 22.7 26.3 21.5 10. 7.6 4.6 7.3
1904 24.5 26.7 21.9 8.9 7. 3.8 7.2
1905 27.5 25.8 21.1 8.8 6.5 3.7 6.6
1906 32.1 27.1 18.3 8.2 5.6 3.3 5.4
From 1899 to 1906, of all accident cases decided the number in-
volving less than 10 per cent disability increased from 20 per cent to
60 per cent, or a percentage increase of threefold, while the percentage
of accidents involving more than 10 per cent disability, dropped from
80 to 40 per cent. Statistics for later years have not yet been published.
Right to Choose Physician.
We now come to the most important provision objected to by the
employers and the one most prolific in abuses, namely, the section
25
giving the workman, in case of accident, the right to choose his own
physician and pharmacist. It is miquestioned that there has been a
regular and altogether disproportionate increase in the cost of medical
attendance and pharmaceutical expenses each year. The following
tables show this:
Amt* in Amt* in
Year. francs. Year. francs.
1901 5,416,893 1907 12,587,214
1902 6,464,425 1908 14,513,038
1908 6,640,419 1909 15,586,235
1904 6,947,212 1910 16,942^)49
1906 8,411,276 1911 20^7 fiSS
1906 10,538,987
This represents the following percentage of the total amomit ex-
pended for accident losses:
Medical expenses Medical expenses
Per cent.of total Per cent* of total
Year. losses incurred. Year. losses incurred.
1901 12445 1907 147
1902 13617 1908 1652
1903 14337 1909 1709
1904 14881 1910 172
1905 14667 1911 178
1906 157
For every 100 francs of wages insured, the cost of medical expenses
figures out as follows:
Year. Franc. Year. Franc.
1901 19151 1907 30046
1902 21914 1908 31692
1903 21723 1909 32096
1904 22054 1910 .32921
1905 25263 1911 36067
1906 29139
The average cost of medical attendance in accidents involving tem-
porary disability has been as follows:
Year. Francs. Year. Francs.
1901 12.95 1907 17.25
1902 14. 1908 18.30
1908 14.50 1909 19.55
1904 14.80 1910 20.44
1905 15.20 1911 21.58
1906 15.90
Thus in ten years, the average rate has increased from 12.95 to 21.58
francs, or two-thirds.
26
What are now the causes for this steady augmentation in the cost of
medical attendance for injured workmen? The employers unanimously
ascribe it to collusion between their working force and dishonest or
conscienceless physicians and apothecaries. As a proof of this, they
cite the fact that when the naming of the physician is left to them,
the cost of treating petty accidents averages only 15 francs, while in
the case of physicians selected by the injured persons themselves, the
average cost will run from 50 to 60 francs.
In the French law, a very important rdle is assigned to the physi-
cian. If an accident occurs, he has to furnish an initial certificate
setting forth the victim's injuries and the estimated duration of dis-
ability. Later on, when the injuries are healed or their permanent ef-
fects known, he is called upon to make out a second or final certifi-
cate, which is of controlling importance in determining the amount of
compensation to be paid to the injured party. The physician's duty
is therefore not only to heal, but to perform a social duty as well —
namely, to reconcile the conflicting interests of employers and em-
ployees, to balance the scales evenly between the two parties and to see
that neither side obtains an undue advantage over the other. It is
easy to see therefore that the successful and proper administration of
the law depends more or less upon the manner in which the prac-
titioners perform the functions assigned to them.
Surprising as it may seem, the French doctors appear from the very
start to have lost sight of the fact that the primary object of the new
statute was humanitarian — ^to see that unfortunate workmen, who had
been injured in the course of their employment, should be in some de-
gree compensated and provided for instead of being largely left in
misery and want as heretofore. The physicians have regarded the law
as a means of procuring a new and profitable source of income for
themselves for services which they had formerly been glad to render to
a great extent gratuitously.
Clinics and Dispensaries.
When the law first went into effect, clinics, and dispensaries for the
treatment of injured workmen were at once established by some of the
large insurance companies and by the heads of many of the more
important industrial establishments. It was rightly foreseen that vic-
tims of trade accidents could be treated more advantageously and more
economically in a large institution under the charge of specialists than
if left to the care of a great number of physicians having little or no
experience in the treatment of accident cases. Employers used all
means to direct their injured hands to these clinics, and, if they would
not go voluntarily, pressure, such as a threat of refusal of further em-
ployment, was undoubtedly exerted in some cases to force their com-
pliance, until forbidden and done away with by a change in the penal
law in 1905.
Side by side with these clinics of employers and insurers arose
27
others established by private physicians in the large cities and indus-
trial centres for the exclusive treatment of workmen's accident cases.
Usually these were started by young and unscrupulous doctors with
little standing or practice and indifferent to the established rules of
medical ethics. As the Accident Insurance law made the employers re-
sponsible for all medical costs and fees, these practitioners foresaw
that, once assured of a clientage, their path to fortune was secure. Ac-
cordingly, while self-advertising is deemed highly unprofessional in
the best French medical circles, the owners of these private clinics have
not hesitated to use the most flamboyant and often dishonest methods
to attract to their establishments workmen who have been injured in
the course of their employment. Drummers and agents are posted and
employed near important workshops, whose duty it is to steer injured
workmen to and to extol the merits of these clinics. The clinics them-
selves are painted in gaudy colors, flaring advertisements are posted
in conspicuous places, circulars are sent out and handbills distributed
among the working classes. Dressing of wounds, massage, electrical,
radium, and mechano-therapeutical treatments are offered. Attention
is also called to the fact that attached to the clinic is a legal bureau
which will procure the maximum indemnity allowed by law and attend
to all formalities prescribed for the procuring of the same. Certain of
the clinics have even gone a step further and now bestow a five-franc
piece on an injured employee when he first presents himself and allow
him a daily stipend ranging from one-half to two francs a day so long
as he is under treatment. With such inducements held out to them, it
is not surprising that the workmen, when injured, flock to these private
accident clinics. In Paris, more than half of all accident cases are
treated in them.
Profits of the Clinics.
Knowing of the heavy expenses these clinics are put to for adver-
tising, employment of runners and often for allowances to the patients
themselves, and of the moderate charges prescribed by law in accident
cases, an ordinary outsider might suppose that these establishments
would not prove very profitable. On the contrary, they pay extremely
well and are increasing in number from year to year. A recently pub-
lished list shows 31 in Paris alone. Many yield an annual income of
over 50,000 francs, a very large sum for a French doctor to earn. One
physician made more than 500,000 francs in a few years, and has re-
tired from practice. How, one asks, is this possible? The answer is
very simple — ^through an elaborate system of dishonest and swindling
practices by which the employers and insurance companies are mulcted
in every possible way.
To begin with, these clinics have as their main object not the quick
and speedy healing of injured patients, but rather the running up and
manufacturing of the maximum possible charges and claims against the
employers. To this end every possible device and loophole in the law*
28
i8 taken advantage of. Workmen are encouraged to exaggerate and
taught how to simulate injuries. If necessary, false medical certifi-
cates are furnished. The treatment is prolonged and spun out for as
long a time as possible. As the fees are low which can be charged
under the law, unnecessary and uncalled-for dressings, massage, elec-
trical aiid radium treatments are resorted to. These are charged for at
doctors' rates, although frequently given by nurses and attendants. A
simple visit will be magnified into a consultation.
In league with these clinics and no doubt dividing profits with them
on some agreed basis are certain pharmacists and apothecaries. The
most expensive medicines are prescribed, when those of a cheaper
quality would serve just as well, and in excessive quantity. Fresh sup-
plies and medicines are ordered in long before the old are used up or
exhausted. And lastly, when the workman is discharged as cured, the
clinic has its own legal bureau run by skilled advocates to look after
the collection of its inflated bill and charges and the half -salary due
the victim of the accident as well. No wonder therefore that employ-
ers find themselves called upon to pay three or four times the ordinary
rate for cases treated in these private clinics and that frequently the
amount of the doctor's charges exceeds the indemnity coming to the
injured party.
In recent years, a third class of clinics has been established by cer-
tain trades unions or labor exchanges, as they are called in France.
These treat not only members, but their wives and children as well at
reduced rates. In case of accidents, members are expected and ordered
to go to these union clinics for treatment.
Bad Results Apparent.
The bad results of the provision in the French Accident Insurance
law granting to the injured workman the right to select his own physi-
cian are thus apparent. The individual practitioner does not benefit,
for he finds no accident cases coming to him for treatment. The stand-
ard of medical ethics has been lowered — in one Medical Congress a res-
olution was even proposed approving of a doctor's paying a stipend to
the workman who presented himself for treatment. The workmen are
demoralized, for they have been taught not to regard an injury or dis-
ability as a misfortune, but as a means of making something out of
their employers. Hence their readiness to travel even a distance of
fifty miles from their places of injury to the clinic that holds out the
most inducements. The employers and insurance companies are fleeced
at every possible turn, and a heavy burden imposed on French industry
in the shape of increased premium rates.
By what is known as the tariff Dubief, the French law prescribes
carefully what rates can be charged for different kinds of medicines
and treatment by pharmacists and physicians engaged directly by in-
jured workmen. No fault is found with these rates; in fact, the tariff
for medicines was increased on the average some 25 per cent on July
29
1, but a strong protest is made against the number of visits, consulta-
tions, dressings, massage, and electrical treatments, etc., and against
the excessive quantity of medicines and drugs supplied. A case in
point arose at Uz6s, where a physician gave the injured party 89 mas-
sages and 12 electrical treatments, and at the same time put in a bill
for 101 special examinations where apparently three or four would
have been sufficient. A favorite device is to charge varying and sep-
arate rates for massage of different parts of the body, although treated
at one and the same time.
In the matter of medicines and surgical supplies, physicians do not
hesitate to order the most expensive articles, and in entirely unneces-
sary quantities. An expensive medicine will be prescribed instead of an
equally efficacious low-priced laxative like castor-oil. Fresh drugs
are ordered in, although the quantity on hand is by no means exhausted.
In one flagrant case, when a laborer was incapacitated for twenty days
with an injury to his shoulder, his attending physician prescribed 5
pounds of liniment, 13 litres of wine, and 400 feet of flannel. One
apothecary even presented a bill for 1,148 francs for remedies furn-
ished a workman who had merely scratched his finger.
Patients have even been detected in reselling flannel and other
articles which had been supplied to them in excessive quantities. Fre-
quently an employee finds a physician dishonest or complaisant enough
to issue to him a certificate of disability when he is either not at all
incapacitated or finds himself perfectly able to work for some other
employer. The furnishing of these false medical certificates is unfor-
tunately by no means uncommon. In one extreme case, twenty-eight
certificates out of thirty-one were found to have been improperly
issued. i :.t^'
« ' : •■
Apothecaries Follow Example.
r , . . . J J -55
With the example of the physicians before them, the chemists and
apothecaries have not been slow to charge what the traffic will bear
and to swell their costs as much as possible. As in the case of physi-
cians' rates, the law carefully prescribes what an apothecary's charges
must be. The statute is circumvented, however, by furnishing supplies
and medicines in greater quantity than called for, or articles that are
entirely unnecessary. In one particularly striking instance, an apothe-
cary treated a workman for an insignificant injury to the fourth finger
of the left hand. To cure this light hurt, the pharmacist presented a
bill for 1,148 francs — ^finaly reduced by the court to 364 francs —
charging for dozens of bandages, whole packages of cotton wool, square
metres of oil-silk, litres of oxygenized water, and for 154 francs worth
of quinquina or tonic wine.
To such an extent do certain physicians and apothecaries swell their
charges, that frequently they receive more for their services than the
sum paid as compensation to the victim of an injury. Below are cited
a few instances:
30
Physi- Physi-
Amt.paid clan's Amt. paid clan's
No. of days workman, charge. No. of days workman, charge.
disabled. Francs. Francs. disabled. Francs. Francs.
43 85 124 54 135 165
31 93 120 48 144 208
34 93 130 70 162 183
Except in cases where a large amount is involved, employers have
learned by experience, that it does not pay them to contest a physician's
bill, even though it be full of over-charges. To obtain a revision of a
doctor's account requires the starting of not inexpensive court proceed-
ings, and means the calling in of outside experts. The fees of these
and all court costs must be paid by the employer, whether he wins or
loses, and frequently these equal, or even exceed, the amount of the re-
duction obtained. Thus, in one case, the judge cut a physician's bill
from 1,027 to 420 francs, but legal costs borne by the employer were
500 francs, so that the net amount saved was only 107 francs. Th^e
masters find it less expensive, therefore, to submit to over-charging in
minor accident cases, than to make a contest.
While the courts have ruled from the start that the workman had
the right of selecting his own physician, the law as originally passed in
1898 read somewhat obscurely on this point. Consequently a number
of the large industrial establishments insisted, under threats of dis-
missal or otherwise, that their employees when injured should be
treated by physicians appointed by the managers. The medical pro-
fession was, of course, violently opposed to this practice, and finally
succeeded in 1905 in having this sort of pressure expressly forbidden.
At the same time, the accident insurance law was amended aM the
laborer's right to select his own physician and pharmacist stated in
clear and unequivocal language. This curtailment of the power of
employers to control the appointment of the physician was immediately
followed by a remarkable and wholly unlooked-for increase, both
actually and relatively, in the number of minor accidents involving
temporary disability.
Previous to this restrictive legislation of 1905, the number of lesser
accidents showed no change, remaining slightly under 60 per 1,000
workmen. After 1905, however, a striking rise is to be noted, attaining
in 1909 the figures of 80.32, a gain of one-third in the relative number
of accidents in four years. These figures certainly bear out the con-
tention of the employers that the physicians are encouraging the work-
men to simulate or magnify the number of unimportant accidents.
Increased Medical Expenses.
Again, another result of the legislation of 1905 has been greatly to
increase the cost of medical expenses. It is to be noted that up to
1904, the cost figpires remain about the same. Beginning with 1905,
when the law was altered, medical costs immediately began to rise in-
stead of being stationary as heretofore. In 1910, they were actually
31
two mad one-half times as great as in 1904, and 50 per cent higher rela-
tiTelj per 100 francs of wages insured*
Once more we observe that up to 1904, the figures for losses do
not vary appreciably. Nineteen hundred and five shows the Gnt im-
portant gain, and every following year marks a further increase, until
in 1910 they have more than doubled as compared with 1904.
In the case of the Mutual Aid Societies, physicians attending mem-
bers are paid annually a fixed amount per head, according to the mem-
bership of the various societies. The system has never been followed
of paying by the number of visits, which has been adopted in accident
insurance cases and which is a direct incentive for physicians to make
unnecessary visits and to swell the amount of their charges as much
as jKMsible.
The courts are doing what they can to check this fraudulent over-
charging by physicians. They are beginning to follow the rule that
where a bill is shown to be excessive the losing party must pay the
costs. If drugs and medical supplies are ordered in too g^reat quantities,
the employer has the right to sue the physician on whose prescription
the supplies were ordered for the excess. Articles not mentioned in
the regular tariff, such as wine or mineral waters, cannot be charged
for nor the bottles in which salves or liniments are contained. These
decisions are all in the right direction.
On every ground, therefore, the right of the employee to choose his
own medical adviser and pharmacist should be done away with. It is
against the interests of both employers and workmen, and has given
rise to many dish<Hiest practices on the part of physicians and apoihe-
caries which mulct the employers and do not benefit the laborers. The
former are called upon to pay for unnecessary medical visits and for
excessive quantities of medicines and drugs, while the latter suffer in
not being promptly cured and in having the time of their enforced idle-
ness extended.
While the desirability of this legislation would seem to be apparent
to all, the French Parliament has thus far been unwilling to act in the
matter, although the agitation for the repeal of this portion of the law
has been going on for some time. In default of this relief, the em-
ployers are urging the abolition of the tariff Dubief and the substitu-
tion therefor of a maximum or tariff of forfeitures, based on the
principle now in force in Belgium and other countries. That is for the
various classes of accidents, the compensation of the physicians shall
not exceed a given amount. It is thought that such a tariff would do
away with the opportunity contained in the present law of making over-
charges in, the matter of visits and treatments. A suggestion has also
been made that a part of the physician's and pharmacist's charges should
be paid by the injured workman himself, who would thus have a direct
interest in seeing that the number of dressings and visits and thie
quantity of drugs used should not exceed a proper amount. These two
propositions have not yet been worked out in a concrete shape, how-
ever, and it is therefore futile to discuss the chances of their adoption.
32
SICKNESS INSURANCE IN FRANCK
Toluntary Mutual Associations. — GoYemment Subsidies. — ^Recent Prog-
ress and Growing Importance. — ^Defects.
While France has introduced the compulsory insurance of working-
men against accidents and old age disabilities, insurance against sick-
ness is entirely voluntary with the workers. This large and important
field of workingmen's insurance has been left to the mutual sickness
insurance societies. Subventioned by the Government on a more liberal
scale in 1898, since then their number and membership has increased
rapidly. Official statistics are now available of their operations up to
the end of 1908, and a review of their advancement in the ten years
preceding shows some very interesting and noteworthy results.
The societies are divided into two classes, approved and free, which
correspond to the registered and unregistered friendly societies in Eng-
land. A distinction is made in the approved societies between those for
adults and those for school-children or scholastic societies.
The following table shows how the various kinds of societies have
gained in number since 1898:
1898. 1903. 1908.
Approved adult societies 8,391 11,078 14,932
Approved scholastic societies 181 1,997 2^10
Free societies 3,253 3,203 3,243
Total, all societies 11,825 16,278 20,485
In contrast to the remarkable growth of the scholastic societies,
which are eleven times as numerous as ten years ago, is to be noted
the stationary number of the free societies. These do not receive a
Government subvention, and the limited number of new ones formed
do not suffice to make up for those changing to approved societies or
going out of existence. In 1908 their number diminished by 27 and
they are likely to decrease in number even more rapidly hereafter.
Of the 20,485 societies existing at the end of 1908, statistics were
only furnished by 14,346 adult, 2,049 scholastic and 2,958 free societies,
or 19,353 in all. As to the relief afforded, the approved adult and free
societies divide themselves into the following four classes:
Approved Free
Nature of relief. Societies. Societies. Total No.
Sickness insurance 5,737 2^07 8,044
Sickness and old age benefits 7,609 319 7,928
Old age benefits 495 75 570
Other objects 505 257 762
Totals 14^46 2,958 17,304
33
Thus 92% of all the societies insure against sickness and 45^
against old age disabilities. The free societies devote themselyes
mainly to sickness insurance and have paid little attention to the sub-
ject of old age pensions.
The growth of membership appears as follows:
Societies approved
(adults). 1898. 1903. 1908.
Active members 1,279,358 1,770,772 3,103,635
Honorary members 244,632 313,455 410,968
Totals 1,523,980 2,084,227 3,514,603
Societies approved
(scholastic.)
Active members 57,829 563,047 736,161
Honorary members 4,738 46,665 47,620
Totals 62,567 609,712 783,781
Free societies.
Active members 351,544 403,678 359,289
Honorary members 33,935 36,224 36^35
Totals 385,479 439,902 395,624
Total, all societies 1,972,026 3,133,843 4,694,008
Of the 4,235,785 active members in 1908, 2,691,780 were men, 551,140
women and 992,865 children. Of the children 736,161 were enrolled in
the scholastic societies and 256,704 insured along with their parents in
the free and the approved societies. All told, 940,560 persons were
members of societies insuring against sickness alone, 1^00,741 mem-
bers of those granting old age pensions, and 1,036,266 members of so-
cieties granting both forms of relief. The growth in the membership
of the approved adult societies has been very rapid in the last few
years. Between 1903 and 1908, they gained 1,332,863 active members,
as compared with 1,281,766— their total accession in the 33 years im-
mediately preceding — ^from 1871 to 1903.
The growth in income is shown in the following table:
Approved Adult Societies.
1898. 1903. 1908.
Premium. Francs. Francs. Francs.
Active members 17,890,204 23,997,813 36,735,850
Honorary members 2,568,449 3,306,106 4,333,240
Subventions, gifts and legacies . 2,253,217 2,938,841 3,435,799
Other receipts 2,594,269 4,429,077 7,363,759
Interest 3,670,175 5,868,725 12,399,544
Totals 28,977,014 40,540,562 64,268,192
34
ApproYed Scholastic Societies.
Premiums active members
Premiums honorary members
Subventions, gifts and legacies
Other receipts
Interest
Totals 3,122,637
Free Societies.
Premiums active members 5,222,335 5,552,786
Premiums honorary members . . . 389,374 457,418
Subventions, gifts and legacies . . 1^02,760 1,542,394
Other receipts 921^65 2,019,678
Interest 1,460,402 1,529,739
Totals 9,296,236 11,102,015
2,549,304
3,610,187
134,700
109,517
205,209
178,741
131,494
184,375
101,930
217,694
4,300,514
6,562,588
514318
1370358
1,05633»
1,512,086
11,015,989
The expenses in 1908 were reported as follows:
/^Approved Societies— >
Adult Scholastic.
Expenses 49,586,850 3,733,487
Surplus income 14,681^24 567,027
Available resources .. 262,848,360 6,548,968
Pension funds 222,400,243 7,819,219
Totals 485,248,603 14,368,186
Free
societies;.
7,752,170
3,263,81^
47,731,630
All the societies combined thus show available resources of 547,-
348,419 francs.
Passing now to the number of beneficiaries and the nature of the
relief afforded by the various societies in 1908, the following figures
are of interest:
—Approved Societies
Adult. Scholastic
Sick; 560,884
Pensioners 177380
Funeral benefits .. 22,692
Widows and orphans 21301
Aged 7,461
Confirmed invalids 4,420
Total, all societies
83,721
195
Free
societies.
Total.
96,864
741,469
8311
186,191
2,979
2536^
2,112
23,41S
1,106
8,56T
588
5,00&
990,514
35
r-Approved Societie8~> Free
Adult. Scholastic, societies.
Days of sickness 8,048,454 1,990,860 1,549,404
Daily sick benefit (francs) 1.34 0.462 1.56
Sick benefit per member (francs). 29.66 11.44 31.87
Cost medical attendance (francs).. 5,190,780. 10,819 630,775
Cost medicines (francs) 5,916,092 8,954 848,013
Sick benefits paid in cash (francs) 10,789,995 921,421 2,419,978
Funeral benefits 1,558,590 4,040 196,460
Widows and orphans 1,815,474 906,026
Aged 375,198 96,713
Chronic invalids 232,485 45,040
Pensions and saving funds (francs) 13,758,455 2^74,230 1,348,975
Thus the total monetary relief afforded in one shape or another was
not far from thirty-six million francs. The average retiring pension
obtained in the approved adult societies varied from 75 to 80 francs.
For the free societies, the corresponding figure was 153 francs. The
management expenses of the approved adult societies were 2,531,083
francs or 5.1 per cent of all expenditures; of the scholastic 195,629 or
5.23 per cent and of the free societies 333,729 or 4.32 per cent. ^
As to the subventions granted to the societies by the State in one
form or another, the same reached the total of 10,287,465 francs in 1908.
Of this amount 8,996,705 francs came from the central government;
920,536 from the various communes and 370,224 from the different de>
partments. The approved societies alone benefited by these subven-
tions, with the exception of 50,604 francs granted by certain depart-
ments and communes to the free societies.
One notable feature of the mutual sickness insurance societies is
their small average membership — 134 and 216 active members in 1908
for the free and approved adult societies respectively. In this re-
spect they lag behind the sickness societies in Germany and Austria,
where the average number of members is 500 and 1,000. But while
there is a steady increase in the cost on account of sickness in Germany,
where the insurance is compulsory and overseen by the State, the op-
posite tendency prevails in the French mutual societies. The following
table shows this:
Cases of Sickness Per 100 Insured.
1898.
Approved adult societies 33.28
Free societies 33.60
German societies 35.
Days of Sickness Per Case.
Approved adult societies 21.39
Free societies 18.55
Crerman societies 17.6
♦For 1911.
36
1903.
1908.
1910.
29.25
23.08
20.99
27.79
25.22
18.33
37.
43.2
43.3*
22.30
22.57
21.96
21.41
20.49
18.33
19.
19.63
19.7*
521
401
517
387
848
863*
Days of Sickness Per Year Per 100 Insured.
Approved adult societies 712 652
Free societies 623 595
German societies 616 701
According to the above figures, there are now 90 per cent more
days of sickness among every 100 workmen insured in Germany than
among the members of the French mutual sickness societies. Among
the latter, too, the cases of sickness per 100 insured are one-third
less than ten years ago, while among the Germans they are one-
third greater. To account for this difference and for the opposite
tendencies prevailing in the two countries is difficult. Germany is be-
coming more and more an industrial nation, where the conditions of
life are more strenuous, while France still remains largely a country
of small landowners and shopkeepers. Doubtless, too, the French mutual
societies with their smaller membership are able to exercise a better
control over their members than is the case with the German sickness
societies.
It should be further noted that in Germany the average annual con-
tribution per member increased in the period 1892-1907 from $4.14 to
$6.19 or 50 per cent. In France the contribution from active members
is much lower and shows rather a declining tendency. For the adult
approved societies, it fell from $2.89 in 1898 to $2.60 and $2.36 in 1903
and 1908, respectively. Benefits per member have remained about
the same in France, while in Germany they have shown a marked rise
coincident with the increase in the amount of sickness and in the sum
total of contributions.
Although the mutual sickness societies in France have made such
great strides in numbers and adherents since 1898, they are as yet
largely confined to the more important centres of population. Instead
of a network of societies covering the whole country, the larger part of
the rural districts possess none. Thus in 1908 out of the 36,222 com-
munes in France, societies were only to be found in 8,548 or 24 per cent.
424 out of 2,911 cantons, or 15 per cent were likewise without any
societies. There is therefore a large extent of territory to which the
operations of the societies could be extended. Again the societies are
weak in the number of women members. In 1908 women comprised
but 551,105 out of a total active membership in the free and approved
adult societies of 3,462,924, or 15 per cent, as against 35 per cent in the
German sickness societies.
French mutual societies have thus by no means reached the limit
of possible growth. Indeed if sickness insurance among workmen in
France were as widespread as in Germany, their active membership
should exceed eight millions or almost double the number reported at
the end of 1908. That their membership is still increasing rapidly ap-
♦For 1911.
37
pears from the statement recently published in the daily press that their
total number of adherents to-day of all classes is six millions as
against 4,694,000 on December 31st, 1908. A contributing cause to this
growth is the provision in the new law making insurance against old
age disabilities compulsory, by which the State assumes one-sixth of a
workman's contribution for such insurance provided he can show that
he is insured against sickness in a mutual society and is paying 6
francs a year as premium therefor.
OLD AGE PENSION LEGISLATION IN FRANCE.
Reasons for Its Non-Success and Unpopularity.
No sooner had the French legislature in 1898 passed the law pro-
viding for the compulsory insurance of workingmen against accidents
than the question of providing old age pensions for laborers begran to be
agitated. It was generally admitted that something should be done in
that direction, but public opinion was divided as to the best method to
be followed. The choice lay between a system of compulsory insurance
such as enforced in Germany, or the plan of teaching and helping
workmen to insure themselves by making use of and encouraging the
establishment of voluntary associations like the Mutual Aid Societies.
Although the result of a canvas made in 1903 showed that an over-
whelming majority of the Chambers of Commerce and of the various
labor organizations were opposed to any form of compulsory insurance,
the French lawmakers decided to adopt the German system. Even if
opposed by public sentiment, they concluded that compulsory insur-
ance was the only means by which the careless or improvident workman
could be made to help provide for himself a pension against old age
disabilities. Voluntary state aided insurance, they believed, would not
accomplish sufficient in this direction to make its adoption desirable.
Without attempting a minute description, it suffices to say that
the French law provides for the compulsory insurance of all salaried
employees who earn less than 3,000 francs, or $600, a year. Instead
of a sliding scale, based on a division into wage classes as in Germany,
all workers, regardless of the wages earned, pay the same fixed amount,
namely, nine, six and four and a half francs each year for men, women
and children, respectively. The employer has to contribute an amount
equal to that paid by his employee. When the retiring age limit of 60
years has been reached (in Germany and England the limit is 70 years),
the French Government adds 100 francs or $20 each year to every
individual pension. This amount is increased 10 per cent whenever the
insured can show that three of his children survived at the age of six-
teen years. In normal cases the workman must make 30 annual pay-
ments before he becomes entitled to a pension. Each year of military
service for the man and every child borne by a woman counts as a
year of payment.
For employees earning from 3,000 to 5,000 francs a year and for
tenants, small farmers and shopkeepers without fixed salaries, volun-
tary insurance is permissible, with nine francs annually as the mini-
mum and eighteen as the maximum payment. A bonus equal to one-
half of the insured's payment is added by the Government each year,
but in no case more than sufficient to increase the retiring pension by
100 francs a year. If desired, both compulsory and voluntarily in^
sured workmen can let their pensions accumulate until they have
reached the age of 65 years, in which event the retiring pension is
very much higher than at 60 years — in some cases two-thirds. While
39
in Germany the maximum pension at 70 years has been $58 and the
average pension but $41, the highest possible pension in France at 65
years is $110. No statistics are yet available as to what is the average
pension in France.
At the time the French law was enacted, the assertion was made
that out of the 22 million adult population, 12 millions would be en-
rolled as compulsorily insured and that the adhesion of six million more
voluntarily insured workers might be expected. Just as in Germany,
where 11^ million workmen were enrolled the first year after a simi-
lar statute was passed, the supporters of the French act expected an as
equally prompt and universal enlistment on the part of the French
laborers. The contrary, however, has proved to be the case. In place
of 25 million dollars realized from the contributions of employers
and employees during the first year of the operation of the German
law, the corresponding receipts during the first twelve months of the
French act were only $5,700,000. The French law took effect on July
3rd, 1911, and is therefore now in its second year. The receipts for that
year are running higher than for the first and at the rate of fifty
million francs, or ten million dollars a year. This means, if 14 francs
be taken as the average individual contribution, that only about three
and one-half million laborers have been brought under the provisions
of the law, or only about one person in ten. Contrast this with the
showing in Germany, where one person out of every four is insured
against old age disabilities. The government claims an enrollment of
almost eight millions, including about 800,000 voluntarily insured work-
men; but its figures are thoroughly distrusted and are not borne out
by the published table of receipts of contributions. These have been
practically stationary for the last six months, and according to the
Government's own figures, the number of employees insured has in-
creased only two per cent during the last quarter. In other words,
the law is not making headway, and the French working classes are
persistently refusing to accept its benefits. As an evidence of this
may be cited the experience of a group of landowners who offered to
pay out of their own pockets the contributions required of their agri-
cultural laborers, thus securing to the latter the benefits of the law
free of charge. To their astonishment, the laborers one and all de-
clined to become insured even on those terms. That the authorities
are thoroughly dissatisfied with the results thus far obtained is evi-
denced by the Government's proposal to amend the law so as to compel
aU employers to report what employees are not obeying its provisions
and to deduct from every salary the amount of the workman's contri-
bution, irrespective of his consent.
Why is it that the French working population are so unwilling and
reluctant to accept the benefits of this legislation, while in Germany a
similar statute has met with universal and prompt acceptance? The
answer to this question is to be found in the failure of the French
legislators to adopt a system of old age insurance suited to the habits
and mental attitude of their people. The idea of old age pensions is
40
not repugnant to the French workman, but the Prussian bureaucratic
way of providing for it does not appeal to him. Not the principle, but
the method, is what he objects to. Insurance against old age disabilities
is nothing more than a system of enforced saving by which the laborer
is compelled to set aside or contribute part of his earnings so that he
will not be without resources when his strength begins to decline and
he can no longer find work. But in France thrift does not have to
be taught, it is practised by all classes and from the earliest years.
Little school children are enrolled in mutual aid societies to which
they contribute two cents a week. There are over 2,300 such societies
for public school children, with a membership of 818,000 pupils. When
the children leave school their deposits are returned to them and the
opening of a savings account through the post office is made possible.
The first step towards the securing of a retiring pension has thus been
taken. Generally, however, a pension or annuity is not the object
saved for, but rather the acquisition in time of a small plot of land or
of a little shop. In other words, the French laborer aims to be inde-
pendent and to be able to invest his savings as he deems best. This
ingrained desire for liberty of action on the part of the race was
lost sight of by the French legislators when they decided to follow the
German system of old age pensions for workmen. The German people
are accustomed to a minute Government supervision of their method
of living and of their private affairs and to implicitly obey official
regnilations. To the Frenchman, however, the complicated formalities
and the involved workings of the German plan, where the individual has
no control over the disposition of his own savings, are extremely dis-
tasteful. Nor do the French seem to possess a sufficiently expert body
of officials capable of handling efficiently the elaborate governmental
machinery required. The payment of pensions is in many cases six
months in arrears, and complaints are universal of the long delays in
the carrying out of the provisions of the law. Even if these adminis-
trative difficulties be overcome, there is little likelihood of the statute
ever becoming very popular. In time, by amendments the present mil-
lions of the recalcitrant workers may be brought into line and compelled
to comply with the law; but it will be a forced and unwilling adhesion.
Possibly, too, as urged by many prominent men, the whole system may
be changed, the obligatory features modified and more encouragement
griven to individual initiative and to private organizations. Thajt would
be the more desirable method.
The lesson to be derived from French legislation on this subject is
plain. In devising a new law to cover any branch of workingmen'^s
insurance, the greatest care should be taken to secure the adoption of
a measure that will conform to or fit in with the habits and disposi-
tions of the working people. Because a certain system has produced
satisfactory results and run smoothly in one country is no reason why
it should be blindly followed in another. Only when a law complies
with public sentiment will it find a prompt and universal acceptance,
without which successful operation cannot be anticipated.
41
HOLLAND.
WORKMEN'S ACCIDENT COMPENSATION.
How Insured — Functians Performed by the State. — Extent of Abuses.
Some Defects.
Under the Dutch common law, an employer could not be held re-
sponsible for an accident to an employee where the same resulted from
an act of God, an unknown cause or through the laborer's negligence.
That, of course, resulted in an unsatisfactory state of affairs, which
was not materially helped by the placing of employers' liability risks
with private insurance companies. Those insurers paid only smajU
sums in proportion to the injuries and then often only after contests.
Yet, in spite of the example set by Germany almost a decade before,
compulsory insurance of workingmen against accidents did not come
into force in Holland, until February 1st, 1903.
Originally the intention was apparently to follow the Austrian law
as a model. The idea of compelling employers to group themselves
into associations for accident insurance purposes was, however, aban-
doned on the plea that the country was too small and the number of
employers in many forms of industrial pursuits too limited to make
the establishment of such associations desirable. As just recently in
Switzerland, a bitter struggle took place between the advocates and
opponents of establishing a State monopoly of this form of insurance.
In the lower house, where the labor and socialistic element was most
strongly represented, the vote was overwhelmingly in favor of monopoly
and against freedom of choice. Owing, however, to the obstinate re-
sistance of the upper chamber the monopoly plan was finally defeated
and free competition between State and every other form of accident
insurance allowed. This outcome has proved very fortunate for the
employers, as State insurance has turned out to be the most costly of
all.
Underlying the Dutch law is the false idea that this form of enact-
ment is class legislation, in which the interests of employers and em-
ployees are opposed. Thence the theory that the rights of the victim
of an accident will not be safeguarded if the employer has any say
as to the method of treatment. For this reason the injured workman
is given the right of selecting his own physician and a Government of-
ficial is made to intervene at every turn between the employer and the
workman. The State alone, through its own medical department, de-
termines the extent of the disability incurred and the compensation to
be paid.
Not only does the Government fix, but it also pays out the indem-
nity awarded to the victim, in weekly installments. No contact between
employer and employee after an accident is, therefore, the rule. This
42
fact should be borne in mind before proceeding to a detailed examina-
tion of the workings of the law.
Leaving for later discussion the question of how the various syxr-
tems of insurance are faring in this open — ^but not on an equal footing —
comi)etitiony the first thing to consider is the number of workmen af-
fected by and of injuries reported under the law. This is shown in the
following table, which covers only serious injuries that lasted over two
days and for which an indemnity was paid.
No. No. Under
Year. workmen. accidents. 6 weeks.
1903 455,365 30,020 26,594
1904 508,356 39,136 34,495
1905 528,820 44,219 39,204
1906 557,992 51,337 45,631
1907 574,472 54,458 48,304
1908 586,427 49,799 44,463
1909 605,450 48^77 43,514
1910 631,307 48,782 43,825
1911 650,000 52,741 47,552
1912 669,000
Accidents per Under
Year. 1,000 workmen. 6 weeks.
1903 65.9 58.4
1904 77. 67.9
1905 83.6 74.1
1906 92. 81.7
1907 94.8 84.
1908 84.9 75.8
1909 79.9 71.9
1910 77.5 69.6
1911 81.2 74.
Over
6 weeks.
Deaths.
3,176
250
4,408
233
4,782
233
5,470
236
5,894
260
5,102
234
4,622
241
4,700
267
4,923
• • • •
266
• • •
Over
6 weeks.
Deaths.
5.4
0.54
6.8
0.46
6.8
0.45
7.4
0.44
8.2
0.48
6.8
0.42
5.8
0.41
5.6
0.42
7.6
0.41
The following figures have been published as yet only for the period
1903-1910:
Permanent Per Average
Year. disability 1,000 disability
cases, workmen, per cent.
1903 657 1.54 45.01
1904 890 1.89 43.46
1905 1,152 2.24 39.09
1906 1,261 2.43 36.88
1907 1,224 2.14 35.98
1908 1,109 1.93 34.52
1909 1,125 1.90 34.38
1910 1,071 1.84 32.19
r^
—Disability —
^-^
25%
25-
50-
75-
or less.
50%.
75%.
100%.
33.2
33.9
16.7
16.2
35.7
30.5
18.3
15.5
41.3
33.
13.3
12.4
44.2
32.3
14.4
9.1
46.3
31.1
14.9
7.7
51.2
29.1
12.3
7.4
50.6
30.9
12.1
6.4
57.5
26.
10.0
6.5
46
In 1910, the average premium charged by the state insurance de-
partment or bank was 2.73%. In relation to wages, losses in Holland
and Austria since 1903 have run as follows:
Year.
Austria
Holland.
Year.
Austria.
Holland.
i.vQo . . . .
1.91
1.64
1907....
1.96
1.92
1904....
1.96
1.82
1908
1.86
1.63
1906
1.96
1.91
1909....
1.57
1.64
1906
2.09
2.00
1910....
1.40
1.40
The following is the rate of accidents per 1,000 workmen in the dif-
ferent trade groups for the same years:
Group. 1903.
I. Pottery, glass, lime, etc 64.9
II. Pi^ecious stones 17.6
III. Printing and lithographing. . . 19.4
IV. Building and engineering 89.4
V. Chemicals and explosives .... ,40.1
VI. Wood, cork and straw 61.8
VII. Clothing and cleaning 20.3
VIII. Pine arts 23.6
IX. Leather, robber, etc 30.3
X. Minerals, coal, etc 61.4
XI. Metals 78.1
XII. Machinery, etc 116.3
XIII. Ships and vehicles 117.3
XrV. Paper products, etc 44.4
XV. Textiles 21.
XVI. Gas and electricity 67.8
XVII. Food products 47.7
XVin. Trade and transportation . . . 71.9
1906.
1907.
1909.
1910.
90.2
113.
96.88
98.88
13.
17.6
14.48
15.04
28.4
31.6
30.97
28.26
112.2
119.3
102.60
99.38
62.6
62.
61.44
67.98
86.9
100.1
90.30
88.63
21.
26.8
24.33
23.74
66.8
49.2
30.
23.20
48.3
66.
60.81
49.12
96.3
118.8
147.49
170.82
116.6
129.6
112.21
107.72
134.1
162.9
132.89
126.67
163.7
198.3
165.08
138.46
61.4
64.8
61.68
66.60
26.7
34.9
27.07
27.44
66.7
76.1
63.37
64.40
62.4
70.6
63.18
61.76
87.9
96.
71.90
69.43
66.9 83.5 94.8 79.94 77.62
As in almost all other countries the percentage of cases involving
death or permanent disability remains about the same. Whatever in-
crease has occurred has taken place in the minor accidents entailing
a disability of less than six weeks' duration.
It is to be noted that up to 1907, accidents increased both in total
and in relative number. Since that date, however, there has been quite
a decline in both respects, due largely to a stricter control exercised
by the Government officials. In this regard, Holland is having a hap-
pier experience than France, where accidents show an almost uninter-
rupted gain from year to year. This difference is all the more striking
because some false rules are followed in the interpretation and adminis-
tration of the Dutch law, which afford opportunities for abusive prac-
tices.
In the first place, the Government physicians who, in every in-
44
stance, determine the extent of the injuries received by the victim of
accident, base their appraisal on the theoretical impairment suffered
and not on the actual loss in wages incurred. For example, if a laborer
loses an eye, he is deemed to be 80 per cent less efficient than before
and receives an annuity accordingly. Yet his work may have been of
a comparatively simple nature, which he is able to perform just as well
after as before his accident. If given his full wages again, besides the
indemnity awarded him, he will receive much higher pay than an able-
bodied workman with unimpaired vision. In order to avoid having
workmen, who have been formerly injured, receive more than the pre-
vailing rate of wages, the large employers exchange lists containing
the names of such employees as are known to be in receipt of weekly
indenmities. If one applies for work he will not be taken on unless he
will agree to a reduction in the amount of the usual weekly wage by
the sum received by him as an indemnity. Consequently, whenever he
can, the workman tries to conceal from his employer the fact that he is
drawing a regular pension on account of an injury previously incurred.
If he succeeds, his salary is higher than that of the ordinary laborer
doing the same work, while if he fails the employer reaps the benefit
of the indemnity through not having to pay the full rate of wages. In
either case, someone makes a profit out of the pension, which, of course,
Is wrong. Atonement for an actual wage loss suffered is the only cor-
rect rule to be followed in settling for workingmen's accidents. Any
other method is a direct incentive to the laborer to exaggerate the ex-
tent of his injuries as much as possible.
Indeed, while much better kept in check than in some other coun-
tries, exaggeration and simulation of accidents by workmen are not
unknown and are much complained of by employers, especially tl^e
former evil. In general, the same drawbacks to the compulsory work-
men's accident insurance are to be observed in Holland as elsewhere.
A hurt that would not ordinarily cause a stoppage of work in a com-
pulsorily insured trade results in a cessation of labor, and an injury to
an insured employee takes much longer to heal than if he were unin-
sured.
Another incentive to prolonged and unnecessary idleness on the part
of those injured exists in Holland through workmen obtaining benefits
from outside sources in addition to the amount alloted to them by the
accident insurance law. The amount is fixed at 70 per cent of their
usual wage. If, in addition, they receive monetary assistance from
a fraternal order, their total income frequently becomes g^reater during
the period of disability than while they were at work. In one instance,
half of the workmen treated were receiving from 90 to 150 per cent
of their usual salaries. Under such circumstances laborers will
naturally delay resuming work as long as they can. The experience
of the Dutch nation in this respect emphasizes the necessity of not
putting the scale of compensation for accidents at too high a figure.
The injured laborer should always be under a strong pecuniary in-
centive to resume his employment. The possibility also of obtaining
45
benefits in excess of the usual wage through carrying outside insur-
ance should be strictly guarded against and forbidden, as in the re-
cently adopted Swiss law.
Although injured workmen have the right of selecting the physicians
who shall treat them, the grave abuses that have resulted elsewhere
from the adoption of this system are hardly to be found in Holland.
Medical costs per accident and in the aggregate have remained about
the same. Various reasons account for this difference from the experi-
ence of France, where free choice by the laborer of his medical at-
tendant also prevails, with a resultant constantly augmenting burden
of expenditure. In the first place, the physician's role in Holland is
limited to treating the injured party. He has nothing to say as to
the compensation to be paid the victim, which is fixed by a Government
official. There is thus no opportunity for the exploitation of the em-
ployer through doctors and workmen acting in collusion and making
false statements as to injuries. Secondly, Holland is a small country,
with only 2,500 physicians in active practice. It is easy therefore for
the authorities to keep tab on each individual practitioner and to call
him sharply to account if his treatment of accident cases is unnecessarily
prolonged and the convalescence of his patients unusually slow. Besides,
a doctor caught in improper practices may have his license to treat
accident cases revoked.
A third and important deterrent is found in the clause of the Dutch
accident law, which permits the employer to prescribe the first aid
treatment to an injured employee. How important the provision is will
appear from the following table:
I ^ Total No. injuries Total No. injuries
accidents cured within accidents cured with-
Year. reported. 2 days. Year. reported, in 2 days.
1903 38,706 8,686 1908 65,550 15,571
1904 49,667 10,631 1909 64,404 16,027
1905 55,497 11,272 1910 66,086 17^04
1906 64,864 13,527 1911 71,731 18,990
1907 68,994 14,536
As the law prescribes that no indemnity shall be paid unless the dis-
ability resulting from an injury exceeds two days, the figures in the
second column give the number of accidents reported which either re-
sulted in no harm being done or which were cured in two days' time
through the use of simple medical surface applications. These form
one-quarter of all, and about the treatment of them the employer has
the say and the workman has practically no voice in the selection of
the physician. This is a very valuable privilege for the employers
and checks dishonest practices, as the following illustration will show:
In some of the larger industrial plants, surgical rooms are established
with a company doctor frequent in attendance. No matter how trifling
his hurt may be, a workman is obliged, under penalty of instant dis-
missal, to report at once as soon as he suffers an injury at the doctor's
headquarters for treatment. Suppose something has flown into his
46
eye. The offending particle is forthwith removed, and the physician
can tell at once whether the patient should continue work or not. If
the injury is found to he a slight one, the laborer knows that it will
be useless for him to attempt to magnify it into an excuse for not
working, even though he can find an easy-going physician willing to
substantiate his claim. Not only does the prompt first aid treatment
furnished by the employer thus prevent any exaggeration or simulation
of injuries, but it also greatly lessens the chances of a wound leading
to a prolonged disability through neglect or lack of treatment in its
early stages.
On the question of medical treatment, therefore, the experience of
Holland cannot be cited as an argument in favor of the free choice of
the physician by the workingmen. If abuses have been kept down, it
has been due to limiting the choice in part and to other favoring cir-
cumstances, like the strict control possible in a small country. Black
sheep exist among the members of the medical profession in all the
large centres, who would be only too ready to mulct the employers if
the opportunity arose through aiding injured laborers to make un-
founded and exaggerated claims.
Dissatisfaction on the part of the workingmen with the amounts
awarded them, so prevalent in Germany, hardly exists in Holland.
Appeals to the courts especially established to pass on disputed ques-
tions arising out of the accident insurance law are comparatively in-
frequent. In 1911, 1,650 cases were decided in the first appeal court of
which only 1,284 related to questions of indemnity. Mention may be
made here that the Dutch law does not permit the settlement of small
annuities by the payment of a lump sum, as allowed in France. But
in Holland, instead of the employer, it is the Government office which
has the burden of making these shiall regular payments, on each re-
curring Tuesday, amounting in some cases to only a few cents a week.
That requires much additional bookkeeping and is one cause why the
administrative expenses of the State insurance department are so high.
As a whole, it may be said that, while the law has some serious de-
fects, workingmen's accident insurance in Holland has not produced the
baneful effects to be found elsewhere. In spite of the increased strain
on laborers due to the greater industrial activity and attendant over-
time working during the last few years, accidents are relatively less in
number than in 1904. Fraudulent and simulated accidents are guarded
against. Collusive practices between physicians and workmen are almost
impossible on account of the strict control and settlement of claims by
Government officials, whose probity and uprightness are very high.
Yet one must admit that owing to certain defects inherent in every
system of government administration, the rdle played by the State in
Holland has very considerably increased the burden on industry from
workingmen's accidents. What those defects are and how they tend to
unduly raise costs can be most clearly brought out by passing to an
examination of State as contrasted with private insurance in the matter
of employers' liability risks.
47
DUTCH EXPERIENCE IN STATE VERSUS PRIVATE INSURANCE.
Higher Cost and Disadvantages of Former. — Disappearance of Self In-
surance, Eclipse oi C<Hi>orate Insurance and Rise
of Mutual Insurance.
In Holland, as in France, all forms of insurance are available to
the employer. He may carry the risk himself, become a member of a
cooperative or mutual insurance association, insure himself in a stock
company or place his insurance in the State insurance department,
which bears the title of Royal Insurance Bank. While these various
systems are open to all alike, they are far from competing on equal
terms. Employer's self insurance is under the greatest handicap of all
and is, consequently, the least favored. On the other hand, the Royal
or State Bank enjoys certain important advantages, which ought to put
it in the lead of all rivals.
To begin with, the debit-side of accident insurance underwriting is
made up practically of two items — ^administrative expenses and losses.
Now, because under the Dutch system, accident claims are settled for all
writers of risks through the State Bank, rival insurers are unable to
secure any advantage over that institution in the important matter of
losses. No opportunity is afforded them to demonstrate that they can
adjust losses more expeditiously or more cheaply than the Government
officials. Only in the item of expenses have they a chance to better
the record of the State Bank. Here, however, the contest is again un-
equal. Every risk not placed elsewhere falls to the Government insti-
tution, which thereby is dispensed from the necessity of employing an
agency force. Furthermore, it enjoys the use of the mails free of
charge. Again, half of all the salaries of the higher officials of the
bank, or about two-fifths of its total administrative expenses, are paid
by the central Government. The remaining three-fifths are divided
among all those insuring workingmen's risks according to the amounts
respectively underwritten by them. Thus, if in any given year the
private insurers insure one-half of all workers salaries, such insurers
would then be called upon to pay one-half of 60 per cent, or 30 per
cent, of the State Bank's administrative expenses. In other words, be-
sides meeting their own quota of expenses they must also contribute
largely towards those of an institution carrying on an insurance busi-
ness in competition with themselves.
With various expense items, which its competitors are called upon
to meet, thus taken care of, the State Bank, whose aim is to furnish in-
surance at cost and not for a profit, ought to be in a position to make
lower premium rates than anyone else. One would expect therefore to
find by far the larger part of existing accident risks insured with the
48
state institution. Such has, however, not proved to be the case, as a
glance at the following table will show:
Total
salaries
Year. . Florins.
1903 226,046,000
1904 251,212,700
1905 264,803,000
1906 280,799,800
1907 292,401,500
1908 297,164,000
1909 312,092,300
1910 330,612,100
1911 349,761,000
1912 3^64,000,000
Insured by
Year. Mutual Comp.
1903 38,100,000
1904 48,200,000
1905 62,200,000
1906 75,700,000
1907 85,600,000
1908 92,000,000
1909 104,400,000
1910 120,000,000
1911 134,000,000
1912 155,600,000
In the column of total salaries insured are included the wages paid
by those employers carrying their own insurance. These are now but
a handful in number, comprising the leading municipalities, certain
Government departments and the principal railway system, which have
always insured their own risks. The wages paid by these self insurers
should therefore be deducted, as has been done in the second column, in
order to obtain a correct estimate of the total percentage of business
open to competition secured by the several systems of insurance. While
permissible on making a minimum deposit of 30,000 florins, self insur-
ance by individual industrial employers no longer occurs. One reason
for this is that, if an accident happens, the full purchase value of the in-
jured man's annuity must be deposited by the insurer with the Gov-
ernment bank, either in cash or in the shape of securities. If he is the
employer himself, no part of this fund is ever returned, even though
the victim should die the next day. A corporation, on the other hand,
would in such case receive its securities back. On account of this dis-
crimination and because those insured in a large organization obtain
certain advantages free of cost, such as advice in legal matters, em-
ployers' self-insurance by owners of industrial plants has been elimi-
49
Salaries
open to
Insured by
competition.
State Bank.
Pet
198,565,000
72,341,000
36.4
219,460,000
65,891,000
30.
230,780,000
66,356,000
28.8
240,890,000
69,925,000
28.6
254,607,000
89,879,000
35.2
256,224,000
124,323,000
48.5
271,000,000
132,800,000
48.6
285,700,000
136,500,000
48.
300,950,000
134,525,000
134,000,000
Insured by
44.7
Pet.
Stock Comp.
Pet.
19.2
88,124,000
43.4
22.
105,358,000
48
26.9
102,224,000
43.3
30.9
99,300,000
40.5
33.5
79,100,000
31.3
35.9
39,891,000
15.6
38.5
33,800,000
12.9
42.
29,200,000
10.
47.8
32,400,000
7.5
nated in Holland, leaving only State, mutual and corporate insurance to
dispute the field. This last branch is only open to domestic corpora-
tions — ^all foreign companies being excluded.
Besides the State Bank, there were originally in competition eight
stock companies and one employers' mutual association. At the begin-
ning, the stock companies were far ahead in the amount of business se-
cured and held their own until 1907. In that year, one of the com-
panies, owing to heavy losses sustained, ceased insuring risks and was
followed later by three other companies, leaving only four active to-day.
The salaries insured by these companies declined rapidly after 1906,
until 1909, since which date the amount has remained almost stationary.
It is evident therefore that the stock companies, handicapped as they
are, have been conducting a losing fight. Nevertheless, they are able
to hold their own and underbid the State Bank on one-tenth of the possi-
ble business. That they find it profitable to accept these risks at lower
terms than demanded by the Government clearly shows the premium
rates of the State Bank to be in many instances too high. As the
authorities move slowly in changing rates, the stock companies will
probably hereafter always find some lines of accident insurance which
they can handle to advantage. Employers, who would rather pay a
fixed premium, will always prefer them to a mutual organization,
where the rate varies according to losses incurred. But, so long as
conditions in Holland remain unchanged, they will continue to play only
a minor role in the insurance of accident compensation.
Like that of the stock companies, the amount of salaries insured by
the State Bank remained stationary until 1906. With the decline of the
companies in 1907, the figures of the bank begin to rise. In 1910
they reached their maximum and have since remained at the same
figure, with a decline in the relative percentage of all open risks under-
written from 48 to 43 per cent. State insurance in Holland appears
therefore to have passed its zenith and to be now on the decline. After
having held the lead for the four years 1907-1911 in the amount of
salaries insured, the State Bank in 1912 dropped to second place, having
been out-distanced by its strongest and most successful competitor, the
Employers' Mutual Association. Although the total of workers' salaries
insured increased some 10 per cent between 1910 and 1912, the amount
insured in the State Bank barely held its own. Whatever new business
offers itself now is secured by its competitors.
From the outset, it was easy to foresee that employers mutual or
cooperative insurance would be the kind most likely to make headway
against the system of Government insurance in vogue in Holland.
Furnishing its members protection against risks at cost price, dis-
pensing with an agency force and all participants directly profiting
through losses being kept down, this form of private insurance should
compete on more equal terms than any other with the State Bank.
Such, indeed, has proved to be the case as the figures of its steady and
uninterrupted growth from year to year in the amount of salarieis
underwritten plainly indicates. Starting in 1903 with the least amount
50
of all or only one-fifth of all salaried risks, mutual iiusurance took the
lead in 1912 with 47 per cent of all risks covered. In nine years, its
business has quadrupled, while that of the State Bank has merely
doubled.
In Holland, therefore, employers' mutual has to-day outstripped and
surpassed State insurance in amount, through being able to offer lower
rates than those demanded by the Government authorities. Its striking
superiority in this respect is clearly demonstrated by the following
table:
Salaries insured Prem. based Actual
in mut. system, on gov. rates. prem. paid.
Year. Florins. Florins. Florins.
1903 38,100,000 865,000 729,000
1904 48,200,000 1,121,000 1,060,000
1905 62,200,000 1,537,000 1,335,000
1906 75,500,000 1,776,000 1,490,000
1907 85,600,000 2,021,000 1,599,000
1908 92,000,000 2,449,000 1,575,000
1909 104,400,000 3,310,000 2,133,000
1910 120,000,000 4,187,000 2,346,000
1911 136,000,000 4,703,000 2,808,000
1912 155,600,000 5,310,000 3,327,000
Total 917,800,000 A 7,279,000 18,402,000
Saving over
Year. gov. figures. Pet.
1903 136,000 16.7
1904 61,000 5.4
1906 202,000 13.1
1906 286,000 16.1
1907 422,000 20.9
1908 874,000 36.7
1909 1,177,000 35.6
1910 1,841,000 44.
1911 1,895,000 40.3
1912 1,983,000 37.4
Total 8,877,000 32.5
To the above figure of savings should be added the sum of 139,000
florins found to have been overcharged the mutual association for losses
from 1903-1907. The total actual saving is thus brought up to 9,016,000
florins or 33 per cent over what the employers would have had to pay
if they had been obliged to insure with the State. If the State pre-
miums be estimated at 100, mutually insured employers paid one-third
less or at the rate of 67. In other words, the average premiums de-
manded by the Government for the ten years 1903-1912 have been al-
51
most 60 per cent higher than what those insured mutually have found
sufficient to meet all losses and expenses. And even with its two-fifths
higher premiums and with the major part of its administrative expenses
contributed from outside sources, the State Bank failed to come out
even. At the end of 1911, the total deficit in its accounts figured about
1,800,000 florins. The excessive cost in Holland of the Government sys-
tem of insurance as compared with that offered by a well-managed and
economically run private organization is thus conclusively proven.
The question may be asked, why, if so much more costly, the State
Bank should yet be able to secure two-fifths of all the possible busi-
ness. The answer is to be found in the fact that Holland is a country
where small employers predominate and where large industrial estab-
lishments are comparatively few in number. The last available statistics
show that in 1910 there were 89,728 employers insured, with 631^07
workmen, or seven workmen on the average for each separate employer.
For the State Bank alone the figures were 75,179 employers and 291,731
workmen, or 4 workmen per employer, showing that the less im-
portant risks were generally insured with the Government office. This
has been the case from the start. The small employer with only two or
three workmen to insure is under no particular inducement to make a
change because the total premium he has to pay is not large in amount
and the possible saving to be effected would not in any case exceed a
few dollars. Consequently, he is apt to stick to the State Bank, while
establishments of any size or importance, as a rule, insure elsewhere.
But for this hold upon the small employers, the amount of insurance
effected through the Government office would be very much less.
In order to ascertain why Government insurance is so much more
expensive, one need only contrast the methods of the State Bank with
those of the Employers' Mutual Association. This latter, known as the
Central Bank for Employers' Risks, is an incorporated association, on
January 1, 1913, serving the interests of 5,275 employers, with some
267,000 workmen in their pay. Its members consist of 96 large em-
ployers carrying their risks directly with the Central Bank, and 41 af-
filiated mutual associations, to which the remaining 5,179 employers
belong, with an average membership of 130 employers each. Each as-
sociation levies its own premiums based on losses suffered and on its
quota of the expenses of the Central Bank. That Bank, in turn, acts as
a clearing house for all the associations, settles all losses as called upon
by the State Bank, provides a legal bureau to pass on disputed claims
and maintains a technical department for the inspection of plants and to
suggest safeguards against accidents.
Through adopting the plan of dividing its members into small
gfroups and making each group responsible for accident losses suffered
in the establishments of those belonging to it, every individual em-
ployer insured in the Central Bank is under the strongest possible
stimulus to reduce the number of accidents as much as possible among
his employees. If the indemnities paid his workmen for injuries re-
ceived in any given year are materially cut down, the owner knows
52
that it means a saving to him in the shape of a reduced premium. He
has the greatest incentive therefore to adopt safety appliances and to
enforce the observance of preventive rules. Contrast to this attitude,
the position of an employer insured in the State Bank. Once he has
paid his premium, it is immaterial from a pecuniary standpoint whether
accidents among his employees occur frequently or not. So long as his
equipment measures up to the ordinary standard, he has to fear no in-
crease in his premium rates. As one of sixty or more thousand employ-
ers insured, any precautions against accidents taken by him in his single
establishment will have only a very remote influence, if any, towards
lowering the charge for the insurance in his particular industry. Un-
able to directly influence results through any especial ac^on of his
own^ therefore, the employer insured in the State Bank has no particular
cause to seek to reduce the number or frequency of accidents.
How this indifference as to the number of accidents operates to the
disadvantage of the State Bank appears from the following table:
Year. Accidents per Million Florin Wages.
State. Companies.
1903 153 166
1904 186 186
1905 225 192
1906 262 209
1907 286 207
1908 258 179
1909 236 170
1910 223 171
Accidents, therefore, are considerably more frequent among those
insured in the State Bank. Yet the contrary ought to be the case. As
has just been pointed out, Holland is a country where small industry
prevails. In 1910 69,074 employers, or 78% of all, had 5 workmen or
less in their establishments, or a total of 92,802 workmen. Such small
employers are the best risks. The official figures of accidents per 1,000
workmen, given below, indicate this:
1903. 1904. 1905. 1906. 1907. 1908. 1909. 1910.
For all employers 65.9 77 83.6 92 94.7 68.4 72.9 69.5
For employers with less
than 5 workmen 47.7 57.4 64 69.4 73.9 84.9 79.9 77.5
In the latter category, the average number for the eight years comes
to 65^, as against 82 in the former. But, as previously indicated, it
is just the small and best class of employers from a risk standpoint,
which is usually insured in the State Bank. Yet, instead of making
a better showing, however, as would be expected, its accident ratio per
1,000 workmen is decidedly higher than that of other insurers.
Besides excelling in the number, the State Bank also formerly led in
53
tke loss per accident. For the five years 1903-1907, the losses ran in
florins as follows:
Year. State. Companies. Year. State. Companies.
1903 102.78 90.66 1906 115.67 80.93
1904 112.58 94.24 1907 102.66 74.70
1905 114.34 89.24
An injured workman insured in the State Bank, therefore, received
twenty-five per cent more indemnity on the average than one insured
elsewhere. That was not due to any favoritism, but rather to lack
of proper control by the Government officials. For example, a casual
dock laborer injured with one may be able to resume work with an-
other employer long before his period of estimated disability has ex-
pired. In such a case, the Government officials, having had no adequate
system of check, would continue to pay the regular indemnity as bcdPore.
Those privately insured, however, make it a point to keep tab on their
workmen, and the laborer's recovery would in all likelihood be observed
and the authorities notified to stop any further payment of indemnity.
With a higher average loss and a relatively larger number of acci-
dents, it is not surprising to find that in 1907 the total losses of the
State Bank amounted to 2.79% of salaries insured, against 1.70% for
those of the private companies, or an excess of 64%.
Since 1908, however, the showing of the State Bank as regai<ds
losses per accident has been as favorable as those of the companies.
The last figures reported run as follows:
r-Loases per Accident-^ r-Losses to Wages Insured->
Year. State. Companies. State. Companies.
r^ ^florins --> r^ per cent — ^
1908 84.57 70.64 2.13 1.41
1909 75.60 80.54 1.74 1.65
1910 69.03 77.79 1.51 1.51
Through having to consider only a comparatively small number,
when it comes to an apportionment of losses, the premiums of th,e
Central Bank can be more quickly and fairly adjusted to meet actual
costs than those of the State institution. The latter has always pro-
ceeded on the theory that stability in premium rates is the great thing
to be desired. The law itself prescribes that rates shall be revised at
the end of every five years, and it is very seldom that any particular
rate is altered during the five year period. The red tape that has
to be gone through with in each instance acts as a deterrent against
effecting any change.
Furthermore, in raising or lowering the tariff of charges, the
authorities are governed more or less by their official statistics of ac-
cidents and losses in the various branches of industry. While very
full and complete, their publication must necessarily be several years
delayed in each instance on account of their very elaborateness. In-
54
deed, those from 1908 on have yet to be published. Now, in Holland,
as elsewhere, accident risks in different branches of trade or industry
may change very quickly in this age of invention and improvement,
and often from the most unexpected causes. For example, who could
have foreseen that employees in butcher shops were to become a much
more dangerous accident risk in consequence of meat being delivered in
the Dutch cities by young men or boys on bicycles, where formerly they
went on foot? Under its methods, a number of years must always
elapse before the State Bank will realize that its premiums in that par-
ticular trade are too low to cover the losses, and perhaps an even
longer period before its rate will be raised. Unlike the Central Bank,
where premiums are automatically adjusted every year to suit the vary-
ing results in each particular branch of industry, the rates of the State
Bank are generally based on conditions as they were three or four
years previous. Consequently, through its inability to speedily change
rates, one would naturally expect to find the premiums of the govern-
ment institution deviating from the normal more or less and being
either too low or too high. And that has proved to be the case. For
the first five year period after the enactment of the law, namely, from
1903-1907, the State Bank showed a deficit of 4,189,000 florins, as
against total premium receipts of 7,283,000 florins. Of this total
deficit, due to a variety of causes, 2,520,000 florins was ascribed to
insufficiency of premium receipts. For the Bank to have covered costs,
therefore, its premium income should have been over one-third higher.
If 100 be taken as the correct standard, the actual premium receipts for
1903-07 were only on the basis of 73.
From this era of too low premiums and recurring deficits, we find
in the second five year period from 1908-1912 that the Bank has
achieved a surplus in every twelve months, or a total profit of about
2,850,000 florins. Its net deficit now stands at about 1,350,000 florins.
Taking the figures for 1911, which are the last published, the gross
premiums yielded 8,300,000 florins and the profit coming to the bank
through excess of premium receipts amounted to 570,000 florins. In-
stead of an actual premium rate of 2.44, one of 2.02 per cent would have
sufficed for the Bank to have come out even. Its present rates, there-
fore, show an excess of over 20% above actual cost figures. For 1910,
the excess was 40%.
Again, taking the full figures for 1903-1910, the Bank's losses as
contrasted with premiums run as follows:
Year.
Per cent.
Year.
Per cent.
1903
82.2
1907
154.9
1904
112.4
1908
104.2
1905
149.7
1909
125.
1906
184.9
1910
166.6
Starting with a surplus in 1903, the Bank met with a loss in the
next twelve months. If this had occurred to a private company, it is
safe to say that rates would have been promptly raised to overcome
55
the deficit. Nothing was done by the officials of the Bank, however,
so that its loss in the two following years reached alarming propor-
tions. Only in 1907, or three years after the deficit had first de-
clared itself, were rates partly raised and the loss partially reduced.
The slowness of Government action, even in cases calling for prompt
and decisive proceedings, could not be better illustrated.
Perhaps the most instructive example of the methods followed by
the State Bank is to be found in the insurance of longshoremen, for
those engaged in the loading of ships. As a basis for its tariff the
Bank followed the Austrian statistics of 1895 and 1896, showing 48
serious accidents in this calling, involving the payment of 14,732 florins
indemnity. On this showing a premium of 2.64 per cent works out. The
Bank consequently started with average rates of 4 per cent in thi^
branch. The loading of ships, however, is in Holland a very dangerous
occupation, varying in risk according to the size and equipment of the
vessel, the manner of loading, whether elevators are used or not, and
the intensity or speed with which the work is carried on. From the
very start the Bank's premium rate proved to be entirely too low,
entailing losses as follows:
Losses to
Year. Premiums. Losses. Deficit, premiums.
1903 104,078 227,918 123,840 219
1904 112,573 446,632 334,069 396.8
1906 167,044 663,072 486,028 391
1906 194,102 867,657 673,466 447
1907 440,264 1,180,101 739,837 268
Although total premium^s in 1903, the very first year, did not cover
half the losses, the same disastrous rate figure was adhered to for
the three following years. Losses increased by leaps and bounds until
in 1906 they were four and one-half times the premiums. Finally, in
1907, while the deficit was larger than ever, premium receipts began
to rise due to rates having been at last increased. Instead of at 4, as
originally, the average rate in this industry at present varies from
15 to 30 per cent.
Although the government rates up to 1907 were often too low, they
were in frequent instances fixed too high. The following table, giv«
ing conditions at the end of 1907, shows this:
Per cent of wages insured
State Bank Loss outside State Bank.
Risks. Premium. Rate. 1903. 1907.
Painters 3.673 1.46 81.22 87.30
Plasterers 3.673 2.91 82.16 86.46
Carpenters 4.521 1.92 72.71 81.49
Masons 3.673 2.89 74.38 79.13
In thus quoting and adhering to premiums far in excess of the
true risk rate, the Bank made it easy for its rivals to secure from
56
year to year a constantly increasing percentage of the business in the
above trades.
Looking at the reverse of this picture, the next table illustrates
what occurred when the Bank's official rates proved too low to cover
losses.
Percentage wages insured
Risk. outside State Bank.
1903. 1907.
Blacksmiths 60.49 26.88
Pottery workers 41.87 0.11
Glass blowers 67.42 0.00
Here other insurers have either wholly or in greater part withdrawn
from the field, leaving to the State Bank the doubtful satisfaction
of carrying on a losing business more or less alone.
Coming back to the variance in methods between the employers
mutual or Central Bank and those of the government inBtitution, the
branch or minor associations of the former have not only a limited
number of members, but are made to include as far as possible onjgr
those engaged in one form of industry, for instance, sugar refining or
carpet making. This grouping of employers by trades is deemed most
desirable both for purposes of general information and because it leads
to a better understanding of the causes of and possible preventive
measures against accidents in each particular industry. Those en-
gaged in the same business can learn far more accurately, than can any
outsider whether an employer is financially responsible or not, the con-
dition his machinery is in, whether or not he has taken proper pre-
cautions against accidents in his work-rooms, the state of discipline
among his workmen and whether they observe properly precautionary
rules and regulations. In this way, the Central Bank obtains a much
more accurate knowledge than can its State rival of the degree of risk
incurred in different establishments. Each local association has its
committee on admissions to pass on the qualifications of candidates;
and, as far as practicable, only employers animated with the common
purpose of reducing accident losses to the lowest feasible limit and of
safeguarding the lives of their employes in every possible respect are
taken in. If members fail at any time to install acceptable methods
of protection or allow their workmen to become careless in observing
rules of safety, they are asked to withdraw. Thus the Central Bank is
enabled to carefully guard against losses arising through changes in the
degree of risk and to hold its insured employers^ through fear of ex-
pulsion, up to a high standard in methods of safety.
Neither of these conditions exist in the case of the State Bank.
It cannot threaten expulsion in case of imperfect equipment, for it
must insure all risks. Through its failure to keep in close touch
with the changes occurring in classes of or individual risks, it is at
a great disadvantage as compared with other insurers. As an instance
of this may be cited the case of the blacksmiths. In 1903 they were a
57
fair risk and were insured as such both in the State and Central
Banks. By 1906, however, accidents had so increased in this trade that
the risk had become a much greater one. Accordingly, we find the
Central Bank abandoning this branch of insurance and directing its
customers to the State Bank. Later on, when the government rates
were raised to correspond with the increase in risk, we find the Cen-
tral Bank once more competing for this insurance. Again in 1909, the
government premium for peat gatherers was lowered. This was deemed
insufficent by the Central Bank to cover losses in that branch. It
therefore instantly disbanded its own local association for this trade
and had the members insure in the State Bank. In this way, all un-
profitable individual or trade risks are unloaded upon the latter in-
stitution to the detriment of its finances and to the benefit of those
of its competitors.
Although its losses from accidents are so very much higher in
comparison with those incurred by other insurers, the government in-
surance department has made no systematic effort to find out ways of
cutting down the number of accidents. Mention has been made before
of the Central Bank maintaining a special bureau for this very purpose,
which is constantly making valuable suggestions and devising appli-
ances for reducing the chances of accidents. The low costs shown by
the Central Bank are in no small degree due to the work of this
preventive bureau. Frequently it has happened that, where some rec-
ommended improvement has entirely done away with a certain kind of
accident, the government factory inspectors have then made its adop-
tion compulsory. But the point to emphasize is that the invention of
such safety devices and improvements is due to private initiative and
not to government action. The State follows, but towards the dis-
covery of preventive measures it does practically nothing.
Compared to losses incurred for workingmen's accidents (which in-
clude the indemnities paid for other insurers), the administrative ex-
penses of the State Bank run as follows:
1903.
1904.
1906.
1906.
1907.
1908.
1909.
1910.
12.4%
14.5%
19.2%
19.6%
21.6%
26.7%
27.7%
26.6%
Unfortunately, only the total of these expenses is given, and no
attempt is made to subdivide them. In the nature of things, however,
they must run pretty high on account of the centralized system of the
bank. Every loss — ^no matter how trivial — ^has to be referred to the
head office in Amsterdam for settlement, which entails far more cor-
respondence and clerical work than if adjustments were made directly
on the spot. The administrative costs show an upward tendency and in
1910 were 21%% of losses and expenses combined. If, in order to put
the Bank on an equal footing with a private company, there be added
to the percentage of 21.5% for 1910, 10% for the cost of an agency
force and 1%% more for free postage, the total expense would be 33
per cent.
Advocates of Scate insurance may claim that the superior showin^^
of the Central Bank is due to its system of selected risks. It accepts
only those which measure up to a high standard, and rejects all others.
If obliged to insure every employer, good, bad or indifferent, as is the
State Bank, its saving in expenses over the figures of the government
office would not be nearly so great. A comparison between the two
systems, it may therefore be contended, is unfair, because they do not
serve the same class of risks. In answer to that contention one should
recall that both systems are intended to furnish insurance at cost. The
odds should be in favor of the State Bank, on account of its having to
pay only a part of its own administrative expenses. In 1911 such ex-
penses amounted to 1,292,000 florins, of which the State Bank had to
meet only 347,000; whereas the Central Bank, besides footing its own
administration expenses of 168,500 florins, had to contribute 317,000
florins towards those of the State Bank. If, in spite of this and other
advantages, the State Bank, in order to come out even, cannot charge
at the rate of 70, like the Central Bank, but is obliged to charge at
the rate of 100, either one of two things is clear, namely, either its
expenses are unduly higher than those of its rival or its method of
determining premium rates is entirely wrong.
Assuming that the State were able to operate as cheaply as the
Central Bank, it should, if the principle of cost prevails, quote a like
figure of 70 for the risks insured with its business opponent. If it
pleads inability to do so because obliged to accept the more dangerous
and unprofitable risks, which the Central Bank is at liberty to discard,
the reply is that the remedy lies in its own hands. Although obliged to
insure everyone who applies, the State Bank may fix its own premium
rates. It is not obliged to do business at a loss, and, if its tariffs were
properly rated and kept up to date, the private companies could not load
it down with the unprofitable risks. That they do so is its own fault,
and is a grave reflection on its management. Not its obligation to
insure all comers, but lax methods and improper adjustment of pre-
miums are the cause of its excessive loss ratio. If the experience of
the Dutch nation is to count for anything. State insurance of occupa-
tional accidents would not appear desirable from any point of view.
It is very costly; and, far from being a check upon, it tends to breed
indifference as to the number of accidents.
In conclusion, the result of the contest in Holland, lasting now for
over ten years, between State and private agencies in the field of
accident insurance has been to prove the decided superiority of the lat-
ter. Official routine methods, slowness of action, tenacious clinging
to false ideas and erroneous conceptions mark the proceedings of the
one system, against which are to be contrasted up to date measures,
prompt adaptation to changing conditions and a constant watch for
possible improvements. The outcome strikingly confirms the opinion
of those who believe that individual effort and private initiative can
always be counted upon to produce better results than can be secured
by entrusting the conduct of an ordinary business to the State.
59
ACBCDLTORAL ACXaDBNT INSURANCB IN BOIXAND-
SJ^ ^SStoki»g to tt-t -- *« «*-rittod to ^ L^r«^
Hrts were to be reqmnd. btf » "■■.'" T. l!^.-^, ...«««4. of
galarics to be daaged agaiBSt the mOTd— i
risk incuired hj taA iil|im itf est
Aside from Uns. Hie propoM
▼inons cff tbe act e u r v e tin g indnidzial
setUeraoit cff damis and Hie pajwueat of eH
the State insimiiee depaitBCfii at
accident insimiiee law so as ta c
bound to occur before loBS. Tbe leafing agncnltMcal
liressed thonsdves in favor Ocra
uninsured and thus fisdiBunated
In its original draft of Ae lav of IStt. Hie
make a government moaspolj if
to require all risks to be earned in a
to f oiestaU a fike atbesi^ aa tiie part if Ae
to indode agricohnial acodnts amcmg tiioB _--,.^,»..ri- t-k—
to iwove tbat soch risks can be eoonanniaDF and «■ I r^r^ M n ^ _^ ^ |
care of by lunrate organxxitJOBs, tvo e '
sodations kave been started. One cbbb:
1st, 1909, and insures against aeodecis ir bnraccharal in*^«miU
The second and more im]M»tuit startsd esaes^ m year ^^«
all otber agricultural accadent risks. It vm OBened beH^ to
these two classes* because the accadean ris^
ture and because of tbe dUtescLt uriis cf
of in tbe two professions. In ^KsrarxL:
are furef eT«ble» wbi)e in agricshxre
by provinces.
Identxal in their puiposew naaaelT- •* asxr« c^rilrTees aga^«^» j j,
consequences of amd»ts at tJ* eajiiryeffs rtpf^uiy^ z^mjk, tww aiaoctt- / ^
I
li
tkos are organised ©a tbe same gesiesal la«s. IjbcbI €■• peewi«ciai a»- .^
sociatkns are fonsedL e^A mmimg^if ^ r::? rw^ basBrd sad tmn «acv- /^^
tag a number of kcal
cident cases. The cost of treating all minor accidents is borne by the
various provincial associations, which further determine the terms at
which members may join and the actual wages paid. The associations
can engage in other forms of insurance if they so desire. Each asso-
ciation has its board of arbitration, with employers and employees
equally represented thereon, to decide disputes as to compensation.
Only two disputed cases arose in 1912.
These associations, with such affiliated employers as pay salaries in
excess of 50,000 florins a year, form and are members of a central asso-
ciation, with headquarters in Amsterdam. This central association bears
the expense of all serious accidents involving permanent disability or
death, thus re-insuring the local associations. The central association also
furnishes expert technical advice on the prevention of accidents, on legal
and financial questions, and regarding safety regulations. In short,
two underlying principles were followed in the formation of these asso-
ciations. The first was the greatest possible centralization in every-
thing relating to financial administration, both in the interest of
economy and also, to make it easier to meet serious losses. The second
was the greatest possible decentralization in all matters relating to the
treatment and settiement of accidents. To local committees is left the
control and determination of the medical treatment and monetary relief.
How efficacious and strict a watch is kept over all cases can be judged
from the fact that 52,000 laborers insured at the end of 1912 were
under the surveillance of 253 separate committees, or one for every 200
employees. Under such conditions, simulation and exaggeration of ac-
cidents by the workmen is very difficult. This plan of local committees
to supervise accidents is in direct opposition to that provided in the law
regarding industrial accidents, under which all matters are controlled
and settled from one State head office in Amsterdam.
In starting this new system of mutual insurance, many possible
adherents were deterred from joining by the inability to determine the
cost of the insurance in advance. As all members are proportionately
liable for losses, the premiums to be paid could not be limited before-
hand, as in the case of insurance by a corporation. To overcome this
objection, the estimated premiums for the first year were all paid in
full in advance, thus enabling the associations to start with a reserve
fund. In consequence it has not been necessary to call on members
for any extra contributions. Premiums are high enough to cover a reg-
ular addition to the reserve funds as well as expenses and losses, and
are levied by the local associations. In turn, they remit to the central
body for its expenses.
Passing now to the results of this insurance, it should be noted
that indemnities paid under it are on the same scale as proposed in
the Government's bill for compulsory insurance of agricultural acci-
dents. Consequentiy a fair idea of the risks and cost of such insurance,
if made universally obligatory, can be obtained from the operations of
these mutual associations. At the end of 1912 they insured one-half of
all employees engaged in horticulture and about one-tenth of those in
61
a^ctiltural pursuits. The fign^res for the two classes of organizations
iribow the following results for 1912:
Horti- Agri-
cultural, cultural.
Lfocal associations 40 10
Employers insured 2,464 9^78
Employees insured 12,000 40,000
Wages insured (florins) about 5,000,000 14,000,000
Expenses and losses (florins) 31,381 144,747
Per 100 florins wages 0.65 1.04
Losses 19,013 99,193
Per 100 florins wages 0.40 0.71
Expenses 12,367 48,564
Per 100 florins wages 0.25 0.33
Accidents 220 1,132
Less than 60 days' disability 198 1,030
Over 60 days 19 88
Deaths 3 14
Permanent disability 4 9
Contrasting these results with those in the case of industrial acci-
dents, the following comparative figures appear:
Horti-
cultural.
Average premiums 0.75
Accidents per 1,000 workmen 18
Deaths & permanent disability per 1,000 0.58
Expenses & losses per 100 florins
wages 0.65
In the Dutch mutual associations, premiums and settlements are
based on actual payrolls, differing therein from the German system.
The payroll system works smoothly and satisfactorily. Owing to the
lack of sufficient data, no risk classes have as yet been established. It
is intended, however, ultimately to introduce that system. A beginning
has been made, of course, in differentiating horticultural from other agri-
cultural accidents. Every effort is made to exclude claims for non-
occupational accidents, and the strict control and prompt investigation by
the local committees tends effectively towards this end.
Employers have the option of insuring members of their own
household against risks or not as they desire. All but five per cent
prefer to have their families covered by the insurance.
Agri-
Indus-
cultural.
trial.
1.10
2.40 (1907)
28
81 (1911)
0.67
8.00 (1911)
1.05
2.22 (1907)
SWITZERLAND.
THE RECENT LEGISLATION REGARDING WORKMEN'S ACCI
DENT AND SICKNESS INSURANCE.
Good and Weak Points of the Measure — Peculiar and Novel Features
and Reasons Therefor — ^The Sickness Insurance Law —
The Accident Insurance Law.
Switzerland enjoys the distinction of being one of the first coun-
tries to do away with the theory of employers' liability for accidents
to employees for negligence only. In 1875 transportation companies
were made liable for all accidents to employees, except in case of willful
neglect or ''Act of God"; and from 1877 on the same principle was
gradually extended to apply to work in factories and in building, min-
ing and contracting and to other industrial pursuits. Instead of re-
maining content with this form of legislation, however, the National
Council in 1890 submitted to the voters an amendment to the Federal
constitution allowing the introduction of an obligatory system of insur-
ance against sickness and accidents. This amendment was ratified on
October 12th of the same year by the overwhelming vote of 283,228 for
and only 92,200 against. Although the authorities immediately began to
work out the details of a new scheme of insurance, the same, known as
the Lex Forrer, was not completed until 1898, and only adopted by the
National Assembly on October 5th, 1899. Its leading features were the
compulsory insurance of workingmen against sickness and accidents;
and all classes — ^workmen, artisans, agricultural laborers and small
trades-people — ^were made subject to its provisions. Unlike the German
compensation laws, wherein the limit is $500, the Forrer Act applied
to all those earning up to a thousand dollars a year. Accident insur-
ance was to be placed with a state institution, which was to have a
monopoly of this branch of the insurance business. The State was to
bear one-fifth of the cost of accident insurance and to contribute a
certain amount for each person insured against sickness, which con-
tributions together would have entailed an estimated cost of eight mil-
lion francs. Arrangements were made for the establishment of gov-
ernment sickness insurance societies, which would have competed with
the existing private societies. That act contained over 200 para-
graphs, and its provisions and administrative details were complicated
and involved.
No sooner was the Lex Forrer enacted than a storm of opposition
arose. The existing private sickness insurance societies, with their
influential followings, objected to the organization and competition of
the public sickness insurance societies therein provided for. The agri-
63
cultural interests claimed that the compulsory insurance of laborers in
their industry would impose altogether too heavy a burden. And the
industrial classes were opposed to the idea of a government monopoly
of accident insurance. A referendum having been demanded by 117,461
voters, the Lex Forrer was submitted to a popular vote on May 20th,
1900, and rejected by a vote of 341,914 against and 148,035 for.
Disheartened by this rejection, the Federal Council did not present
another bill affecting workingmen's insurance until December 10th,
1906. In its draft of a new measure, the Council was actuated not so
much by a desire to frame a perfect statute as by a wish to submit
a measure that would receive the approval of the majority of the voters.
That motive should be borne in mind in any study of this law. The bill
was debated at great length, and was not finally adopted by the National
Assembly until June 13th, 1911. Like its predecessor, the Lex Forrer, it
aroused great opposition; but this time the objections came mainly
from the employer class. With difficulty 75,930 citizens were found
who demanded the usual referendum. On February 4th, 1912, the elec-
tion took place, preceded by a bitter contest, and the law was finally
approved by a vote of 287,585 ayes against 241,416 noes, or by a
majority of 46,149. Eight only of the 25 cantons rejected the measure,
the most important of them being the French speaking cantons, where
the monopolistic features of the new law were strongly disliked for
interfering too much with the freedom of the individual. On the other
hand, owing to the support of the laboring class, the cantons contain-
ing the important manufacturies and industrial workshops approved of
the act, as did also those cantons wherein the agricultural interests
predominated. The authorities are now busily engaged in preparing the
necessary organization to put the new law into effect. That part relat-
ing to sickness insurance is expected to go into operation in 1914, and
that relating to accidents not later than January 1st, 1916.
The Sickness Insurance Law.*
While the provisions of the new law relating to accidents aroused
great antagonism, those relating to sickness insurance met with com-
paratively little opposition or criticism. It has been generally regarded
as a step in the right direction, though many persons are of the opinion
that it does not go far enough.
Before taking up this new statute, a brief survey of the existing
system of voluntary sickness insurance is in place. That system has
grown rapidly, as the following figures will show:
Year. No. societies. Total membership.
1865 632 96,000
1890 1,085 209,920
1903 2,006 505,947
♦Title I of Federal Law of June 13, 1911.
64
Out of every 100 inhabitants, 18 are insured against sickness in Ger-
many, 13 in Switzerland, 10 in Austria and 7 in France. Next to Ger-
many, therefore, where such insurance is compulsory, Switzerland oc-
cupies the post of honor.
But, while the figures just given make a gratifying showing, every-
one familiar with conditions in Switzerland admits that there is a cry-
ing need for increasing the scope and efficiency of the present system
of sickness insurance. In 1903 it covered only 30% of the male adult
population and 7% of the women,— only 29% of the men and 21% of
the women factory hands being insured. Hardly any children are in-
sured; and many perish annually because the parents are unable to pay
for proper medical attention. In the remote mountain districts physi-
cians are not to be had — ^in the Canton Wallis over half of those who
die are without medical attendance. In one extreme case 39 out of
the 42 deaths occurring in one community during a g^iven period took
place without a doctor being available, even to sign the death certifi-
cate. These are grave evils which everyone admits should be remedied
as soon as possible.
On the part of many of the largest employers of labor, the govern-
ment was urged to introduce a system of obligatory sickness insur-
ance. Where voluntary insurance prevails, the younger workmen neglect
to join, and, handicapped by too large a percentage of older and less
healthy members, the societies are often unable to fulfill their obliga-
tions. To this fact is ascribed the failure of 31% of all the Swiss sick-
ness insurance societies during the period 1880-1903. In the various
trades and occupations wherein the employer is now made responsible
for all accidents, only one-half of all the workmen are insured against
sickness. As only a limited number are injured in accidents, whereas
all laborers sooner or later meet with sickness, compulsory sickness in-
surance forms the foundation for any universal and satisfactory sys-
tem of social insurance.
However sound these arguments, the authorities felt that the decisive
vote by which the Lex Forrer was rejected proved conclusively that the
Swiss people did not desire as yet the introduction of a system of
compulsory sickness insurance. As the next best thing therefore, the
government decided on the plan followed in Sweden, Denmark and Bel-
gium of encouraging the growth and extension of voluntary sickness
societies by a system of subsidies. But, in order to expedite introduc-
tion of compulsory sickness insurance, permission is granted in the new
law to the individual cantons and communes to declare sickness insur-
ance compulsory, either for all or for certain categories only, of work-
men, such as the more poorly paid. If a canton makes such insurance
obligatory and defrays part of the expenses, the Federal government
agrrees to contribute an amount equal to one-third of the total outlay by
the canton. It is impossible to say as yet whether any of the communes
or cantons will avail themselves of this right.
Under the new law all existing Swiss sickness societies — irrespective
of religious, political or other entrance requirements for members —
65
may become approved or recognized societies and thereby entitled to
government aid. They must not be run for profit, must show their
financial responsibility, must be open to both sexes and must receive
Swiss on as favorable terms as members of any other nationality. Their
rules and regulations, as well as all proposed changes, must first be
approved by the government authorities. The societies must agree to
receive members of a year's standing coming from other societies, who
desire to transfer their membership on account of removal, change of
occupation or dissolution of the original society. To obtain govern-
ment aid, the societies must either furnish medical attendance and
medicines or pay their members a sickness benefit of at least one franc
a day. As a preventive of simulation, children under 14 years of age
cannot be insured in societies which give sickness benefits. For the
same reason, the sickness benefit is payable only from the third day of
illness, whereas medical treatment must be given from the first day.
As the period of disability is apt to be less where the ailing member has
to shoulder a part of the cost of medical treatment, the societies are
obliged to bear only three-fourths of such cost where the time of treat-
ment in any given twelve months aggregates 270 days or more. But
the societies are required, if they so elect, to give members only 180
days of treatment in the course of one year.
Besides the matters just mentioned, the societies must undertake
to treat for the account of the accident funds all accident cases for the
first six weeks of disability, subject to reimbursement and appropriate
remuneration. In addition, they must forego the right of selecting
physicians as heretofore, and must accept the services of any doctor,
chosen by any ailing member, who resides in the locality, and who is
willing to serve at the rate of compensation prescribed by the govern-
ment.
Up to the present time, women have had comparatively little oppor^
tunity of insuring themselves against sickness. Of the sickness societies
existing in 1903, 58% accepted men only as members, for the reason
that women are a more dangerous risk. Although not so frequently
ill, they are apt to be longer sick than in the case of the other sex, and
there has been a decided prejudice against admitting them as members
of sickness societies. In prescribing, therefore, that no woman may
hereafter be excluded on account of her sex from any recognized society
the new law makes a great step forward. Nor can she be required to
pay any higher dues than a man — she is put on a plane of equality.
Although the same disability results as in the case of an ordinary
illness, only a few of the Swiss sickness societies have furnished sick
benefits or medical treatment in the event of childbirth. Hereafter,
however, the accepted sickness societies are obliged to treat all such
cases as though they were ordinary illnesses, and must give assistance
or treatment for a minimum period of six weeks. And as experience has
shown that children have a much better chance of surviving if nursed
by their mothers for the first few months of their existence, the so-
cieties are obliged to pay all mothers who nurse their children for a
66
period of at least ten weeks from time of birth a special grant off
twenty francs. In this way it is hoped to do much in the way of dimin-
ishing the rate of infant mortality. If 300,000 women are insured in
the approved sickness societies, which is the number the authorities
have calculated upon, 18,000 cases of childbirth are expected to occur
among them each year.
Whenever a sickness society shall have fulfilled the necessary re-
quirements, it becomes entitled to an annual subsidy or contribution
from the central government, based on its membership. The amount of
this contribution varies. For children in all cases 3^ francs, and the
same amount for the male members of such societies as pay either
benefits of at least 1 franc a day or furnish medical attendance. In
the case of women members, 4 francs is contributed, because their ratio
of risk is higher. Societies supplying both benefits and treatment are
to receive 5 francs a member, the sexes being treated alike, and 50 cen-
times extra is paid in all cases where in the course of 540 days, 360
days of treatment are allowed. Twenty francs is allowed for every case
of childbirth, and the same sum in addition for each newly bom child
nursed by its mother for a period of ten weeks. But the sum total of
the government's contribution in any given year is not to exceed two-
thirds of the gross amount realized from members' dues, gifts and
other sources. And where cantons or communes have made sickness
insurance obligatory— either for all or for only certain portions of the
laboring population — and have assumed the pa3rment of the dues of
members, either in whole or in part, the Federal government is to
contribute one-third of any amount thus expended.
Specially favored treatment is accorded the remote and thinly
populated mountain districts, with limited means of communication. Here
the total of the Government's contribution may reach 7 francs per mem-
ber per year; and it may also make a special grant of 3 francs per head
to the cantons or communes in order to reduce the cost of treating sick
persons.
In 1903 there were 505,947 persons insured in the various private
sickness societies. After the new law has gone into full effect, the of-
ficials count on a membership of 800,000 in accepted sickness societies
entitled to benefits under the act; — 660,000 in voluntary societies and
140,000 in societies in cantons and communes wherein sickness insurance
shall have been made obligatory. The Government's sickness insurance
budget is therefore estimated in detail as follows:
r
•ft. »« .1 I . ' r
Voluntary Insurance Societies.
100,000 children, at fr. 3% fr. 350,00#
255,000 men, at fr. 3% " 892,500
70,000 women, at f r. 4 " 280,000
235,000 men and women, at f r. 6 " 1,175,000
400,000 extra treatment, at f r. 0.50 " 200,000
67
14/M)0 births, at f r. 20 " 280,000
4,700 nursing mothers, at f r. 20 " 04,000
Total fr. 3,271,600
CompaUory Insurance Societies.
140,000 members, at fr. 4 (contributions to cantons) fr. 560,000
85,000 members at fr. 2 (cantons assuming dues of needy
persons) *' 70,000
2,800 births, at f r. 20 " 56,000
700 nursing mothers, at f r. 20 " 18,000
Total fr. 704,000
For societies in mountainous districts *' 500,000
Grand total fr. 4,475,500
Based on the figures expended by the societies in 1903, the cost
of providing 800,000 persons with benefits and treatment in sickness
would be about seventeen million francs. The Government's contribu-
tion, therefore, will be slightly more than one-fourth of the total amount
required — certainly a very generous proportion. An enrollment of 800,-
000 would mean that about 21% of the total population would be pro-
tected by sickness insurance, which percentage is about the same as
that in Germany.
But will the existing societies accept the Government requirements ?
As we have seen, the new law has many good points. It does away
with all discrimination against women and enables them to obtain in-
surance on the same terms as men. Medical assistance is granted them
in case of childbirth. A very important provision is that allowing the
transfer of membership from one society to another where a laborer
changes his place of occupation, for 100,000 such transfers are said to
occur annually in Switzerland. The way is left open for the gradual
introduction by the individual cantons of compulsory sickness insurance
for all classes, while especial care has been bestowed on the formation
of sickness insurance societies in the remote mountain districts. The
widespread and successful application of this law depends, however,
largely on the extent to which societies can be found to conform to
the Government requirements, so as to become entitled to the Federal
subsidies. As far as the existing societies are concerned, there are
several provisions in the law which may cause a number of them to
hesitate about accepting its terms.
In the first place, the societies must give up their independence
of action and subject themselves to Government inspection and regula-
tion. Many of them are supported to a considerable degree by con-
tributions from employers, etc., which will be lost in the event of
I
68
change to accepted Government organizations. No longer will they be
able to keep down medical costs and to guard against simulation by
having members treated by trustworthy physicians of their own selec-
tion. Lastly, which is the most serious objection, they may get into
grave financial difficulties by being obliged to treat for the state insti-
tution all accident cases for the first six weeks of disability, and to
advance the compensation therefor at the rate of 80% of wages, instead
of about one franc a day, as in the case of sickness. The Government
agrees, of course, to reimburse the societies according to a fixed tariff
for the handling of such accident cases; but whether that tariff will
suffice to cover the additional outlays made in this connection remains
to be seen.
It should be noted, however, that under the law any accepted so-
ciety can cease to act as such by giving three months' notice of such
intention. In view of this provision, it is safe to assume that the ma-
jority of the existing sickness societies will elect at the outset to be-
come accepted Government institutions. Later on, if they find the
burdens and annoyances of acting as such to be too heavy, doubtless
a number of them will take advantage of this loophole in the law and
give notice of their desire to resume their former voluntary, uncontrolled
and unassisted form. To what extent such withdrawals will take place
it would be futile to speculate in advance.
The Accident Insurance Law.*
L
The new law establishes a National Swiss Accident Insurance De-
partment, with headquarters at Lucerne and individual agencies i^
each canton, govemedf by an administrative council of 40 members
appointed by the Federal Council for a term of six years. Twelve of
them are to be representatives of the compulsorily insured employees
and sixteen of the same class of employers, four are to be named as
representatives of the voluntarily insured and eight as representatives
of the Government. The active management is to be in the hands of a
board of managers nominated by the Administrative Council, but elected
by the members of the Federal Assembly, who are not bound, however,
to follow the recommendations of the Administrative Council.
Four branches of insurance are to be undertaken by the National
Insurance Department. First, compulsory occupational accident insur-
ance affecting all workmen employed in Switzerland in the following oc-
cupations: Railway and steamboat services; postoffice employees; those
engaged in factories subject to the provisions of the law of March 23,
1877; in the building trades; transportation by land or water; the erec-
tion and repairing of telephone and telegraph lines and machinery; in-
stallations of a technical nature; general contracting, tunnelling, mining,
*Title II of Federal Law of June 13, 1911.
fThis body is really more advisory than governmental; see infra.
69
quarrying, and the building of streets, bridges, waterworks and sewers.
The premiums for this insurance have to be paid by the employers.
Second in the list is a decided innovation, namely, compulsory in-
surance in the trades and occupations just enumerated against non-occu-
pational accidents or such as occur outside of working hours. Here
one-fourth of the premium is charged to the Federal Government and
the other three-fourths to the employee. The employer is to advance the
workman's share of such premium, and may deduct the amount of the
same from his wages.
A third category covers voluntary insurance up to 3,000 francs,
against accidents to persons not included among the obligatorily insured,
residing in Switzerland and over 14 years of age. One-eighth of the
premium required in such cases is to be advanced by the Government.
Lastly comes the voluntary insurance of employers against liability
for injuries to outside or third persons.
In these two last branches, the Government institution will be ex-
posed to the competition of the private insurance companies, but on
equal terms only in the last class, for in the field of voluntary self-
insurance the private companies will be badly handicapped and will be
at a great disadvantage through the Federal Government's donation of
one-eighth of the required premium.
Besides endowing the department with a working capital of five
million francs* and a reserve fund of the same amount, the Govern-
ment is to pay one-half of all the administrative costs of the central
institution and to allow it the free use of the mails and exemption from
all taxation except on real property not made use of in its insurance
business. A certain part of the premiums are to be set aside in each
of the four projected branches of insurance as a reserve until such
time as the fund shall equal one-half of the average premium receipts
plus the Government subsidy received by the institution during the last
preceding five years.
The authorities are empowered to compel the societies subsidized by
the Government under the sickness insurance law to treat all accident
cases for the State institution's account for a maximum period of six
weeks. Only from five to ten per cent of all injuries caused by acci-
dents remain unhealed or uncured at the end of that period; and spe-
cial arrangements will have to be made for those cases.
Compensation under the new law is to be granted on a liberal scale.
Besides free medical treatment, the injured party is entitled, from the
third day on, to 80% of the wages earned by him before the accident.
In every case, 14 francs is taken as the maximum daily wage — ^any-
thing in excess of that figure is disregarded. If permanent disability
ensues, 70% of his customary wages is to be paid, but 4,000 francs is
to be considered the maximum salary in calculating the rate. If only
partial permanent disability ensues, the amount is reduced in propor-
*This donation to the working capital, however, is simply an advance
to be repaid.
TO
tion to the extent of the injury received. In case of death, a funeral
benefit of 40 francs is provided for, and the widow is to receive during
her widowhood an annuity equal to 30% of her husband's yearly wages.
Children each receive 15% until they are 16; if orphans, 25%. If a
child is permanently incapacitated at the age of 16, the annuity does not
cease, but runs until the 70th year. Ascendants receive for life, and
brothers and sisters up to the age of 16, an annuity equal to 20% of
the annual wage. But in no case of survivorship is more than 60%
paid — ^if an excess results, the annuities are scaled down, each propor-
tionally, to 60%. The widow and children are preferred for the
amounts due them, but if they aggregate less than 60% the ascendants
and collateral heirs receive the difference. Where the annuity to sur-
vivors, or that granted to the victim for permanent partial disability, is
less than 10 francs a month, the State institution has the right to com-
pound it by the pa3rment of a lump sum.
Foreigners, (of whom 200,000 are estimated to be working in
Switzerland), receive only % of the benefits accorded to natives, unless
their home country grants to SwissT citizens equally as high a com-
pensation in case of accident or sickness, as is to be provided by the
Swiss law.
Under the present employers' liability system, an injured workman,
if only temporarily disabled, is entitled to recover the full amount of
wages lost by him. In granting only 80% of the daily wage earned
in such cases, the new law operates to the disadvantage of the em-
ployee. In case of death or permanent disability, however, he will
receive a much higher rate of compensation than now. Instead of a
maximum recovery of 6,000 francs, the amount to be awarded is an
annuity equal to 60% to 70% respectively of his former wages, up
to 4,000 francs annually. 6,000 francs capitalized at 4% will yield
an income of only 240 francs a year, which is the highest amount an
employee can now recover. But hereafter, the average yearly annuity
paid will vary between 60% and 70% of 1,200 francs (the average
yearly wage), i. e., will be between 720 and 840 francs. Thus a per-
manently disabled workman will be three times better off than under
the present system.
According to the calculation of the authorities, 700,000 persons
are counted upon to become insured against accidents. This number
is made up as follows:
51,000 Railway and steamboat employees.
377,000 Employees covered by present employers' liability insurance.
122,000 Employees additional in compulsorily insured list.
150,000 Employees voluntarily insured .
700,000 Total number.
At an average wage of 1,200 francs, this would make a total pay
71
roll of 840 miUion francs. The premium rate is fissured as follows:
For occupational accidents 2.76
For non-occupational accidents .55
For administration expenses .33
Total 3.63
Based on the premium rate and total pay roll just mentioned, the
cost of this new insurance will amount to 30,492,000 francs. This is to
be divided as follows:
Per cent,
of Wages.
Employers, 19,008,000 francs 2.26
Employees, 8,320,500 francs 99
Government, 3,163,500 francs 38
The employers have to bear the entire cost of insurance against
ordinary occupational accidents, less the Government's contribution to-
wards the estimated administrative expenses. The employee's share
is divided as follows:
Francs.
% cost of non-occupational accidents of the com-
pulsorily insured 2,871,000
% cost of occupational accidents of the volun-
tarily insured 4,539,500
% cost of non-occupational accidents of volun-
tarily insured 910,000
Total 8320,500
The Government's contribution is apportioned as follows:
Francs
% cost of non-occupational accidents of the com-
pulsorily insured 957,000
% cost of occupational accidents of voluntar-
ily insured 648,500
H cost of non-occupational accidents of volun-
tarily insured 130,000
% cost of administration expenses 1,428,000
Total 3,163,500
To this should be added the cost of the special insurance tribu-
nals, viz: 161,000 francs, which brings the Government's total esti-
mated outlay up to 3,324,500 francs. If to this be added 4,475,600
francs to be bestowed on the sickness insurance department, the Swiss
72
I
Government ia facing an anticipated annual expenditure all told ai
7^00,000 francs on account of its new insurance law.
On behalf of the new law one can say that it will bring about
compulsory accident insurance for one-fourth more employees than
under present conditions. To the severely injured workman it affords
a much higher compensation, given in the form of a permanent
annuity instead of by the payment of an easily dissipated lump sum.
The average rate of indemnity is higher than that granted in any
other country. Even non-occupational accidents, or those outside of
working hours, are to be compulsorily insured, something that has never
yet been attempted in any other country. Whether as many as
150,000 will become voluntarily insured, is an open question. Ev^n
though the Government assumes one-eighth of the total cost, the em-
ployees, especially in the more poorly paid occupations, like agri-
cultural pursuits, may find it beyond their means to pay the remain-
ing seven-eighths of the high premiums required.
As compared with those in the obligatorily insured categories, those
taking out voluntary insurance are at a decided disadvantage. The
former obtain insurance against every kind of accident and only have
to defray % of the premium for non-occupational accidents, amounting
to 0.041 2-3 of the total wage earned. To obtain the same protection,
the voluntarily insured must pay the entire premium, less only the
Government's % share and its contribution to the cost of adminis-
trative expenses. For them the premium charge works out over 3%
of the total yearly wage. If insurance against non-occupational acci'
dents had been left optional, one-sixth of this charge could have been
saved; and no good reason exists why this should not have been done.
But the authorities preferred to have the two classes of insurance go
together — both occupational and non-occupational insurance must be
taken out, or the worker not compulsorily insured will get none at all.
From nearly every point of view the insurance of non-occupational
. accidents appears to have been a mistaken move. It is right and proper
to insure workmen against the consequences of accidents arising in the
course of their employment, but to go a step further and to indemnify
them against injuries incurred while not working and while under no
professional risk is to put them in a favored class as compared with the
rest of the population. As no other country — except Sweden, where the
Government furnishes such insurance but only on a voluntary basis —
has attempted to insure such risks, no reliable statistics are available
as to the cost. Its financial consequences are therefore altogether un^
certain. If, in spite of unremitting watchfulness, simulation is constantly
on the increase in occupational accidents to workingmen, how are such
fraudulent practices to be checked or controlled where injuries are re^
ported to have occurred away from all oversight or witnesses? Wil]
not, therefore, the estimate of 13% of all accidents be greatly ex-
ceeded? The experience of the Swiss insurance company. The Helvetia^
need only be recalled, which company undertook such insurance, but
was speedily obliged to give it up on account of the losses entailed due
78
to artificially inflicted or simulated injuries. The workmeB of Italian
nationality were especially noted for self-made wounds, produced bjr
acids and corrosives.
Another interesting problem is whether the employers will not
sooner or later assume the employees' quota of the premiums for non-
occupational accidents, in which event all check upon simulation from the
employees' self-interest will be lost. That this will come to pass is pre-
dicted by many in touch with the situation. By the terms of the law, the
employer is obliged to remit to the Federal insurance department the
portion of the premiums due from his employees for non-occupational ac*
cident insurance. Where an employee is earning merely a minimum liv-
ing wage he cannot shoulder this amount, small though it be, and it
must perforce be borne by his employer. In the larger and more pros-
perous establishments, the employers will do this for all classes of em-
ployees rather than be bothered with the annoyance of having to keep a
complicated set of books and of deducting the small sum of a few cents
a week from the wages of each workman. And in time the smaller em-
ployers may follow suit.
As is no secret, undesirable concessions and unnatural compromises
were made in order to secure the passage of the accident insurance law.
To this circumstance is due the insertion and retention of the provision
for the insurance of non-occupational accidents. The Lex Forrer, so
overwhelmingly rejected in 1900, contained a like provision, advocated
on the ground of the difficulty in distinguishing between these and the
usual run of occupational accidents. On its being shown that in the
case of 280,000 accidents settled by the three leading Swiss employers'
liability insurance companies, only 16 lawsuits arose to determine the
category in which the accident belonged, the retention of the non-occu-
pational accident clause was then urged on the ground that for the in-
jured workman the consequences of an accident incurred outside of
working hours were just as disastrous as in the case of one received
in the course of his employment. That is doubtless true. But why
should the State be called upon to help protect a certain class of
its population only at the expense of the rest against the results of ac-
cidents incurred through causes common to all classes, and in no way
due to the risks of their employment?
Besides its unfairness to the remainder of the community, the in-
clusion of the non-occupational accident clause is responsible for the
rise of 14% in the estimated cost of the new law as compared with the
acts heretofore in force. If that clause had been omitted the employers
would have been able to shoulder the entire cost and no contribution
from the workmen would have been necessary. The Federal Govern-
ment would have been relieved from the burden of granting subsidies to
carry out its scheme of accident insurance, which nearly every other
nation that has legislated on the subject has thus far succeeded iti
avoiding. The money thus saved might have been used in starting a
system of old age insurance. In spite of all these possibilities, the Na-
tional Assembly, influenced by political considerations, resolutely stuck
74
to its determination to include non-occupational accidents within the
scope of the law. Otherwise the influential Socialist party threatened
that they would vote against the measure; and it was realized that with-
out its support the act could not obtain the support of a majority of the
electorate. It should also be noted that the Government's being obliged,
owing to the inclusion of non-occupational accidents, to grant subsidies
for accident insurance, was one of the principal reasons urged for intro-
ducing a State monopoly of accident insurance.
Another section of the law which has been much criticised is that
relating to the compensation of foreigners. Its wording is unfortunate
in providing that foreigners are only to receive three-fourths of the
usual compensation, except those from countries wherein Swiss are paid
as high an indemnity as they would have received if injured at home.
But such a case is never likely to occur, inasmuch as the Swiss law
grants a much higher rate of compensation than that afforded by any
other country — 25% more than Germany, which is the next highest. If
the section had read that foreigners, whose countries indemnified work-
men of Swiss nationality as liberally as native citizens, should receive
full instead of three-quarters compensation, other nations would have
been under some incentive to treat injured Swiss laborers as liberally
as their own subjects. To make full compensation to foreigners em-
ployed in Switzerland dependent on other countries raising their com-
pensation rates to the high Swiss standard, is seeking the impossible.
Consequently this provision of the law will fail of its object and will
accomplish nothing towards doing away with any existing discrimina-
tions against Swiss laborers in foreign countries.
Much stress has been laid by the advocates of the law on the fact
that the central government insurance establishment is to be run on
mutual lines. In effect, it is claimed, the institution should be likened
to a large mutual insurance company managed by those directly inter-
ested. The appointment of the members of the governing board, how-
ever, is vested in the National Assembly, and, with eight direct repre-
sentatives of the Federal Government thereon, the authorities are pretty
certain to control the policy of the insurance department. Besides, 40
governors is altogether too cumbersome a board to. work efficiently, and
the real management and control of policy will be in the hands of th^
directors, whom the National Assembly can select as it chooses. The
Government office is expected to begin operations with a staff of from
500 to 600 clerks.
As has been stated before, the unhappy insertion for vote getting
purposes of compulsory insurance against non-occupational accidents,
with its attendant Government subsidy, was one of the chief causes why
a State accident insurance department was deemed necessary. The
other reason urged for its establishment, — ^that the Government would
furnish through its central institution insurance most cheaply and satis-
factorily—does not appear well founded.
Even the advocates of a Government system have had to admit that
the existing private agencies — stock companies, mutual societies, and
75
employers' associations — ^have covered this field of insurance eco-
nomically and given a very satisfactory service. The average profits of
the 17 domestic and foreign stock companies directly insuring em-
ployers liability risks have only equalled 1% of the total premium re-
ceipts — such insurance being given at cost price. The largest and
strongest company of them all (the Zurich) showed for the period
1906-1910 gross premium receipts of 159 million francs and net profits
of 12,700,000 francs. Of these only 2,200,000 francs came from surplus
earnings, while 10,500,000 francs were derived from interest on thie
legal reserves carried. In 1910, the two leading companies (the Zurich
and the Winterthur) showed, the former a profit of 218,000 and the lat-
ter a loss of 213,000 francs, after paying all losses and administrative
expenses. Had it not been for the interest on the large reserves ac-
cumulated of 2,706,000 and 1,803,000 francs, respectively, the companies
would not have been able to declare a dividend. Claims are settled
quickly and satisfactorily and with almost no litigation. Out of a
total of 103,000 accidents settled during the course of two years by the
different Swiss private organizations, only 165 were taken into court,
or less than two lawsuits per 1,000 accidents. In contrast to this, one
need only think of the enormous and constantly increasing mass of liti-
gation in Germany and Austria. In Austria there is one appeal for
about every three accidents entitling the injured to compensation. In
1909 76,352 appeals, or 18% of all accident cases, were brought before
the German arbitration tribunals, and 25,234 of these, or 33%, were
further appealed to the imperial insurance office. On account of the
excellent record made by the Swiss companies, it is all the more sur-
prising that the National Assembly should have decided on suppressing
their activities in the accident insurance field. In favor thereof the
argument was advanced that, if allowed to compete, the private com-
panies would take only the better class of business, leaving the state
institution to handle all the bad risks. Even if that were so, it is im-
material, for the state can charge what rates it pleases and thereby
recoup itself for any losses. As a matter of fact, the ZUrich and Winter-
thur companies formally offered to share any and all risks with the
state institution on an equal basis. Nevertheless, the Swiss lawmakers,
perhaps fearing that the government institution could neither flourish
nor make headway unless it had the field to itself, remained unmoved
and determined to do away with all private competition.
Aside from the possible heavy cost of non-professional accidents, it
remains to be seen whether the intended government monopoly of work-
men's accident insurance is going to work reasonably well in practice or
prove a very costly experiment. State insurance has usually resulted
either in excessively high premium rates, with costs covered, or in too
low premiums, with constantly recurring deficits.
That the new government accident insurance department will furnish
insurance cheaper or settle claims more promptly than the private com-
panies is not to be expected. Whatever experience there is, points the
other way. The history of the government's military insurance depart-
76
ment against sickness and accidents, where costs have been rising by
leaps and bounds during its 10-year existence and have averaged more
than five times the original amount estimated, is far from re-assuring.
Complaint is made of the dilatoriness and of the disagreeable haggling
of the government officials in settling with victims of railway accidents
occurring on the lines owned by the state.
In view of this, both employers and employees may hereafter have
decided cause to regret in many respects the suppression of the existing
system of private competition and its replacement by a bureaucratic
government monopoly.
SWISS EXPERIENCE IN MIUTARY INSURANCE.
An Instructiye Ten Tear Test of State Insurance— Unfavorable
perience.
As throwing some light on the subject of State insurance, the
operations during the last ten years of the government bureau for in-
suring those engaged in military service is not without interest.
Beginning in a small way in 1874, the Swiss government thereafter
gradually extended the relief offered to those who become ill or dis-
abled while in the military service. During the period 1889-1894, the
State insured such military risks in one of the larger private Swiss
insurance companies with very satisfactory results, as was frankly
stated in the National Assembly. Nevertheless, the officials came to
the conclusion that it was undignified for the government to employ a
private agency, and, from 1895 on, conducted this branch of insurance
for account of the government direct.
In 1898 a new proposal was made to increase the rate of compensa-
tion to be paid to soldiers, who suffered injury or incurred sickness or
disability during the time of their military service, to the same amount
that an industrial establishment would have to pay to one of its em-
ployees in like circumstances. The advocates of the measure asserted
that, based on the most careful estimates, the increased cost of this
extra insurance would not exceed 100,000 francs a year. In place
of an annual average outlay of 64,000 francs, the government experts
confidently predicted that 164,000 francs would suffice to meet all
charges in the course of the year under the proposed act. Accordingly,
on these representations, the Swiss Parliament adopted the proposed
law; and it took effect January 1st, 1902.
Hardly had the new law gone into operation before it was seen that
the estimates of its cost were absolutely untrustworthy and too low.
In the very first year after its passage, an extra credit of 500,000 francs
had to be voted, in addition to the 165,000 francs provided in the gov-
ernment budget. How far the authorities erred in the figures they
submitted, namely, 165,000 francs, is best shown by the following table
of the actual cost of the insurance of the Swiss military establishment
for the 10-year period beginning with January 1st, 1902.
Insurance cost.
1902 fr. 680,000 1908 fr. 850,000
1903 " 807,000 1909 " 893,000
1904 *' 787,000 1910 " 1,017,000
1905 " 836,000 1911 " 1^16,000
1906 " 879,000 Average " 894,000
1907 " 876,000
In the original government estimate, the sum of 116,500 franes
n
deemed sufficient to meet all payments required on account oi
cident or disability cases. The actual average amount required for the
10-year period has proved to be 351,000 francs, the least in any givea
year being 220,000 francs and the highest (in 1911) being 607,000
francs. In the department of sickness insurance, the showing is even
worse. In place of an anticipated annual outlay of 36,000 francs, the
amount expended has run beyond that required for disability cases and
in 1911 reached the total of 614,000 francs. Administration costs have
likewise far exceeded the original estimates and show a steady in-
crease from year to year, having risen from 33,000 francs in 1902 to
69,000 in 1911.
Meet of these figures are clearly set forth in a message dated No-
vember 12th, 1912, addressed by the Bundesrat, or governing council,
to the Swiss National Assembly. The increased cost is ascribed in
part to the higher indemnity rates paid under the new law, which have
induced more of the well-to-do soldiers to apply for relief than was the
case with the small amounts previously doled out, and secondly, to the
simulation and exaggeration of illnesses and accidents. Thus the gov-
ernment counted on having to issue only 20 permanent pensions a
year, instead of which the average number has been 53. In one year,
the figure rose to 129. In the last 12 months before this law took ef-
fect, 2,908 cases of sickness were reported, entailing 47,010 days of
illness, whereas in 1911 the corresponding figures were 5,906 cases and
109,474 days.
Whatever may be the true causes for its unexpected and costly re-
sults, the experience of the government in the branch of military in-
surance makes a very unfavorable showing. The losses to be met proved
from the start to be four times as great as had been counted on, and
are constantly rising — although the size of the army has remained
about the same. Simulation of illnesses and exaggeration of injuries
are rife; and the officials are unable to make any headway against
these abuses. This chapter of Swiss State insurance has only added
to the misgivings of those who so strongly opposed the introduction
of the system of compulsory accident insurance to be carried on by the
State alone without any outside competition. Will the State make a
better showing when it comes to handling this new class of risks or
will the outcome be as similarly unfortunate and costly for the g^ovem-
ment finances as in the case of the insurance granted to those in its
military service? This is a question which must be left to time oad
experience for an answer.
f
I
I
i
«;t
Live Music Archive
Librivox Free Audio
Metropolitan Museum
Cleveland Museum of Art
Internet Arcade
Console Living Room
Books to Borrow
Open Library
TV News
Understanding 9/11