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Prudential Assurance Co: 1934 Review

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1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry
1934. From British Commerce and Industry

Note: This is an abridged version of a chapter in British Commerce and Industry 1934

THE PRUDENTIAL ASSURANCE COMPANY LIMITED

INDUSTRIAL Assurance has become almost synonymous with the name "Prudential"; partly, no doubt, on account of the volume of business transacted by this single organization; probably, however, by reason of what may be termed the discernment of the company in being able to improve this class of life assurance and bring it on behalf of the poorer members of the community within the comity of the well-regulated, more powerful and older established classes of insurance business.

For Industrial Assurance is founded on a strong social impulse, and is an indispensable part of the daily life of any industrialized nation. As such, it deserves a constructive and helpful attitude of mind. It has been hard to build up—how hard only those can know who have trodden the toilsome path and devoted their whole careers in its cause. It has been an easy target for critics, and is so still, especially to the critic whose knowledge of facts and figures does not embrace sympathy and understanding of their deep social significance. There is a story of a British Prime Minister who on a change of government in France, asked the French President what manner of man was the incoming Premier. Quite the reverse of the outgoing, was the reply. The latter, apparently, was a great scholar, and the President said "He knew everything, but understood nothing; the new Premier knows nothing, but understands everything." And it is in this spirit of readiness to receive impressions, of being able to sense the atmosphere of things, that an endeavour should be made to understand the problems and ideals of industrial assurance, and to review some of its greatest achievements in the record of the Prudential Assurance Company.

It has been the fashion in dealing with the growth of the Prudential over its eighty-six years of activity, to recapitulate all that is phenomenal in its history, and to go no further; to succumb to the sense of its magnitude and millions, to its triumphs of physical organization, its adoption of mechanized routine for large-scale operations, to the uncanny mathematical, statistical or actuarial basis of it all, and the equally astonishing subsidiary and supporting activities which all these involve.

Phenomenal as its figures of achievement undoubtedly are in a comparative sense, we propose to examine the reverse side of the picture, and use them as a commentary on the tasks that lie ahead. Human nature in its social as well as its spiritual welfare demands generations upon generations of apostolical work before it seizes upon the many chances of redemption which lie around, calling for only a simple personal decision, and, afterwards, a not over-exacting discipline in its maintenance. Having regard then to the future structure of society, and a higher standard of life and security to which the poorest among us must be allowed to attain, we prefer to consider the mission of the Prudential Assurance Company in its chosen sphere as not having arrived, as yet, at the half-way house.

But to confine the theme of this monograph to a straight and narrow path, let us dispose of an apparent inconsistency. How is the claim that industrial assurance is founded on a deep social impulse to be reconciled with the second fact of the innate lethargy of human nature in matters of its own true welfare? Each of us should answer this for himself, for we are all only too well aware of the warring elements within us. Endowed as we are with the promptings of a fundamentally fine nature, our conduct is too often dictated by other considerations. But thanks to the persistence of the protective institutions in our midst, we are able to activate our finer side, translate it into life, and adopt it as the basis of our social relations. Through the faith of those who took the lead in previous generations these institutions are now available to us. Among them the Prudential Assurance Company has grown, in spite of taunts, slanders, libels and jealousies—in fact, all the modern equivalents of ancient and medieval forms of persecution—into its present position of general acceptance, and consequently of strength.

By the persistence of its earlier pioneers in the Prudential, the lessons learnt in its administration, the business basis which is being increasingly won for its operation, and the example which the Prudential machine has set to the world, industrial assurance has been established firmly in the scheme of life. To-day, it has become a scientifically organized persistence, the organization of the central administrative authorities at Holborn Bars being even eclipsed by the striking power section through its field force, numbering more than 13,000, who are daily at the doors of the people. So much, then, for the seeming paradox.

Acknowledging the power of the Prudential machine, it is necessary to examine how it expends itself and what are its objectives in the mechanism of modern society. Many attempts have been made in historical times to describe the essentials of an ideal society and how far existing society falls short of these efforts of imagination. They are generally tinged with the personal, political or propagandist predilections of the writers, but common to them all is the ideal of security for all members of the community, whatever vicissitudes should befall. In the modern world, based as it is on social stability and on the measurement of all exchange values in the common denominator of money, security means financial security. The fortunate rich ensure it by setting aside a fund in the form of a trust in favour of their children as each is born. The rest of the community, to which over ninety-five per cent. of us belong, whether we labour for a few pounds per week or a few hundreds and even a few thousands a year, must depend for our security on our own efforts by means of the facilities offered to us by our insurance companies. Not that we who labour are unfortunate, or to be pitied when compared with those who are endowed from birth. Riches have never spelt happiness —that is one of life's little ironies—but a task in life does. There is no happiness without work, and it is the only form of human activity, including the recognized pleasures, of the executive which, as Mr. Bernard Shaw has said, man can take in unlimited doses.

Given work, therefore, a sense of security is the secret of contentedness in life. By means of industrial assurance this is brought within the reach of the most modest pockets. Ordinary life assurance offers it to those who require protection on a larger scale, and fire, burglary, accident, marine insurance, etc., are available to cover all the other contingencies which affect our personal or business positions in life. All these additional types of security the Prudential Assurance Company provides, and by virtue of the scale upon which it is able to transact business, its already substantial connections overseas and its total funds which are in the region of two hundred and eighty millions sterling, it provides them on a vast scale in each branch. We are concerned for the moment only with industrial assurance, for it embraces the security and happiness of the greatest number.

An ideal society would confer this protection automatically on its members, but even in an ideal society it would require a solvent business basis. That society is groping its way towards its attainment and reaching out for its practical accomplishment is proved by the success of the Prudential Assurance Company in its particular field. That society aspires to the fullness of achievement by other methods is shown in the plea that the State should provide work or maintenance for all its members and yet again, that the existing machinery of our leading industrial assurance companies should first be amalgamated and then nationalized, thus introducing a compulsory element as under the State Unemployment and Health Insurance Acts. Good talking points all, provided it is realized that the objective is more likely to be reached, and more quickly, by seizing every new advantage, although small, as it comes within reach, and by continuing such painstaking and step-by-step progress with cumulative results. Rhetoric, or credulity in the proverbial magic wand, will achieve nothing. For " big " business, by its very success, is nationalizing itself whilst at the same time retaining the driving force of individual initiative in its ranks. The measure of progress already made may be found in the figures of the Prudential Assurance Company, which in the Industrial Branch alone was able in 1933 to collect approximately nineteen and a half millions in premiums and to pay or credit its policy holders, by way of claims, allocation of surplus and additions to reserves, with over twenty millions, and it should be self-evident that nationalization or any other form of State direction, whatever its character and scope in the future, must justify itself by being able to offer the public greater benefits in return for lower premiums are obtainable from an established institution which and at a smaller expense ratio than has pioneered to date.

Here we come to the crux of industrial assurance—the expense incurred in the collection each week of mere pence from hundreds of thousands, or more accurately, some tens of millions, of people. So far back as 1871 the late Sir Henry Harben, who had built up the membership of the Industrial Branch of the Prudential from a total of 8,000 new policies a year to 8,000 new policies per week (in 1871), illustrated the difficulty in an address to a meeting of insurance experts in London. He said:-

" If a gentleman had a house to let at £500 a year he could get the rent collected at 21 per cent.; but if there were two hundred houses with rents amounting in the aggregate to £500, its collection would perhaps cost 15 per cent. The wage-receiving class would not bring their premiums to an office."

From 1871 to 1920 the cost of collecting premiums was reduced approximately 10 points, or from around 50 to 40 per cent. of the premium income. But since 1920 great strides have been made, and the outstanding example is the Prudential. Through tightening up the outside field force, and its marshalling into convenient administrative areas, eliminating overlapping and generally perfecting what was earlier known as the block " system; also by its adoption of up-to-date mechanical methods for the treatment of records and correspondence, the company has within the last fifteen years reduced its expense ratio in this branch from the region of 40 per cent. to 23'87 per cent. To make use of a shibboleth of the times, the Prudential Assurance Company embarked upon a system of rationalization in regard to both its internal and external management before the word was coined.

As the question of expense must be a deciding factor in the administration of this form of personal protection, it will be difficult for a nationalized organization to compete with the efficiency already attained by the Prudential and one or two leading offices, which between them transact three - fourths of the total business of the country at present. Comparison also with the cost of maintaining the thrift movement in National Savings Certificates—now represented by a separate Government Department with its paid officers, publicity department, and canvassers spread over the country, and the machinery of the Post Offices at its disposal—places the administration of industrial assurance in a gratifyingly satisfactory light. Its cost, too, in comparison with that of fire insurance, with which it has until recent years closely corresponded, is surprisingly favourable. And finally, regarded in the light of a service that has to be " sold " like merchandise, its purveyors now retain a smaller proportion than is absorbed in distributive costs between manufacturers, wholesalers and retailers.

There is no escape from the house-to-house collecting aspect of industrial assurance, and a great tribute is consequently due to the company which has shown how it can be done successfully. To those whose thoughts are in the Arcady of nationalization, it is well to repeat that this form of collection will still be necessary. A system akin to that used under a "banker's order" has been suggested to eliminate the personal call of agents for premiums. Under this the premiums would be collected automatically through Post Office savings accounts. A State scheme based on the machinery of the Post Office has, in fact, already been tried. Yet it may be said that it was still-born, for it failed to develop beyond the embryonic stage even after sixty-three years of existence. The story is of interest for more than one reason. We will take one only at this point—in illustration of the charge that premiums were frittered away in the expenses of collection.

The great Gladstone in a speech of vituperative splendour lashed the struggline, companies of his day, and introduced the State scheme. That was in 1864. From about 1840 the country was strewn with the wreckages of the earlier companies, and Mr. Gladstone's denunciation as Chancellor of the Exchequer ran:-

"But I have ventured to tell the House that this Bill has grown not out of a consideration of the case of assurance societies, but out of a consideration of the case of friendly societies, and of the wholesale error, but not error only, along with error, deception, fraud and swindling, which are perpetrated upon the most helpless portions of the community, who find themselves without defence."

The only voice raised in defence of the bona-fide character and solvency of the leading companies came from Mr. Harben of the Prudential. But the contest was unequal—like a terrier pitted against a mastiff—and the Bill became law. But after sixty-three years, when it was decided to discontinue the State scheme at the end of 1928 (although many efforts had been made to vitalize it by giving facilities for the transfer of premiums from the Post Office savings account of a member, and by the issue of a premium book in which stamps could be affixed weekly) the number of policy holders was only 9,956 and the sum assured £494,536. In contrast with this, the industrial assurance companies and collecting societies had grown by the same date to embrace approximately seventy-five million policies assuring a sum not far short of twelve hundred million pounds. Of this, the puny Prudential of 1865, when the State commenced to compete, with a premium income almost reaching the £100,000 mark (although even then it was the mightiest in the country, for the number of its policies had grown from 15,494 in 1858 to 280,275 in 1865), was alone in possession of about one-third of the number of policies in force in the country assuring for close on one half of the total sum. To repeat, therefore, there is no escape from the house-to-house collecting aspect of industrial assurance, and a great tribute is consequently due to the company which has shown how it can be done successfully.

As the question of expense is being happily solved it has been found practicable to add to the benefits obtainable under an industrial assurance policy, to bring it more into line with the benefits usually accorded under ordinary life assurance. The only distinction in law between an ordinary life and an industrial life policy is that the premiums for the latter are payable at intervals of less than two months and received by means of collectors. But there are exceptions to this in that ordinary life premiums may also be payable at similar short intervals. The boundary line between the two is consequently rather pale and this being so it may be possible in due course by the steady improvement of benefits to make the dividing line almost imperceptible. This is the goal at which the Prudential is aiming, and towards which it has moved at a surprising rate through being able to reduce the expense ratio in recent years.

Industrial assurance sprang up just over a century ago when ordinary life assurance among the middle and upper classes experienced something in the nature of a boom. It was the poor people's best effort in imitation, although it was not able to aim for more than to secure a decent funeral at death. The strength gathered by the Prudential, both in experience and resources, representing a heritage for which the present generation cannot adequately thank the past, has enabled an evolutionary process of improvement to play its part. Addressing the shareholders in March, 1934, Sir Edgar Horne, the chairman, summarized some of the gains secured for the holder of an Industrial Policy, stating:-

"To-day, industrial assurance does not consist merely of funeral expense policies; the benefits we offer, coupled with our reversionary bonus, enable us to transact a very large volume of other types of assurance, a considerable proportion of which is by monthly premiums. Under endowment assurances issued at ages 17 and upwards by monthly premiums, where the sum assured by the policy is at least £50 we grant, without any extra premium, an additional benefit by doubling the sum assured in the event of death by accident."

He could have said a great deal more when on the subject, but Mr. Schooling, the deputy chairman, on the same occasion described how one of the main criticisms of industrial assurance had been met by the Prudential. The granting of free policies in respect of lapsed policies was inaugurated in 1878 and in 1907 the Industrial Branch was admitted into the bonus and profit-sharing scheme--this concession alone since its inception having conferred a bonus of nearly thirty-five million pounds on the policy holders of the Industrial Branch. Mr. Schooling's summary stated:—

" In 1878 we granted free policies after ten years' premiums had been paid. The ten years was reduced to five in 1882, to three in 1926, and to one in 1929. In 1930, in order to ensure that no one should fail to receive the free policy rights to which he was entitled, the grant of free policies was made automatic on the cessation of premiums. The amount of a free policy issued in recent years is at least equal to the proportion of the original sum assured that the premiums paid bear to the full number payable. Further, since 1899, if premiums under a whole-life assurance have been paid for 25 years and the assured is aged 75, the policy holder has been relieved of further payment of premiums and a free policy is granted for the full sum assured. In the Industrial Branch the total number of free policies of all classes in force is 4,329,531; during 1933 462,282 were granted and 392,506 claims were paid.

" One of the most important innovations by the company has been the granting of reversionary bonuses to Industrial Branch policies. The sum of £1,610,298 was paid to claimants in the Industrial Branch during 1933 by way of bonus—a striking example of the profit-sharing scheme voluntarily introduced by the company years ago."

In explanation of these added benefits, it is not possible to say more than that the Prudential represents a triumph of organization, having at its command the greatest experience, the highest skill, and the most specialized knowledge required in the direction and administration of each of the many-sided activities required of the company.

Another aspect of the growing solidarity and soundness of industrial assurance as conducted by the Prudential may be found in the improving character of the policies in force. Forty years ago, the average duration of a policy was seven and a half years, and the average sum assured E10. Twenty years later, by 1914, the duration figure had been raised to thirteen years, and by 1933 the period in the case of whole life assurances exceeded eighteen years. For the year 1933 the average sum assured proposed for had increased to £26.

The fund upon which the whole fabric of the Industrial Branch is based nearly trebled itself from 1919 to 1933, the figures being £53,696,798 and £145,788,219 respectively. This fund means security and advantage for those who insure at the present time and sets the seal on the stewardship of those who have directed the Prudential through the last two or three generations. No longer dependent on the momentum of mere expansion, the company has applied itself to the scientific task of improving the whole status of industrial assurance as a means to a most desirable social end.

Just as five hundred incomes of £200 a year are of more value, socially considered, than one of £100,000, so are two thousand industrial assurance policies of £50 each a better evidence of social stability and well-being than one life policy for £100,000, or, for that matter, of twenty for £5,000 each.

In the performance of its mission the Prudential has not risen to a position of privilege. On the contrary it has saddled itself in the expectation of all thinkers with the duty of pioneering further in its services to all classes of society. Its assets are in the main the collective wealth and property of its millions of policy holders and not of its shareholders. No form of enterprise can boast of a worthier social purpose, being at once a stewardship and a trusteeship, and it is this which gives it meaning and makes it worth while to carry on, cherishing all the advantages bequeathed from the past, and consolidating the present for all who are to follow in the future.

In 1912 the Prudential took a leading part in forming the Approved Societies for the administration of National Health Insurance and contributed very largely thereby to the laying down of the firmest possible foundation for the subsequent operation of this epoch-making piece of legislation.

The company conducts four Approved Societies under the National Health Insurance Acts with an aggregate membership of over 3,600,000. Additional cash and treatment benefits are to Approved Society members what bonuses are to life policy holders. These additional benefits have arisen from the surplus available through favourable sickness experience combined with successful administration. They have been additional to the usual sickness disablement and maternity benefits payable under the National Health scheme, which in 1933 alone amounted in these Prudential Societies to £2,185,498, £1,293,885 and £345,781 respectively. The Prudential Approved Societies have paid out in twenty-one years over sixty-one million pounds in cash benefits and over six millions in treatment benefits.

It is in the genius of the British Constitution for the Government of the day to make no scruple about asking individuals or institutions for advice, guidance and practical help, and for such service to be voluntarily and gladly rendered in the cause of patriotism and good citizenship.

Both as a company and through its servants the Prudential has been called upon for such help, and important service has been willingly and freely rendered on many occasions.

During the war statistics of vital importance were confidentially compiled, and apart from public participation to the utmost limits of its resources in the taking up of War Loan, War Bonds, Victory Bonds, etc., and the invaluable suggestion of handing over American Dollar Securities at a critical moment in the financing of the purchase of War Munitions from the United States, the professional skill of the company's actuaries and others was placed at the disposal of those responsible for setting up the War Savings scheme with its highly successful system of certificates and associations.

To resume. As previously stated, the Prudential Assurance Company conducts also other insurances, and on a grand scale.

Amongst the life offices of the world, the Prudential ranks with the largest, its premium income on Ordinary Life Insurances for 1933 being over thirteen million pounds, covering an amount assured with bonuses of £225,365,337 and supported by a fund of £111,069,369.

When the company commenced business in 1848 it was as a Life Office, and it only entered the industrial assurance sphere in 1854, some years after several other offices had been engaged in this branch. The Industrial and Ordinary branches have since grown side by side to their present immense proportions through the personal touch of the agents of the company with all classes of the community, and the discipline and control exercised over their work by the Head Office.

Life assurance has been standardized in England and the leading countries of the world. This does not mean that there is no room for further progress. A great deal of progress remains to be made in two directions—first, in adding to the number of insured in a world that is still astonishingly under-insured; and secondly, in adapting the standardized terms of the leading varieties of a life assurance policy to meet the peculiar requirements of large classes of people, and the individual requirement of any single applicant. In these directions the developments of the future lie, and the biggest prizes will be won by those offices which will display the greatest acumen, enterprise, and initiative in formulating plans both for the territorial extension of operations and in offering new types of security which are abreast of social needs in the quickly changing modern world.

In both respects the Prudential is moving forward, and consequently adding to its already colossal strength. Taking first the extension of operations into other countries. Its offices are now to be found in the Dominion of Canada, the Union of South Africa, the Commonwealth of Australia, New Zealand, the Empire of India, the Colonies in Africa and elsewhere, the Far East, the Near East and the United States of America; to all these should be added a vast re-insurance business which is accepted from the Continent of Europe, particularly from Poland and Austria. As an illustration of the scale of operations it is sufficient to mention that the amount of new sums assured ceded to the company in 1933 under its treaty with the Pheonix Life Insurance Company of Vienna was £1,950,000, and the total sums assured under the treaty amounted to over fifteen million pounds, securing a renewal premium income of £727,549 a year. Again, direct life business from overseas increased in 1933 over the previous year by one million pounds. Insurance in all its forms, it should be noted, is one of the most important of British exports, second in value in the past only to our export of capital in the invisible export category, and greater than the greatest of our visible exports, not excepting coal or textiles. There is illimitable scope and there are undoubted advantages in its steady development in the future.

In illustration of the second direction in which there is scope for new ideas in adapting life assurance to the peculiar requirements of the times in which we live, the Prudential method of combining house purchase with a Life Policy brought in new sums assured, in 1933 alone, of over a million and a half pounds. Another instance of shrewdness in divining a public want has been the inclusion of a surgical and nursing fees benefit where the life is assured for at least £1,000 and prompt payment of such fees when a calamity overtakes a family. This feature of life assurance is at present almost entirely confined to the Prudential. Without payment of any additional premiums the company pays immediately under certain conditions such portion of the sum assured as may be required for surgeons or nursing fees occasioned by operations undergone by the life assured during the currency of the policy. This additional benefit meets a serious contingency in the domestic circle, and must relieve the financial anxiety that is so often present on such occasions.

Still another illustration may be found in the new "Heritage" policies which provide in certain circumstances, in addition to the basic sum assured, an income for a period following the death of the life assured. The Heritage and Heritage Endowment policies both provide that, if death occurs within a stated period, an income is payable for the balance of that period. In the case of the Heritage policy, if the life assured survive the expiration of this limited period, the premiums continue and the sum assured is payable at death. In the case of the Heritage Endowment policy, the premiums cease in any event at the expiration of the stated period, and the sum assured, or an income for life as an alternative, is then payable.

The latter form of assurance is proving specially attractive, and the reason for this appears to be the happy balance the company has achieved between the benefits available for the family of the assured, if he dies within the term, and the income provided for himself if he survives. The new sums assured under Heritage and Heritage Endowment policies during 1933 were £167,749 and £526,633 respectively if the income benefit payable for the limited period is included, these amounts become £479,888 and £1,105,255.

Clearly, then, life assurance is subject to evolution like most of the ideas and things of life, and must necessarily advance with the times. These two great fields of assurance — Industrial and Ordinary Life—by no means exhaust the activities of the Prudential. Within the last fifteen years all classes of risks have come within the scope of the company's operations—Fire, Marine, Motor, Employers' Liability, Sickness and Accident, Sinking Fund and Miscellaneous. Of these, Fire Premiums approach the million mark and Motor the half- million mark. The total annual premium income from all the above classes, which are included in an omnibus General Branch, was £2,720,719 in 1933. In addition, the company has undertaken duties as trustees in respect of issues of debentures and debenture stocks and as trustees and executors of estates. The total value of such debentures, debenture stocks and estates at the end of 1933 was approximately thirty- five million pounds.

Now the basis of successful insurance is to be found in the efficiency of its administration, and, given this, in the careful supervision and investment of its accumulated funds. It is only possible within a short compass to deal with these two further aspects in view of the several varied and additional activities of the Prudential Assurance Company which might be selected for review. A company with total assets of £277,472,181 in 1933, and a total income of £50,191,265, must through its nature be interested in a great many questions calling for specialized knowledge outside the direct business of insurance. In regard to the annual income alone, representing more than the annual budgets of several nations in the world, the figures defy the imagination.

And in regard to the Capital Assets, representing only gilt-edged and the soundest securities any country can offer, spread over the United Kingdom, the Empire and the leading foreign countries, some grasp of the task of supervision may be obtained from the fact that in 1933 the total value of business transacted by the company on the London Stock Exchange reached over £140,000,000, representing securities bought, sold and repaid.

The task of indexing the movement of these in and out of the great Muniment Room at Holborn Bars, with its thirty-ton door, is one of great responsibility in itself. The task of making decisions for their purchase and sale is of even greater responsibility than many a Government post with Cabinet rank, as it calls for a worldwide knowledge of affairs, of investment and business conditions, present and prospective, of the prospects of whole countries and their industries, of the narrower but more technical issues involved in the see-saw of interest returns as between gilt-edged or fixed interest groups and industrials, the many permutations and combinations that may be employed to obtain a high average return on all securities consistent with safety, and finally, the ever-present nightmare to even the ordinary investor which is multiplied a millionfold to the Investments Department of the Prudential, of the future trend of interest rates in general. These are questions best left to the men of many professional attainments to be found exercising their technique in this department at Holborn Bars, for upon their concentration rests in a large measure that extra appeal which an insurance office is able to offer with its policies either by way of higher percentage bonus rates, or, as we have seen, in both the Industrial and Ordinary Life Branches, of additional concessions and benefits to the policy holders.

For the Head Office of the Prudential with its staff of over 4,000 workers is the centre of many technical professions which are essential in support of the real purpose of the company. That these include actuaries, lawyers, and medical men is well known. That there must be qualified surveyors and valuers of property and accountants, may also be inferred. But in the background there is the physical organization itself, comprising considerable departments in engineering for the maintenance of heating, lighting and power requirements of the buildings for clerical correspondence and liaison work, indexing and filing work, postal work, catering and other necessary activities. For example, the Post Office which the Government has placed at the disposal of the company within the building transacts an annual business of nearly £40,000 in postage alone, apart from the use made of the facilities it offers for several types of payments through the post.

But quite as significant as the co-ordination of the work of great departments into one harmonious whole, is the mechanization within certain departments of vast quantities of work, including clerical, accountancy, statistical—and, in fact, of almost any type of information or record that may be required by the directing forces of the company. Outstanding among the methods employed are the uncanny performances of the " Powers " Sorting and Tabulating Machines. These are the least ostentatious machines that ever made a revolution, being human in their seemingly self-suggested intelligence, and inhuman in their deliberate yet unerring precision. They are important because they have played a major part in solving the cardinal problem of the high cost of industrial assurance.

To describe their work in detail would take too much space, but broadly all the information relevant to an insurance policy is tapped out on the keyboard of one of the machines and is recorded by perforations on a card—each perforation signifying by its position on the card a specific piece of information, e.g., date of policy, amount assured, premium, type of policy, age of assured, sex, bonuses, etc. To punch these cards is obviously labour-saving compared with endless clerical or typewriter work. But the machine is only beginning its role of usefulness at this stage. It is one of a battery of machines which together can be set to manipulate and sort these cards to supply mass information on all the questions noted on them as required by the management or actuarial side of the company. As the number of Industrial policies alone exceeds twenty-six millions it may be realized that several batteries are at work, each battery comprising other machines with certain specialized functions, and a final machine which furnishes the precise information required tabulated and totalled in typewritten figures. From these are completed the registers, returns, agency records, and the other innumerable demands which the main Insurance Branches, together with the Approved Societies, may make.

Being automatic and driven by electric power, after the first perforations are made in the cards, masses of essential information which would ordinarily take months to collect, and require large staffs for the work, are now made available in a matter of days, and sometimes of hours. After the first process of punching, one lady operator is able to supervise the automatic working of more than one machine. This means one girl to two or three machines—or a complete machine run by a decimal fraction of a girl.

To print the data for such items as premium renewal notices, and envelopes for local branches and members of the field staff, batteries of addressing machines are installed using embossed plates, which, of course, once prepared, always give correct particulars. The most elaborate machine starts with the blank paper in roll form and at the finish produces the complete notice printed on two sides, perforated, cut and addressed at the rate of 3,000 an hour. Smaller machines perform the addressing operation only from embossed plates at an average rate of 2,500 an hour—the work of each machine being equivalent to that of 15 typists if the same operation were done by typewriter. The volume of work handled each year in this way runs into many millions of impressions.

Internally, therefore, a large proportion of the personnel at the Head Office of the Prudential Assurance Company is engaged in the pursuit of work and of knowledge, and also its administration, which has nothing to do with the business of pure insurance, but has been rather applied in its support to ensure its more efficient and expert execution. Thus has an elementary idea of a century ago been brought by this great institution to the visible climax of upward progress, at first blundering empirically for many years by means of guesses and half-knowledge until a definite path was discovered which we of this generation should continue to develop and broaden into a highway of increased security for all through life. For insurance is one of the great unifying forces of social life, and an insurance company merely the steward entrusted by the thrifty and provident to protect and enhance the value of their individual resources


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