CO129-346 - Governor Sir Lugard - 1908 [1-3] — Page 180

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there is a tendency for all companies to conform to it, and to

consider it sufficient: and the incentive is removed to

strengthen reserves beyond the government standard, and so the

growth of the companies in strength is apt to be discouraged.

There has never been a standard of solvency in the United King-

-dom, and yet no ill results have followed. On the contrary had

there been a standard, great harm would have been done. If it

were not invidious, I would name more than one company which at

the present day are in the front rank, but which would, perhaps

forty years ago, or even at a more recent date, have been

forced to close their doors had such a table as that of the

Institute of Actuaries, with net premiums event at four per

ċent, interest been imperative, and there are other companies

the careers of which have been watched with interest by actuari-

-es in the United Kingdom, and with gratification, because it

has been seen that they have been struggling out of the zone

of risk, and have now become so solid that there is no longer

question as to their future. The British system of liberty

with publicity, and without a standard of solvency has had the

salutary effect during the last thirty years of causing several

companies to emerge from the region of doubt, and also of

causing others which were weak, and which had not the vitality

to recover, to transfer their business honourably to stronger

rivals.

The publicity prevented them from recruit-

-ing new policy holders, and, without any compulsion, they found

it advisable to seek a haven of refuge. This is very much better

for all concerned than to drive into liquidation a company,

even if so situated that there is suspicion as to its solvency.

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