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SICKNESS INSURANCE.

In the field of sickness insurance much less has been accomplished than in the fields of insurance against accidents and old age and invalidity; and this is especially true, when the efforts of the Government are considered. There is no obligatory insurance against sickness, nor has the State adopted any active measures to stimulate voluntary insurance, as it has done in regard to accident insurance and old-age and invalidity insurance.

The legislative interference with the private efforts toward sickness insurance are as yet limited to the regulative law of April 15, 1886, which aims only to regulate the mutual benefit societies.

Moreover, it is not quite accurate to speak of these mutual benefit societies as a system of insurance of workmen against sickness, for they are not limited either to wage-workers or to the one form of insurance—that against sickness. However, wage-workers do constitute a great majority of their membership, and while many forms of benefits and assistance are furnished by some of these societies, sickness insurance or at least benefits in cases of sickness, as a matter of fact, do represent the most frequent and most important form of insurance, and it is therefore most convenient to speak of the operations of these organizations under the caption of sickness insurance."

HISTORY.

Some mutual benefit societies of Italian workmen date back into the eighteenth century, and owe their origin to the old trade guilds, but only during the last 40 years, or since the unification of Italy, has any general movement toward the establishment of mutual benefit societies manifested itself. The statistical account of these societies given elsewhere shows that in 1862 only 443 of these societies were enumerated; in 1873, 1,447; in 1878, 2,091, and by 1885 they had increased to 4,900. In the beginning these societies were organized very informally. They had no legal standing and therefore could not own any property. In their development serious difficulties soon appeared, as was the experience in all countries where mutual benefit societies were developing. Aside from occasional fraud and abuses, most such societies came to grief because of the entire absence of an actuarial basis for their operation and lack of executive ability and familiarity with the problem, which made these associations offer much greater benefits than they were able to meet. These difficulties were especially great for the associations which endeavored to grant old-age and invalidity benefits. Few of the associations kept the accounts of different forms of benefits separated and because of faulty bookkeeping they were not aware of their financial difficulties.

The necessity of some legal regulation of these societies soon became quite evident, both to the Government and to the societies. Not only was it necessary to safeguard the savings which, however small in individual cases, amounted to large sums in the aggregate, but it was felt that a collapse of many such associations would have a very detrimental effect upon the saving habits and the cooperative spirit of the Italian workmen.

On the other hand, the lack of legal standing proved a serious drawback and impediment to the more energetic associations, which were anxious to extend their operations, because it deprived them of their property-holding powers. Frequently, therefore, individual associations applied to the Government for incorporation by royal decree, but as such incorporation was evidently a mark of approval or at least of confidence, the Government considered it necessary to study the financial basis of the associations before granting such requests. The results were, as Minister Grimaldi stated in his report to the Senate of April 6, 1886, that, within the three years previous, out of 100 associations requesting such incorporation by royal decree only 20 were granted this request.

The law of April 15, 1886, concerning the recognition or incorporation of mutual benefit societies was the result of a movement which lasted nearly ten years. During the session of the Chamber of Deputies of June 14, 1876, a promise of such a law was made by the Government and in fulfillment of this promise a bill was introduced on June 9, 1877, by the minister of agriculture, industry, and commerce.()

In the memorial accompanying the bill, the minister pointed out that these mutual benefit societies were essentially insurance institutions, and that therefore they could not be successful unless they were guided by the well-recognized principles of insurance and based their dues and benefits upon sound actuarial calculations.

Therefore the State could not confer the benefits of “recognition" (incorporation) unless the society did comply with the demands of actuarial science. In discussing the objection raised by a certain number of representatives of mutual benefit societies that this might lead to an excessive interference by the Government with the operations of such voluntary organizations, the minister pointed out that such danger was purely imaginary, since incorporation was intended to be an entirely voluntary act and granted only upon application of the society itself, and no organization was forced to apply. On the other hand the minister dismissed the suggestion, also considered by the consultative commission, that the requirements for recognition be limited only to conditions of the formal organization of the society

a Atti Parlamentari, sessione del 1876–77. XIII Legislatura. Camera dei Deputati, No. 120. Progetto di legge presentato dal ministro di agricoltura, industria e commercio (Maiorana-Calatabiano) nella tornata del 9 giugno 1877.

without regard to the actuarial basis. Such conditions would not, in his opinion, give any guarantee of security, and it would not be proper for the Government to grant the natural support of its recognition to any institution whose security was not guaranteed in any way.

The bill of 1877 was prepared in accordance with these principles. It proposed the organization of a central commission of mutual benefit societies to which any such society might apply for a “recognition,” presenting complete accounts of its financial standing. In accordance with the broad conception of these societies as insurance institutions, not only sickness insurance but also old-age pensions, widows and orphans' pensions, forms of insurance which evidently required very strict adherence to actuarial principles, were to be permitted. In addition the societies were permitted to conduct educational work or engage in cooperative enterprises, such being the custom in a great many cases.

For each form of insurance the society was required to keep a separate account and to demand separate contributions. A minimum number of insured was required, 500 for sickness insurance and 200 for old-age and life insurance. The nature of the constitution of the society and the method of investment were also regulated, but the most important provision was that permitting the recognition of only such societies as furnished evidences of a satisfactory relation between the obligations assumed and the means at their disposal. It was explained in the memorial that in order to obtain this satisfactory actuarial basis the recognized societies would have to avail themselves of mortality and sickness tables based as far as possible upon Italian data and also upon foreign statistics, which tables might be prepared by the commission which was to include legal, mathematical, and insurance experts. Recognized societies were to remain under the supervision of the Ministry of Agriculture, Industry, and Commerce and the commission. The ministry could accordingly order an investigation at any time and cancel its recognition if the accounts proved unsatisfactory. In recognition of compliance with these stringent requirements of the law the incorporated societies would acquire, in addition to the rights of legal persons, also other privileges, such as exemption from certain taxes, not only of the society as such, but also of the benefits paid to its members, and publication of its reports in certain official journals at the expense of the ministry.

This legislative project was prepared by the consultative commission for labor and savings institutions after a study of the legislation of France, Belgium, Great Britain, and Germany.

This bill did not meet with the universal approval of the societies interested. The requirements for incorporation were considered too stringent, and in numerous congresses the desire was expressed that such requirement be made more formal in its nature, refer primarily to the organization of the mutual benefit societies, and leave the actuarial basis untouched.

On June 11, 1880, the new minister of agriculture, industry, and commerce introduced a new bill in the Senate. He admitted that the requirements of the old bill were too stringent, but on the other hand dismissed the plea for the incorporation of all societies applying for it as entirely too extravagant. The following requirements were considered essential: (1) The exact definition of the aims of the society; (2) a due proportion between contributions and benefits; (3) a certain minimum number of members; and (4) separation of funds and accounts pertaining to separate purposes of the societies.

It appears, therefore, that this bill included all the essential features of the earlier bill. The most important differences were that the application was to be made to the local judiciary authorities and incorporation was to be ordered by them, while the actuarial standing of the society was to be investigated by experts selected by the court from local professors of mathematics. The idea of a central commission for the control of the benefit societies was preserved, but its composition was made fully representative—that is, in addition to three members appointed by royal decree, three by the Senate, and three by the Chamber of Deputies, there were to be five members selected by the societies.(a)

The bill was somewhat amended in the Senate and after a brief discussion was passed with slight changes on February 12, 1881, and presented to the Chamber of Deputies on March 8, 1881. The senate bill was referred to a parliamentary commission, which brought in its report on December 22, 1881, containing a modified text of the bill as proposed by this commission. While adhering somewhat to the text of the senate bill, the commission of the lower chamber materially changed all the esential features of the bill. The commission took the directly opposite point of view to that of the minister of agriculture, industry, and commerce. It insisted that none of the foreign laws was entirely adapted to the special requirements of the Italian workmen, that the mutual benefit societies would be more useful if left to develop naturally, and that they should be entitled to receive the benefits of incorporation without subjecting themselves to any governmental regulation other than the common law. The project of the parliamentary commission, therefore, excluded all

a Atti Parlamentari, Legislatura XIV, qma Sessione 1880– Documenti. Camera dei Deputati, No. 178. Disegno di legge approvato dal Senato de Regno presentato dal ministro di agricoltura, industria e commercio (Miceli), nella tornata dell' 8 mayo 1881.

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reference to the organization of a central commission of mutual benefit societies, the requirements of a due proportion between dues and benefits, the separation of the separate forms of benefits and their accounts, the demand for a minimum number of members, and the method of investment of the funds. It also excluded pensions for widows and orphans from the list of permissible benefits, feeling that that function required a stricter adherence to insurance principles than was desirable to exact from the mutual benefit societies. The bill, as amended, simply contained provisions for incorporation of mutual benefit societies by local judicial authorities, with very few provisions for control of such societies. This proposal of the parliamentary commission never came up for discussion in the House.

The principles enunciated in the report of the parliamentary commission were, however, embodied in the next project of a law concerning mutual benefit societies, introduced in the Chamber of Deputies on June 21, 1883. The bill was referred to a new committee, which brought in its report on February 19, 1884, introducing a few minor changes. The consideration of the bill was delayed another two years, and the bill was finally passed in the Chamber of Deputies on April 8, 1886, introduced in the Senate on the next day, reported by the committee on April 10, 1886, passed and became a law on April 15, 1886. This rapid enactment of the law after a discussion of ten years seems to have been influenced by a decided change in public opinion and in its opposition to some regulation of the operations of the mutual benefit societies, while on the other hand the Government has finally adjusted the law to the demands of the opposition and has abandoned the effort to introduce a system of careful control of the financial and actuarial status of the recognized societies.

PROVISIONS OF THE LAW OF APRIL 15, 1886.

The law concerning the incorporation of mutual benefit societies, approved on April 15, 1886, states the requirements with which a mutual benefit society must comply in order to be granted such recognition or incorporation, the degree of control exercised subsequently by the Government over such recognized societies, and the benefits derived by such societies from this recognition.

The law applies to all mutual benefit societies without consideration of the occupation or economic standing of its membership, provided they aim at one or more of the following objects: To assist their members in case of illness, working disability, or old age, or to come to the assistance of the families of deceased members. The law carefully avoids the word “pensions” and in a subsequent circular of July 2, 1886, the minister of agriculture, industry, and commerce

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