APPROXIMATE COST OF THE COMPENSATION ACT TO INDUSTRY.

While the data quoted above as to the activity of factory inspectors in adjusting claims under the compensation act do not include the entire number of accidents, they nevertheless furnish valuable material for an approximate estimate as to the financial burden which the act places upon the entire industry. Taking the average amount of pension for fatal cases, and all cases of permanent disability, total as well as partial, the total amount of pensions paid for all accidents of these classes may be computed on the assumption that the average compensation in cases not certified by inspectors was equal to the average in cases so certified.

To eliminate annual fluctuations, averages for the 3-year period, 1904 to 1906, are taken.

NUMBER, AMOUNT, AND CAPITALIZED VALUE OF PENSIONS, BY RESULT OF INJURY, ANNUAL AVERAGES FOR 1904 TO 1906.

In addition to this the cost of accidents resulting in temporary disability must be considered. For this data are available in the statistical reports concerning accidents in industry. The annual average number of days of treatment for all cases of injury during the three years, 1904 to 1906, was 1,340,868 days, which presupposes the payment of an equal number of daily allowances, or wages for 670,434 days; taking the average number of working days per annum to be 260, according to the Russian compensation act, the total sum. of allowances paid must be equal to 2,579 annual wages.

From this number and the average wages the cost of temporary disability may be estimated. The average annual wages in establishments subject to factory inspection in 1904 was $110.17, in 1905 $105.84, and in 1906 $119.32; and the average for 1904 to 1906 is $111.78. The total amount paid out annually in allowances for temporary disability may be computed at $288,280.

The average amount of the payments made annually under the compensation act may thus be estimated at $1,747,360, which does not include the cost of medical treatment.

The total amount paid out in wages in establishments subject to factory inspection is not available, but it may be computed since the average wages for about 75 per cent of all the wage-earners are given. The average wage being $111.78, and the average number of wageearners about 1,678,000, the total wage expense would amount to $187,566,840.

The proportion of the cost of the compensation act to the total wage expense is therefore equal to about 1 per cent (0.93 per cent). To this must be added the cost of medical help. The total cost of medical aid in factories in 1907 has been determined at $4,874,052; but what share of it should be charged to industrial accidents it is impossible to determine. In view of the low rate of wages and the fairly high remuneration of medical work, the cost of medical help may equal the amount of financial assistance in cases of temporary disability. This would mean an additional charge of about 0.15 per cent, and the total charge upon industry equals only 1.08 per cent of the wage expense.

That this estimate is not far from truth is evidenced by the data in regard to the activity of mutual accident insurance companies.

In 1905 the average premium amounted to 1.46 per cent of the wage expense, and in 1906 to 1.55 per cent. If for the previous years the premiums were very much lower, it was not only because it was before the law of 1903 went into effect, but also because among the mutual associations existing before 1905, those of textile districts, with a comparatively low accident rate, were most numerous. The average premium is higher than the computed cost. It may partly be accounted for by the added cost of administration; partly, perhaps, by the fact that the assumed cost of medical treatment in the computation was too low. With an average daily wage of ($111.78÷260) 43 cents, which gives a daily sick allowance of 21.5 cents, the cost of medical and especially surgical treatment in accidents may be much higher than that of the sick benefits, as assumed. It may safely be said therefore that on the whole the system of compensation as established by the law of 1903 has added less than 1 per cent to the wage expense of Russian manufacturing industry, and its cost to the employers is equal to about 1 million dollars annually.

PRIVATE VOLUNTARY ACCIDENT INSURANCE.

COMMERCIAL COMPANIES.

Insurance against accidents was altogether unknown in Russia before 1888, when a Russian fire and life insurance company began to write such insurance. In the preceding year, 1887, the Ministry of Interior had approved the conditions under which such insurance might be written, and these became the standard rules for all other insurance companies. The main conditions imposed upon the insurance companies, in writing accident insurance for workmen, by the regulations of 1887 were as follows: The workman was insured for a definite sum against death, permanent, and temporary disability caused by accidental injury while at work. (a) Excepted from

a Litwinov: Otvietstvennost predpriminatelei, p. 234. Press, A. A.: Strakhovanie rabochikh, p. 6.

insurance were: (1) All usual diseases and their results not caused by industrial accidents, ruptures, or other injuries caused by lifting excessive weights, etc.; (2) injuries caused by vis major, by calamities such as war, illegal acts or malicious intent of the insurer (that is, the employer) (") or of the injured employee, or injuries received in fights, quarrels, state of intoxication or insanity; and (3) injuries received outside of regular employment of the insured.

Thus the extent of application of the insurance system was nearly equal to that of the usual compensation act, though it did not prevent litigation. In case of death the total sum of insurance was to be paid to the widow and orphans; when the victim was single onehalf of the sum of insurance to the parents.

Cases of permanent disability were divided into three degrees: The first degree of complete disability included the complete loss of sight, or of both arms or legs, or one arm and one leg, or complete incurable insanity, to be compensated by the full pension specified; the second degree included cases of permanent disability, with loss of one-half of earning power, such as loss of one extremity, entitling the injured to one-half of the full pension; and, third, lighter forms of injury, resulting in partial though permanent disability of lower degree, compensated by pensions of from 10 to 25 per cent of the full pension. For temporary disability the insurance company was to pay a daily allowance, agreed upon in the policy, during disability not exceeding 200 days. The pensions paid for permanent disability could be changed to a lump sum upon agreement between the insurance company and the insured (the employer).

Rossiia was a general insurance company which introduced accident insurance in Russia in 1888. Later in the same year a special accident insurance company was organized and another one in 1892; two general insurance companies began to write accident policies in 1896 and four in 1898. Altogether nine insurance companies wrote accident policies in 1903, when the new accident compensation law was passed. The number of workmen insured in these companies was as follows:

NUMBER OF PERSONS INSURED AGAINST ACCIDENT IN PRIVATE INSURANCE COMPANIES, 1888 TO 1903.

[Source: Press, A. A.: Strakhovanie rabochikh v Rossii. St. Petersburg, 1900. Prokopovich, S. N.: K. rabochemu vaprosu v Rossii, St. Petersburg, 1905.]

a In this case the injured workman would naturally preserve the right of action against the employer. Not including one company not reporting.

The preceding table shows that this form of meeting the liability of employers was gaining but slowly up to 1894, and began to grow rapidly about 1895. The increasing popularity of private insurance was partly due to rumors of coming new legislation for strengthening employers' liability and partly to a gradual change in the policy of the insurance companies. In the earlier years they limited their liability to the amounts of insurance specified. While this was satisfactory to the injured in the majority of cases, he frequently felt that in cases of evident fault of the employer he could recover through the regular courts, and thus the limited insurance did not altogether relieve the employer of the danger of heavy damages. Gradually the insurance companies were forced to accept the civil responsibility for the employers and the obligation to meet the cost of litigation (known in this country as employers' liability insurance). This increased the cost of insurance, which in 1890 was only 1.87 rubles (96 cents) per insured employee; in 1898, 2.83 rubles ($1.46); and in 1903, 3.55 rubles ($1.83); nevertheless under these new conditions the number of workmen insured increased from 205,274 in 1895 to 395,148 in 1897, to 684,766 in 1898, and 936,309 in 1900. In 1903 the number had declined to 738,287.

The decline in the total number of insured during the years 1901 to 1903 is partly explained by growth of mutual insurance and partly by the increase in rates by the companies in view of the expected promulgation of the compensation law.

According to the special report here quoted, 600,000 out of the 685,000 insured in 1898, or about 88 per cent of the workmen insured, were employed in manufacturing and mining industries; and as the total number of workmen employed in these industries at that time numbered 2,120,000, it follows that 28.2 per cent of all the workmen were insured. The percentage was still higher in some branches; thus in the iron and steel industry it was 30.9 per cent, in the flourmilling industry 35.6 per cent, in the textile industry 36.3 per cent, in the woodworking industry 48.3 per cent, in the chemical industry 53.6 per cent, and in the oil industry 62.0 per cent. In most hazardous industries, then, the percentage of insured was from onethird to two-thirds of all the employees. The situation was less favorable in the mining industry, where only 10.5 per cent of the workmen were insured. From 1898 to 1900 the number of persons insured increased 36.7 per cent, so that by the end of the nineteenth century about two-fifths of all the employees enjoyed the protection of accident insurance.

The average number of workmen per establishment subject to factory inspection in Russia in 1898 was 56; for the establishments carrying the insurance the average was 148, almost three times as

great. This indicates that the greatest share of insurance was carried by large establishments.

The statistical information concerning private insurance is not complete. In fact, little is available besides the special report prepared by the Ministry of Finance for the Paris Exposition of 1900, which brings the data down to 1898 only.(")

Two forms of accident insurance are recognized in this report-the collective form and the individual form. Under the latter form individuals privately contract for accident insurance and pay the premium, while under collective insurance the employer contracts for insurance of his employees. The individual form of accident insurance is therefore of little importance from the point of view of workmen's insurance, and is quoted here only because certain data are stated for both forms of insurance combined.

The number of persons insured collectively against accidents in private insurance companies increased from 40,196 in 1888 to 684,766 in 1898, the amount of insurance against death outstanding at the end of the respective years being $14,498,051 in 1888 and $235,358,916 in 1898. During this same period the amount of insurance against permanent disability increased from $15,315,407 to $319,916,038. While this average amount per person of the insurance against death has decreased from $361 in 1888 to $344 in 1898, the average amount of insurance against permanent disability has increased during this period from $381 to $467. The premiums received increased from $27,997 to $998,147.

The amount of insurance carried by the employer for each workman was not high. It depended upon the wages of the latter, and the usual policy called for 800 or 1,000 times the daily wage of the workman in case of death and 1,000 to 1,500 times the daily wage in case of total permanent disability. This means three to four times the annual earnings in case of death, and 4 to 6 times the annual earnings in cases of total permanent disability. As was shown above, in case of death of the injured person, the actual sum of insurance was paid; while in cases of permanent disability the whole sum (or a part of it, depending upon the nature of the disability) served as a basis for a calculation of a life pension or annuity, the amount of such annuity depending upon the age of the injured workman.

The average sum of insurance against death varied from $336 to $381, and for total permanent disability from about $381 to $467. These rates of compensation do not appear to be high, but this may be partly explained by the general level of wages in Russia. For the last decade of the nineteenth century the average wages of an industrial worker (men, women, and children) is stated in an official

a A. A. Press: Strakhovanie robochikh v Rossii, 1900.