SESSION 08. Friendly Societies/Societies of Mutual Aid and health risk coverage

8. Friendly Societies/Societies of Mutual Aid and health risk coverage.

Pilar León-Sanz (University of Navarra)


A comprehensive historical study of the Health Insurance sector requires us to examine the development and the functions of the Friendly Societies and Mutual Insurance Systems. In general, a health-care system has been defined as the means by which health care is financed, organized, delivered, and reimbursed for a given population. It includes considerations of access, expenditures, and resources (Gil-Sotres, 2010). From the nineteenth century, diverse health-care systems such as the Friendly Societies, Mutual aid societies and health insurance companies have been closely associated with the social and economic vulnerability of workers. The existence of these Mutual Insurance Systems coincided with other traditional charitable institutions (general hospitals, homes for the elderly, asylums, orphanages), and others organized at municipal or national levels. Private health insurance companies also began to offer medical-pharmaceutical services in urban centres. It is a time that reviewed the notion of a subsidiary role of the State in Health and Social care of the population.
Care and assistance to society arises as a result of the sum of all these systems and institutions. This idea serves as the impulse for the essays collected here. The study of Mutual Health Insurance in general has increased its presence in the agenda of world social and economic history.

The session will consider questions as the following:

  • Costs and Benefits of Friendly Societies/Mutual Insurance Systems
  • Friendly Societies/Mutual Health Insurance Systems and the management of Health risks
  • Contributions of Friendly Societies/Mutual Health Insurances to the Hospital care
  • Relationship between Friendly Societies, Mutual Insurance and Private Health Insurances.


Paper 1

Insurance and public investment in 19th century Britain.

Bernard Harris (University of Strathclyde)

The 19th century witnessed a dramatic growth in the number of people paying for different kinds of insurance. This facilitated the growth of a large number of different insurance organisations, including both mutual organisations – such as friendly societies – and commercial organisations, such as the Royal Exchange Insurance and Prudential Assurance companies. This paper examines the role played by these organisations in the growth of Britain’s public infrastructure. During the course of the 19th century, insurance organisations invested the money provided by their insurees in a wide range of municipal public works programmes, many of which were used to fund public health initiatives. The paper uses data compiled by the Local Government Board to compare the role played by insurance organisations with that of other financial sources, including banks and private individuals, in the development of the sanitary infrastructure.


Paper 2

Struggling for sustainable pensions: On a neglected attempt to reinsure German miners’ social security benefits, 1906-1923.

Tobias Alexander Jopp (University of Regensburg)

Several recent publications (e.g., Guinnane/Streb 2011; Guinnane/Jopp/Streb 2012; Jopp 2013, 2016) discussed the operations of the German miners’ mutual insurance system between c. 1850 and 1920. This system can be traced, in different forms, from its origins in the medieval period right to the present day, where it still is an integral part of German social insurance. In the period 1850-1920, the system was carried by numerous Knappschaften (singular: Knappschaft) –local insurance funds providing health and pension (invalidity!) benefits for their memberships. Since the Prussian mining reform over 1851-1865 (Bavaria and Saxony: 1869) these funds operated like a social insurance scheme in small with compulsory membership and shared employer-employee financing based on the pay-as-yougo method. Thus they were direct forerunners of the Bismarckian system, after the introduction of which over 1883-1889 the Knappschaften were still operating parallel to it. According to the literature, the Knappschaften widely struggled due to (biologically and socially) ageing memberships, a challenge usually associated with the experience of advanced social insurance systems after 1945. As a consequence, dependency ratios rose and financing problems surfaced in the form of rising contributions and deteriorating pension levels. A decades-spanning discussion among contemporary experts and keen observers of the system arose since the late 1870s as to what is “sustainability” and as to how to reform the system accordingly, to establish sustainable pensions. That discussion led to the foundation of the Knappschaftliche RückversicherungsAnstalt in 1907, supposed to function as a reinsurance arrangement for all participating Knappschaften, which had to pay in money as to fund implicit pension liabilities. As this arrangement, which existed until 1923, is widely neglected in the older as well as recent literature, this paper’s purpose is twofold: First, to provide a basic overview of its functioning; and, second, to reflect upon possible lessons for similar modern-day financing problems.


Paper 3

A Tale of Two Federations. The Institutional Development of The Independent Order of Oddfellows, Manchester Unity and the Federation of Mutual Societies of Catalonia, 1810-1942.

Fernando Largo Jiménez (University of Granada)
Jonathan Fink-Jensen (European University Institute)

In times and places where public programmes and market-based systems provide insufficient social security, mutual insurance pools tend to emerge. Historically speaking this was definitely the case in many industrializing countries in the nineteenth and early twentieth century, when mutual insurance associations offered burial and sickness insurance to their predominantly wage-earning members. Most mutuals were small and homogeneous groups, relying heavily on voluntary participation and social control to keep administrative costs low and to prevent malingering. Notwithstanding their expanding reach in urbanized areas, the continued existence of the mutual was continually threatened by commercial competitors, aging memberships, inadequate management and intervening governments.

One way of dealing with these risks consisted in cooperation and affiliation between the local groups. Working together could solve problems of frugality and locality without necessarily having to give up local democracy and sociability, and shared interests could be defended more effectively. However, the reasons behind affiliation and its institutional outcome could vary widely.
In this paper we compare the foundation and developments of two mutualist federations: The Independent Order of Oddfellows Manchester Unity (founded in Manchester, 1810), and the Spanish Federación de Mutualidades de Cataluña (Federation of Mutual Societies of Catalonia, 1896). Developments of both federations are sketched until the moment the state introduced national health insurance in 1911 (United Kingdom) and 1942 (Spain). Firstly, the growth of both federations and their geographical expansion are reviewed, offering a description of their respective governance structures. In the second part we focus more specifically on the risks covered, the sources of financing and the role of social capital in overcoming economic and collective action problems (e.g., moral hazard, adverse selection, fraud). Finally, the initiatives of the federations to alleviate these and other recurring problems through cooperation and sanctioning are analyzed (e.g., supervision and sanctions, financial aid for weaker groups, social capital promotion, sharing expertise). Through this comparison the paper shows similarities and differences between two federated mutuals originating in regions that experienced industrialization processes with different magnitudes and chronologies, thereby highlighting how the socioeconomic context and the frameworks of cooperation and conflict with the public administrations influenced the capacities and policies of both entities.


Paper 4

Contribution of Mutual Health Insurances in the building of the Spanish Hospital System in from the 1950s-2000.

Pilar León-Sanz (Universidad de Navarra)

Three years after the end of the Civil War, the law on compulsory sickness insurance law (Seguro Obligatorio de Enfermedad) was approved (1942). However, the beginning of the implementation of Social Security was characterized by the insufficiency of public health infrastructures. In this situation the State depended on the collaboration of private entities, Mutual Insurance Systems, and the Church. In effect, in 1962, the National Hospital Network was created, made up of “all hospitals, regardless of the Organism to which their ownership and regency corresponds” (Law 37/1962, Art. 4). The new directive defined the hospital as an “establishment intended to provide medical-clinical assistance, notwithstanding that it may be performed in them, in addition, as deemed appropriate, preventive and recovery medicine, and outpatient treatment” (Law 37/1962, Art. 1). Although hospitals should be open to all patients, “whatever their social and economic status,” the ownership was respected, as well as the characteristics and care setting to which they were addressed (Law 37/1962, Art. 2). There was also a modification of the classification of hospitals. The presentation will analyze the contribution of the Mutual Insurance Companies to the Spanish Hospital System in the second half of the twenty century, taking into account the progressive lack of State support for these institutions, since it preferred to exclusively support the public institutions that it supported. We will also observe the evolution of the hospitals promoted by these institutions at a time of structural changes within these entities and of the reorientation of the Mutual Insurances’ own aims.


Paper 5

Solidarity and workplace accident.

Lars Fredrik Andersson (Umeå University)
Liselotte Eriksson (Umeå University)

Work place accidents emerged as a major threat to people’s health and financial security during the phase of industrialization. From the late 19th century work-place regulations and social security was gradually imposed by western states to mitigate the social unrest in the work class. The popular (civil society) movement became a political force and a major organizer of insurance schemes to protect workers from the financial consequences of work-place related illness and sickness. By meeting the growing demand among wage-earning urban households for insurance protection, health insurance societies became a key welfare institution across the western world in the late 19th and early 20th century. In underwriting work-place sickness, but also accidents, selecting risk and distribute costs actuarially fair turned into major challenges. Workers of different occupations was exposed to different work-place risks – a fact that was well established in public reports, health insurance societies and unions. If equal premiums was imposed, the low-risk workers would subsidize the high risk, while an actuarial fair risksetting would make risk exposed workers to pay more. Our preliminary findings from a Swedish case, shows that an equal premium setting model was selected, motivated by the importance of solidarity among workers. On the other side, critiques at the time raised the concern that risk-exposed workers went for the largest policies, putting the society’s financial health at risk. As later developments in compulsory work place insurance, solidarity argument was not isolated to health insurance societies. It was a concern for the design on social insurance at large. In this paper we address the solidary argument within the social insurance movement, and examine carefully the developments in one of the nation-wide health insurance societies in Sweden at the turn of the twentieth century. As a latecomer Sweden was exposed to the broader developments of social (and accident) insurance developments taking place in Western Europe at the time. We will put our case into this broader context and apply mixed method approach. We will use a qualitative approach to scrutinize the solidary argument in the debate. In order to examine the impact of solidary policy setting on selection and outcomes of health insurance, we will employ and individual-based data including information on occupation and premiums size among members in one nation-wide health insurance society.


Paper 6

Historicizing Risk in the World’s first Emerging Economy: The case of British Friendly Societies.

Penelope Ismay (Boston College)

Risks, as in danger or peril, have a long history, but risk, as a calculable danger that can be insured against, has a comparatively short one. We now know that the transition from thinking of “risk as danger” to “risk as an insurable danger” was not simply the result of developments in probability or statistics. As a number of historians have shown, thinking of future events as potentially calculable required cultural change. But what people thought they could do about risk or danger before the development of insurance is critical for understanding that cultural change—and indeed critical to understanding how insurance became socially acceptable at all. This process was not only cultural, it was also informed by socio-economic status. This paper focuses on the British working class mutual aid organizations called friendly societies that proliferated throughout the 18th and 19th centuries. I show how the original structure of these societies was designed to reflect a providential worldview and based on that worldview they initially resisted the actuarial reforms that, after 1850, they were legally required to implement. Over the course of several decades, friendly societies slowly but never completely adopted an actuarial underpinning to their organizations. Taking seriously the reasons that working-class members of friendly societies gave for both rejecting and ultimately accepting the claims of actuarial science will illuminate the cultural processes through which the transition from community-based to insurance-based forms of risk mitigation has happened in the past.