MAJORITY REPORT. 
115 
being five times the lowest and that large blocks of insured 
persons are included at each stage of the range. The fact that 
1,880,630 insured persons failed to participate in any surplus at 
all while more than one-third of that number were entitled to the 
full five units is worthy of note; we think that the diagrams 
referred to furnish the most graphic exposition of the financial 
results of segregation under the present system. 
CAUSES OF SURPLUS. 
247. The emergence of a surplus on valuation is due to a 
great variety of causes, some within and others outside the 
control of the Society. We propose here, however, to refer 
only to those two possible causes which were most frequently 
mentioned in evidence before us. The first is the segregation 
within a Society of lives much above or much below the general 
average as regards liability to sickness. For example, a Society 
composed mainly of rural workers could hardly fail to show a 
much more favourable result on valuation than a Society composed 
mainly of chemical workers. The second cause of surplus which 
was constantly quoted in evidence was careful administration, 
particularly as regards the supervision of claims for benefit. 
Undoubtedly, good administration must be a contributing cause 
to a satisfactory valuation result, even if it is thought that when 
compared with the other cause to which we have referred, it 
has been but a minor factor. We should like to make it clear that 
in advancing this proposition we are in no way lending our 
support to any suggestion that good administration is relatively 
unimportant. But we are inclined to think that, even if it were 
possible hypothetically to assume a uniform standard of 
administration throughout all Societies, the discrepancies which 
would have resulted would have been almost as great as those 
which have in fact emerged, and we are strengthened in this 
view by the consideration that there are prosperous Societies in 
which administration is not strict and unfortunate Societies which 
are unfortunate despite strictness of supervision. 
RESULTS OF SEGREGATION. 
248. The evidence which we have received on this matter has 
inclined to one or other of two extremes, each of which can be 
supported by arguments of some force, but neither of which, as 
we shall show later, commends itself to us. On the one side 
it has been represented that the position which has now revealed 
itself as the result of the first two valuations was only to be 
expected and was clearly foreseen and explained and defended 
in the most definite terms when the scheme of National Health 
Insurance was first before Parliament in 1911. Our attention 
has been called to various statements, in Parliament and else- 
where by responsible Ministers and others, containing pledges