Modest Benefits and restricted Scope: the Provision of Assistance Funds

In 1890, there were over one thousand mutual assistance funds in Switzerland. They offered policyholders modest protection from the consequences of accidents and illnesses. Despite their limited benefits and the locally restricted scope, they formed an important precursor to modern social security.

Read on Close

Assistance funds were a link between traditional forms of provision (as provided by guilds, for example) and modern social insurance schemes. The first funds – organized as unions – emerged as early as the end of the 18th century. By the 1870s, they became prevalent particularly in industrialized regions and cities. In 1888, Switzerland had 1,085 assistance funds serving 209,920 members. In industrial regions, up to 25 percent of the workforce were members of such a fund. Though a number of funds were open to anyone; most were maintained by professional associations, employers or trade unions.

Unlike poor relief, the assistance funds were geared towards the working population, in particular the growing industrial workforce. They were based on the principle of mutuality and the balance of risk: the members were required to regularly pay a premium and, in return, received a modest daily allowance protecting them in the event of loss of earnings due to illness or disability. Special burial funds assumed the burial costs for policyholders. From the 1880s, a number of funds also offered pensions for old age, widows and orphans, and competed with commercial insurers such as the Swiss life insurance and pensions company, Swisslife, founded in 1857.

In the 1860s, insurance mathematicians like Herrmann Kinkelin or Johann Jakob Kummer began to criticize the organization and financial models of the assistance funds for their inadequate capital reserves, which rendered the funds incapable of fulfilling their obligations in the long run. However, the assistance funds resisted calls for controls and rejected a state health and accident insurance scheme – particularly in French-speaking Switzerland. Yet, the introduction of accident insurance in 1918 strengthened state regulation and competition. The number of funds dropped after the First World War. Some became commercial insurers.

Literatur / Bibliographie / Bibliografia / References: Lengwiler Martin (2006), Risikopolitik im Sozialstaat: Die schweizerische Unfallversicherung (1870–1970), Köln; Muheim David (2000), Mutualisme et assurance maladie (1893–1912). Une adaptation ambigue, Traverse, 2, 79–93.