It formed part of the wider social welfare reforms of the Liberal Governments of 1906–1915, led by Henry Campbell-Bannerman and H. H. Asquith.

David Lloyd George, the Liberal Chancellor of the Exchequer, was the prime moving force behind its design,[fact or opinion?]

[1] Lloyd George followed the example of Germany, which under Chancellor Otto von Bismarck had provided compulsory national insurance against sickness from 1884.

The government picked up responsibility for the basic benefits that the unions and societies had promised, thus greatly helping their financial reserves.

[3]: 325 [4] The Act was psychologically important, as it removed the need for unemployed workers to rely on the stigmatised social welfare provisions of the Poor Law.

[5] Key figures in the implementation of the Act included Robert Laurie Morant and especially economist William Braithwaite, who drafted the details after inspecting the German system.

Due to pressure from the Co-operative Women's Guild, the National Insurance Act provided maternity benefits.

In parts of Scotland whose economy was still largely based on subsistence farming, the collection of cash contributions was impractical.

Though the fund was held centrally, and the obligation to pay into it was a nationally imposed one, access to the scheme was via "Approved Societies", who collected the contributions, paid out for treatment, and provided day-to-day administration.

The 1911 Act only allowed Approved Societies to collect the contributions of their members; they could not keep the money, but had to forward it to the National Insurance Fund.

The National Insurance Act Part II provided for time-limited unemployment benefit for certain highly cyclical industries, especially the building trades, mechanical engineering, foundries, vehicle manufacturing, and sawmills.

The scheme was based on actuarial principles, and it was planned that it would be funded by fixed payments from workers, employers, and taxpayers.