I move amendment No. 6:—
In page 8, before line 18, to insert the words—the expression "national company" means an assurance company registered in Saorstát Eireann under the Companies Acts, 1908 to 1924, and incorporated in Ireland not before the 24th day of April, 1916, and not later than the 7th day of January, 1921, and which for the purposes of this Act save as is otherwise provided shall be a "Saorstát Eireann Company" save that the provisions of paragraph (b) of sub-section (4) of section 12 and the words in paragraph (a) of sub-section (9) of section 12 beginning with the word "and" line 59 and ending with the word "business" line 61 do not apply.
As the Bill stands, and unless it is very seriously amended at this stage, or at a subsequent stage, it will really sound the death-knell of Irish insurance companies. The Irish insurance companies have had a very difficult struggle, and are competing under a very heavy handicap with companies with much greater resources. Though they went through their formative years at a time when restrictions on insurance were much less than they are at present, and when the premiums charged were much higher than they are to-day, the Irish insurance companies had one advantage, and only one advantage, in competing with foreign companies: that they could appeal to the patriotic sense of the Irish people and use the slogan, "support Irish industry." The fact that these companies were giving preference to Irish employees and had invested their money in Irish industries, and so far as possible assisted a native Government and the national outlook generally, made an appeal to the Irish people, and enabled the Irish companies to get business against the very keen competition of the stronger companies. By a system of licensing insurance companies, this Bill will to a great extent, if not completely, do away with that advantage. Once a company is licensed to do business in this country, to all intents and purposes it becomes an Irish company, as no one is going to inquire very far back into his antecedents one way or another. A person henceforward will insure with the company that can offer him the greatest advantages. It is on that basis that insurance will probably be done in future. To that extent Irish companies will suffer by this system of licensing.
Then the partition proposals in this Bill by dividing up the Irish companies will destroy their identity. Once the company has had to submit to this Solomon's judgment, it will be very hard to identify the original company or to know into which particular section these companies have been divided up and stirred about by the Minister's Irish stew of amalgamation. It will be very hard to recognise the parts that will emerge without their original label. Again, everybody who knows anything about business, will recognise that goodwill is a most important item in any business, perhaps even a more important item than capital itself. It is quite a usual thing—and nobody should be more familiar with it than the Minister for Industry and Commerce—to see a particular business house changing hands several times in one generation while the same name remains over the door all the time, for the simple reason that a certain goodwill attaches to that particular name. There is probably no business in the world that is more affected by the factor of goodwill than the insurance business, because it is a very widespread business and touches the interests of a great number of the public. If a company carries out its business in a satisfactory manner and gives satisfaction to the people who are doing business with it, everyone who comes in contact with that company becomes an advertising agent for it. In like manner, if a company does not give satisfaction to its clients, the people who are dissatisfied can do immense injury to that company; and the company that is endeavouring to give satisfaction, once it loses this factor of goodwill, is losing something that is extremely important for its successful working. Under the partition proposals in this Bill that element of goodwill will be completely lost, and the Irish companies to that extent will be the losers, because the great English companies and the foreign companies will still retain their name. Their goodwill will not be affected, whereas the Irish companies will lose whatever prestige they have built up during the last few years.
There is another important point in these partition proposals, namely, that they are going proportionately to increase very greatly the overhead charges of the Irish companies. Anyone who has any knowledge of the business of insurance companies realises that the great difficulty with which they are confronted is to reduce their expense rates. You may start at one end of the problem and by increasing your business, which is a fairly easy thing to do, you do not mind the factor of expense, but by increasing your business in such a way that at the same time you increase your expenses proportionately, you are worse off in the end than at the beginning. If you approach the problem from the other end by reducing expenses you may possibly find that you are reducing your income still more, so that you are still faced with the same dilemma. In the case of companies that are doing both classes of business, their overhead charges are generally distributed between the two branches of the business and if you cut off one branch you will be faced with the position in which the other branch will find it very difficult to maintain its overhead charges. A number of the officials in those companies are supported by salaries paid from both sides of the business. In the same way a great number of offices can only be maintained by reason of the fact that a share of the business is fire and general, and another share of it is life. If you cut off one or other of these classes of business it will mean that various local offices will have to be closed down and the business of that extent will be reduced.
There is another important aspect, which makes it also necessary for the Irish companies to escape from these partition proposals. That is, the fact that every penal clause in this Bill, everything that makes insurance in this country more difficult than in foreign countries, militates to a greater extent against the native Irish insurance companies than against the foreign companies and, to that extent, is a fillip to the foreign companies. Most of the foreign companies do only a small portion of their business in this country, some of them only about 10 per cent. They can afford to lose on their business in this country for a number of years if, by doing so, they know that the Irish company which is being subjected to the same conditions will be driven out of business. The Irish companies, unlike the foreign companies, have no subsidiaries in other countries on which they can depend. If conditions are such that they cannot carry on a profitable business here, the Irish companies will be forced out of business while the foreign companies in competition with them would be prepared to lose a considerable sum of money in order to see that result brought about.
There is another part of the Bill to which I have an amendment down alongside one by Deputy Dillon, which will enable all Saorstát companies that were composite companies before the Bill was introduced to continue as composite companies. I do think that special consideration should be given to those companies that were established here in the period between the 1916 Proclamation and the acceptance of the Treaty in 1922, that is, during the period of the struggle for independence. Most of these companies and societies—I have not included societies in my amendment— were started more from patriotic motives than from any other point of view. They were not started solely as commercial concerns. The money was subscribed in the same spirit by a number of people as that in which they subscribed to the National Loan and it was part of the Articles of Association of these companies that they should invest in Irish industries. At a time when there was very little encouragement or inducement to invest in Irish industries, when there was if anything a certain animus against these industries, it was a very good thing to have institutions that had fairly substantial funds and were prepared to support those industries. Very often from a financial point of view these concerns were not of a type to attract investors. Some of them did carry on to success but a great many of them did not. At all events, these industries, with a more or less Irish-Ireland outlook, got substantial support from these Irish companies. In the same way men who had participated in the national struggle and who were victimised, for one reason or another, found a refuge in these companies as officials, although frequently they might not have been as competent as men who would have been selected solely on grounds of ability or because of their knowledge of the insurance business.
Again, these companies carried on under very considerable handicaps at times. Their directors and high officials were frequently on the run or in jail for political offences. Their head offices were frequently raided and their position was made exceptionally difficult. However, the companies survived that difficult period but then they had to undergo a period equally as difficult, the period of the civil war. Subsequent to that they were plunged into the world-wide depression which meant a big loss on investments. Having survived all these difficulties, it is certainly a hardship that our own Government, a Government which has come into office pledged to carry out a programme of fostering and protecting native industries, should introduce a measure such as this. It is certainly very strange that the death blow for Irish insurance companies should come from a Government organised on these particular lines. The irony of the situation, as I see it, is that it is probably those companies which have done their best to avoid the irregularities which the Minister will probably adduce as a reason for insisting on this partition proposal, which have not utilised their life fund to bolster up their fire accident fund or vice versa, which have kept their accounts separate and tried to carry on in that way—these are the companies which, in my opinion, are going to suffer most. Those companies which have kept their business in such a way that one side has been supported at the expense of another, to the extent of the other portion becoming completely atrophied, will lose nothing by having the diseased limb cut off. That limb was no good to the company, at any rate, as regards the support of overhead charges. Those companies which have tried to keep both limbs solid and sound, which have tried to carry on in a regular way, will find this major operation, as it was described by Deputy Cosgrave, a very serious matter. Those companies have been in the habit of standing on both feet. Both were sound and healthy feet and, if one is cut off, it will be very difficult for them to maintain the top-heavy body which will be left.
No consideration is shown in any portion of this Bill for the shareholders of these companies. Those who subscribed to the capital of those companies did so partly from patriotic motives but that is no reason why their capital should be confiscated in this way. The people who subscribed to the National Loan did not expect to make anything out of it but, when a national Government was established, it immediately repaid that loan. Some consideration should be shown to the people who invested in these companies. Their capital will, to all intents and purposes, be confiscated under this measure if it goes through as designed by the Minister.