Insurance Bill, 1935—Recommittal.
Question again proposed: That Section 12 stand part of the Bill.
I had been referring to this section yesterday as being made both by the Minister's Second Reading speech and the discussion in the House and also by general acceptance in the country, a pivotal clause in the Bill. The Minister told us last night that that was not so, and proceeded to hedge on it afterwards. Now, so far as the insurance companies in this country are concerned, and so far as they are looking for any benefit from this measure, it is to them the pivotal clause. I said, following Deputy Costello's line, that whatever may be the particular section and sub-section on which the matter cropped up, the point is a very clear one. It is considered that there is great benefit accruing for somebody from the partitioning of the business of the insurance companies, leaving one company to carry on one line—life and industrial insurance—and the other companies all other business. We from this side of the House queried that and asked what documentation and evidence the Minister had which led him to assume that such partitioning would have a beneficial effect. I queried that, if there were so many people interested in the matter, preventing the funds being mixed up would be desirable. Then we should have exact references to other countries in which legislation of this type was passed. We have been left with a very indefinite type of reference to the United States of America and Germany. We will have to wait to find positive arguments used on this matter instead of vague references to other countries, such as were given here last night.
I understood from the Minister's Second Reading speech that he accepted that there were three groups interested in insurance matters—(1) the policy-holders, (2) the group which comprises the directors of the company and the staff of the company; in other words, all those people who are about the machinery of the company. There is only one mutual company in this country. The others are proprietary concerns, and, therefore, there are people who have an interest in the receipt of dividends and in getting profits. As regards the third group, there is more particularly here than elsewhere the generally accepted view that the State must intervene so far as industrial assurance is concerned for the protection of people who, because of their lack of education or otherwise, need protection. It is regarded as a necessity that the State should take care of the policy-holders in industrial assurance companies. The State is intervening in different countries with greater degrees of encroachment on other insurances than industrial assurance. What benefit is there accruing from the partitioning of business either to the policy-holders or to the group of people who are interested in the company itself, whether the staff or the board? Where does the State seek to get any better security from this proposal than from any other? I hope there will be general acceptance of the Minister's viewpoint that it is desirable that the funds of one particular branch of insurance should not be used to cover deficiencies in another branch. But this is a big step beyond that based apparently on the assumption that this matter of the separation of the funds or assets of the company would be excepted from the partitioning of the business. As I have mentioned the question of the staff, I think it is appropriate here to refer to the question of the compensation of redundant staff, that is, members of the staff who are made redundant through amalgamation, or in any other way through the impact of this Bill on insuranec business.
Again, I find it difficult to discuss this measure, because sub-section (4) of Section 12 to anybody reading it must have the meaning that ordinarily would be taken from it. Sub-section (4) of Section 12 certainly laid down this, that if a Saorstát company was to make application for a licence to carry on, in addition to life or industrial business any other class of business, the Minister may grant that application. He could only grant it if certain conditions were carried out. The conditions laid down in paragraph (b) of sub-section (4) of Section 12 were that the company be amalgamated with some other company, and in addition that the other insurance business be transferred to some other Saorstát company. That meant that a single Saorstát company applying for a licence could not get that licence unless it proceeded to amalgamate itself as a unit with some other company and transferred its business other than life and industrial business to some other Saorstát Eireann company. I gather now that that is not the intention of the Minister, but what the intention is I do not know. The Minister accepted Deputy Costello's interpretation of the phrasing there. He admitted that the proposal went much further than is assumed. He said that industrial business would, by the force which this Bill would unleash, tend to be driven into one consolidated company.
The question of a consolidated group was considered by the Departmental Committee which reported on industrial insurance generally. They had a variety of remedies which are now refined down to three, one being that public insurance business should be referred to a utility corporation, (2) that there should be a grouping of companies into bigger and fewer units, and (3) that there should be limitations of expenditure other than benefits to the insured. But the remarks they make in considering these remedies are appropriate to the whole matter of insurance. The Minister professes his disbelief in the views expressed here that any amalgamation would tend to create redundancy. He has also told us, I understand, that he hopes, as far as the general business is concerned, that there will be more and more companies intervening. One of the things found with regard to industrial assurance was that the defects discovered in the working of industrial assurance had arisen mainly from what is called the pressure for increase. I do not say the same pressure operating on certain other types of industrial assurance would produce the same defects, but if the Minister is going to unloosen forces which will tend to get more companies in the field looking for more business, he may find the diffuculties that were found to be present when the question of industrial assurance was examined elsewhere.
Supposing there are to be more companies, there may not be the same touting for business amongst the same type of people of a lower standard of education who might easily be induced to make bad contracts. But surely the same conditions that are said to obstruct insurance business will tend, in this country, to be a greater obstruction to good business? When I had more intimate knowledge of insurance matters in this country I found that, apart altogether from the types of people who have been appealed to, one of the great troubles was that for £100 worth of business successfully got by one company, you had four companies spending £120 to get that same bit of business. If that sort of competition led to lower rates there might be some good coming from it; but when it merely led to the piling up of expenses which had to come out of the funds that should be set aside for policy-holders, then it was a weakness. The Minister apparently looks forward with delight to that type of situation developing.
In addition to that matter, this Committee did report on two points. I do not want to go through the details of this report so far as staff is concerned, but they did find that on any question of either amalgamation into one public utility corporation or any method of grouping into fewer units, there was going to be redundancy of staff. They faced that: they knew it was going to happen. The Minister does not believe it will happen here. They discussed how compensation was to be paid. They recognised compensation would be claimed and they thought it should be paid. They came to the conclusion that compensation to redundant staffs could only be made eventually at the expense of the policy-holders. We thought that was abundantly clear to anyone who had considered the matter, and the viewpoint was expressed here that if there was to be redundancy created and compensation payable, then the State should step in as the State has a definite interest in this whole matter.
The third point in regard to this section was one referred to by Deputy Costello. The Minister professes to believe that it is possible to segregate different funds and assets. This Committee reports at length on that aspect and says that to make these adjustments will be almost impossible. They point out that in the breaking up of businesses there was bound to be hardship caused and that hardship, again, would be met out of the policy-holders' money. The comments they made in that report can, I suggest, with very little change, be made with regard to insurance business here as a whole. The Minister sets out here to create redundancy in staff and cause a very delicate adjustment of business, and apparently he is indifferent as to how that adjustment is carried out. He thinks that once he enforces his partition proposal the matter will solve itself. His point is that whatever problem arises will have to solve itself. If we can be clear that the Minister has information and documentation to show that there will be economies and that there will be better results for policy-holders and for the State—better results all round as a result of the partitioning business— then we might be prepared to let the matter settle itself. But the Minister has left us very vague on that matter. We do not know what was the intention upon which sub-section (4) of Section 12 was drafted.
I do not know of any country in which this proposal has been accepted. I would like to be referred to one case so that the circumstances of the insurance business in that country prior to the change might be examined, and we might then be able to see whether the situation there is comparable and whether the results obtained in other countries are likely to follow here. I may say it was a proposal that stunned every insurance man when it was first made. All the insurance companies here were on the alert about this matter. A variety of letters were written and to date nobody knows why this proposal was put forward. We know where it comes from, whence it emerges, but that is the beginning and the end of it. The only argument I could get from the Minister was when he said we should bring about a state of things in which there was no possibility of life and industrial funds being used to cover losses on other points. Apparently he takes as a sequence to that, that it is impossible to achieve that desirable result without this partitioning. I find it stated in this report that while the law requires separate funds to be maintained for ordinary and industrial business, it does not require the assets to be separated. It points out that it is true the Prudential, Refuge, and Royal London keep separate assets in respect of each life assurance fund, ordinary and industrial, but the general rule is to keep the assets in a common account. It is stated there that the law is that the funds must be kept separate, but they mention also that certain companies keep the assets of their business divided. The only comment made here is that it was the practice to keep the assets in a common account.
The only point the Minister makes is that without this partitioning of business it is impossible to get desirable results. When the Minister is in a position to give us some parallel instances, I will try to find out exactly what was the previous situation in those places. The Minister ought also to realise from the information available to him in regard to other countries that partitioning the business will have certain effects. I think he ought also consider it part of his duty, when bringing in this Bill, to study the results achieved elsewhere as far as he can. Where they are thought to be disadvantageous to policy-holders, he should let us know that the disadvantages will be more than made up in other respects, and he should indicate how soon that position will arise. He repeatedly tells us there is a definite advantage to the State. He ought to follow that up by declaring that because of the advantage the State will derive the Government will seriously consider the question of giving some compensation.
I concluded the remarks I made yesterday on this section by saying that I awaited with interest the reasons which would be given by the Minister to justify the introduction of this new principle which is embodied in Section 12 of the Bill. I still await the statement of the Minister for his reasons justifying that new principle. But I no longer await these reasons with any interest, because I have come to the conclusion that he has no reasons for this section, or for the principle of the separation of business that this section embodies. We have had it now from the Minister that this principle of the separation of businesses was not one devised or introduced to meet the special problem which exists in this country, or any special problem peculiar to the circumstances of this country. We can, therefore, discuss this section and the principles in it in a much freer way than we would otherwise have been able to do if the interests of the Irish policy holders or of the Irish companies were involved. We are in a position to discuss this section and the principle in it on its merits as a general insurance principle applicable to this country or any other country where business is carried on in composite offices doing life and general insurance.
We have had in this country, in the sphere of politics, any amount of political vivisection. Apparently, we are going to have it now in the ordinary sphere of business—more vivisection and experimentation. I want to know who is at the back of this principle? Who is the expert whose opinion the Minister relies upon? He said yesterday: "In my opinion, and in the opinion of a number of people who had given their expert consideration to the matter, this is the best method of dealing with the problem." We all know, of course, that the Minister is not an expert. He cannot be expected to be an expert in insurance matters. The insurance business, the law of insurance, and insurance practice is a most highly technical affair. It takes years of expert study and application—theory and practice—to even touch the fringe of insurance business. We have not got that experience over here. There are very few people, if any, in the insurance business here who have the necessary expert and technical knowledge. The Minister's opinion is formed on what he is told, and I make no aspersions on the opinion of the Minister because it is formed on what he is told. He is not, and cannot be expected to be, an expert. We can, therefore, leave the Minister out of consideration. But what I want to know is, who are the people referred to in the Minister's phrase: "The opinion of a number of people who have given their expert consideration." Now, the value of the opinion of anybody depends on his knowledge and his experience, and if a person purports, or sets himself up, to be an expert his mere statement that he is an expert is not sufficient. We have got to know what his experience is, and what his special knowledge is, and what are the grounds on which he bases his case to be an expert before his opinion can be accepted as an expert.
I asked the Minister yesterday to tell me if this principle was embodied in the legislation of any country in the world. I know of no such legislation. I still know of no such legislation, and I will go further and say that I believe there is no such legislation. If the Minister was considering the introduction of a new principle of this kind, and was basing his reasons for trying this experiment, because it is nothing else, upon a section of the business community of this country, he ought to have had in his possession, if not the text, at least some authoritative opinion about the law dealing with a principle of this kind if it is in force in any other country in the world. The Minister made a vague statement about the United States of America, and then ran away from the United States and took refuge in Germany, but he could not tell whether it was pre-war Germany, post-war Germany or Hitlerite Germany. My own belief is that it is no Germany at all, and that it does not exist. If it does exist, the Minister ought to have considered the principle embodied in the Bill, and have had some expert opinion as to the reasons for it, and as to its practical working out in the countries where it is supposed to operate. We ought to have been furnished with those reasons in this House in order to enable us to make up our minds as to what is the worth of this principle, what its effect is going to be, and as to why we should commit ourselves to this experiment in this country, an experiment which certainly has not been tried in England, Scotland or Canada, where insurance business has been brought to a very high pitch of perfection in its theory and practice.
The Minister referred to the Clausen Report yesterday. I fail to understand why he should have referred to it either in his Second Reading speech or in his alleged reasons yesterday supporting the principle in this Bill, because the Clausen Report in its very words refutes such argument as the Minister did produce yesterday. I have said that in England and Scotland insurance business in its theory and practice has been brought to a very high pitch of perfection. There are experts in those countries in those matters, and we may take it that the people who were interested in the operations of the Clausen Committee gave evidence before it. The members of the committee were experts in their own line. They did not recommend this principle. They dealt with the problem which the Minister purports to deal with in Section 12, but they did not recommend this principle. There is no reference in the Clausen Report to any single individual having given any single line, sentence or word about the principle that we are asked to introduce into this country. If such evidence was given, I would like to be referred to it. If such evidence was given, it has been turned down by the Clausen Committee, because they produced an entirely different scheme, a less revolutionary scheme than the Minister has produced here for this country. Somebody wants to try this scheme on the dog, and we are the dog. The business people in this country are the dog on which this scheme is being tried out, purely as an experiment. Somebody has a bee in his bonnet, and he is unloosing it on this country. Unless we get some solid reasons, some reasons other than those given by the Minister, we cannot agree to accept this principle.
I approach this section with an open mind. I know enough about insurance law to know how little I do know about it. I know nothing about insurance practice, and, therefore, I approach this in a somewhat unusual attitude of humility. I was prepared to be convinced by the Minister, but a more deplorable speech I have seldom listened to than the speech he made yesterday purporting to bolster up the introduction of this new principle into this country, a principle which will have the effect of interfering with the long-established business of British and foreign companies, and of completely dislocating the new businesses which are being carried on by the Irish companies. The Minister said yesterday that he did not think this principle would fall more hardly on the Irish companies than it would on the British and foreign companies. I think there cannot be any doubt whatever that the introduction of this principle will fall very hard on the Irish companies. The British companies have their subsidiary companies in being carrying on a separate general business from the life business. Most of the British companies have these subsidiary companies in being at the moment. They are in a position to form these subsidiary companies or to unload their general business on to other companies and have with them a very satisfactory arrangement for the carrying on of their general business after the passage of this Bill into law. But the Irish companies are left in the position set out in sub-section (4), paragraph (b), not knowing where they are, not knowing what to do with their general business, with no possibility of unloading their general business in a remunerative fashion to them and with no protection for their policy holders.
But, apart from that, I want to know and I think we are entitled to get from the Minister some reasons other than the vague generalities that he indulged himself in yesterday as to the purport or the principle that is introduced in Section 12, or to the arguments that he purported to give us yesterday in support of those principles—mere vague generalities and "in his opinion" and "in the opinion of experts." Who are the experts? What value is to be attached to these experts in the insurance world? What value is to be attached to their opinions? Give the names so that we may know what value is to be attached to them. Having given the names, perhaps the Minister would give us the reasons they gave him, out of their expert knowledge and expert experience, so that we may be in some position to evaluate the principles contained in Section 12. If we do not get them, if we are left in the position that we do not know what these reasons are, we are left in this position that we can form a very good conclusion that the Minister is not able to give us any reason, that he is not able to give us the name of any expert who is recognised as an expert in the insurance world, and not able to refer us specifically to any section in any Bill in any Parliament in the world where this principle has been introduced. We can only come to the conclusion that somebody with the assistance of the credulous Minister, who loves experiments, is trying this on the Irish dog again.
The experts to whom I referred yesterday were the people in various countries who at various times, acting on governmental committees and otherwise, gave consideration to this problem and published their opinions about it. It is, in fact, a matter upon which persons interested in insurance business have been agitated for some considerable time when it became evident that the provisions in the existing law, providing for the maintenance of separate funds for various classes of insurance business, were not effective to prevent the use of life or industrial funds to cover losses arising in the course of, or to meet expenses incurred in connection with general business.
I take it that it is agreed here that it is desirable that steps should be taken to prevent life or industrial funds being used in that way. It is more than desirable; it is essential in the interests of those people who make life insurance contracts with composite companies. These funds are formed out of premiums paid by these people, and these funds constitute the security which the policy-holders have, that, when their policies mature, the benefits for which they have paid will be afforded to them. It is, I think, in the public interest that effective steps should be taken to ensure that there can be no possibility of these funds being used in a composite company for any purpose other than the purpose of the life or industrial business of that company, and certainly not used to meet the losses or expenses of their general business. It used to be considered that that purpose had been served by the provisions of the Act of 1909 to which Deputy Costello referred—the provisions which required the maintenance of separate funds. Section 3 of the 1909 Act was put in for that purpose because it was then recognised to be desirable that there should be no possibility of life funds being used to meet the expenses incurred in connection with the general business, but the provisions of the Act of 1909 were not effective for that purpose.
I expressed the opinion, which I arrived at after a consideration of the various views which have been expressed on this matter from time to time, that there is no effective method of securing the complete separation of funds, the complete immunity of the life fund in that connection otherwise than by the separation of companies as this Bill proposes. We have had Deputy Costello's expert opinion that there is no law in any country, and no section of any law, which contains the same provisions. Deputy Costello may not be an expert in insurance matters, but we had some reason to believe that he was an expert in legal matters, and I am astonished that he should have committed himself to a statement of that kind without having made the most casual investigations as to whether he had justification for it. The most casual investigations would have revealed how groundless his statement was. I mentioned yesterday two countries. I will mention to-day a number of other countries, and, as Deputies want chapter and verse, I will give them chapter and verse. In France, life companies are not allowed to transact any other class of insurance business. That law was passed on 17th March, 1905, if Deputies want to refer to it. In Norway, life companies may not transact business in any other branches except such as by its nature may be considered as subsidiary. That law was passed in 1911. There is no section in any Act passed by any Parliament in the world which contains these provisions, we are told by Deputy Costello. In Holland, no life company is permitted to carry on any other business, or even any other branch of insurance, except such company has confined its life business solely to reinsurance. That law was passed in 1922, if Deputies want to refer to it. In Japan, insurance companies may not take part in any other commercial or speculative activities, and life companies must confine themselves strictly to life assurance business. That law was passed in 1912. There is no section in any law passed by any Parliament in the world which contains these provisions. That is the expert opinion we get from the benches opposite.
I referred yesterday to the United States of America. It is true that in America the business of insurance is regulated by the statute law of the various States, and I do not claim to have investigated the provisions embodied in the various laws of all the States of America, but, taking the State of New York as an indication of what the various United States laws in relation to insurance provide, I find that the class of business which a life assurance company can transact, other than life business, is confined to certain minor classes of insurance and to casualty business which covers accident and employer's liability. A life company in the State of New York is not permitted by law to transact fire or marine insurance. No doubt, if the investigation of the statute books of the Governments of the world was carried further, we would find further evidence of how inaccurate the opinion expressed by Deputy Costello on that matter was.
In any event, the case for the enactment of this provision does not rest on what any other country has done, but rests entirely on the circumstances existing in the Saorstát. Insurance business by Saorstát companies is in its infancy and, apart from that consideration, we are to-day in a position in which that business carried on by Saorstát companies calls for immediate legislation and control. Legislation dealing with insurance is necessary now and cannot be avoided. To postpone or avoid the introduction of legislation dealing with the conduct of insurance business here would be a responsibility which the Government is not prepared to undertake, and, as we are introducing legislation to control the conduct of insurance business here, and because the Saorstát Eireann companies are in their infancy, we are in a position to consider all the questions that arise in connection with insurance legislation from first principles. The vested interests of the Saorstát companies have not attained such size that the question of making arrangements or coming to terms with them is impracticable and, therefore, we can proceed to frame our laws on the basis of sound principles, because there do not exist for us at the present the same practical difficulties in enacting a provision of this kind as would undoubtedly exist in Great Britain. I am told that the clause in the report of the Committee, to which I referred, did not recommend the adoption of this course. It did not; and it is precisely because that Committee was established to consider and report upon the amendments to be made in the English law in the circumstances existing in England, and consequently did not want to recommend a more considerable change in the conduct of English insurance business which the introduction of this principle in English law would occasion that they sat down to consider other practical methods to secure the separation of the funds associated with the various classes of business conducted by the composite companies. They had experts, as Deputy Costello told us, to devise a practical solution of the difficulties which had been experienced by the alternative method to that proposed in this Bill in order to secure the complete separation of the funds. As a result of their labours, although they put forward certain recommendations, they had to confess that they could not solve a complete solution of the problem, or that in such an intricate and delicate subject matter, their work would prove to be flawless. If this were the Parliament of Great Britain, and if we were legislating for the circumstances prevailing in Great Britain, it would be essential for us to consider every possible alternative to the course proposed in this Bill, because of the established practice in Great Britain amongst insurance companies. But this is not Great Britain. This is a country where insurance companies, in comparison with those in Great Britain, are in their infancy. The companies are not of such size and have not established such vested interests and the problem of effecting this change, while making concessions to meet the companies, can be faced.
The companies here are only small-sized units. They will develop because of this Bill into important commercial undertakings, but only if we put our insurance business in this country on a sound basis. I do not think that we should be deterred from that because of certain difficulties that may arise.
If you kick the feet from under an infant you may put it on a sound basis, but you would not ordinarily call it that.
We are told that the Saorstát insurance companies should be given the same opportunities as the English companies.
The same opportunities that Irish industries are being given.
Let me be spared from irrelevant remarks and foolish ones as well.
It was not a foolish remark. I did not think the Minister would take a reference to his industrial policy as folly.
We were told that the English companies had opportunities of developing and becoming strong that are denied to the Irish companies. If it is implied by that that it is essential to the growth of Irish insurance companies that they should be allowed to do all classes of business, there is no point in it. It is true in reference to industrial business that the English companies built up their resources by the adoption of practices which were afterwards made illegal in Great Britain although legal here. We are now making these practices illegal here and are not prepared to refrain from doing that merely to assist the Saorstát companies. The association of general business of insurance with life business at present in Irish offices may be a source of great weakness. The first-class English companies started their activities by doing one class of business only. It was only when an insurance company in England established its reputation and position in the class of business in which it started that it turned its attention to other classes of business. I think it was undesirable from the point of view of the English insuring public that they should have been allowed to do so. But in most cases none of these companies started into the second class of business until some hundred years after they came into existence. While it is possible that an old-established company can, in fact, transact all classes of insurance business in a satisfactory manner, the position with regard to new Saorstát composite companies is by no means the same. Until they have more firmly established their reputation for strength and reliability they cannot expect to attract better classes of business.
Deputy McGilligan asked what was this change for. Was it for the benefit of the policy-holders or the staffs of these companies or the State? I am not concerned for the moment with the effect upon any other class except the policy-holders. This provision is inserted in order to safeguard the policy-holders. No matter what provision you make, such as was made in the 1909 Act, for keeping separate funds, you cannot completely prevent the life funds from being used to meet losses arising out of general insurance business. And the losses that may arise out of general business, to which this Act applies, may be very considerable. One or two years of bad experience, taken in succession, may very well deplete any existing company of all its resources, and may leave people holding life policies in these concerns without any possibility of securing the benefits for which they insured. We have, in fact, only made this provision in relation to classes of business in respect of which, in normal circumstances, very abnormal losses could arise. The provision is made in the interest of the policy-holders, and it has been made, in the present circumstances of this country, because it is practical to make it now with very little disturbance. In other countries they made that change, and enacted similar provisions, even though they involved much larger dislocation of business practice for their companies than this change will cause here in this country. It may cause some considerable dislocation in the external companies which will get licences under this Bill, but there is no reason why we should be concerned with them. These companies, if they continue to do business here, must conform to our law.
As for the rest of Deputy McGilligan's remarks, I had some difficulty in following them and I do not think I could have understood them aright. I was unable to follow the analogy between industrial business and general business which prompted the Deputy to relate to general business certain observations made concerning industrial business by a committee which was concerned only with industrial business. There is no analogy between them. There is an essential difference between all forms of life insurance business and general business. Life insurance is a long-term contract. The insured person pays now for benefits which he may not receive for many years to come. In general business the contracts are all short-term contracts. It is necessary for a company doing life business to build up substantial reserves, reserves capable of covering all its liabilities to policy-holders, and to maintain these reserves intact over a long period of time; whereas in general business the reserves need only be sufficient to meet probable calls in respect of current short-term contracts. Neither could I follow Deputy McGilligan's reference to the question of redundant staffs. I have stated here that there are too many people at the present time trying to get a livelihood out of industrial insurance business. They are getting a livelihood out of it.
A lot are not, I agree to that extent. To whatever extent they are getting a livelihood out of it, that livelihood is being provided by policy holders. If there is amalgamation and more obvious redundancy of staff, the surplus of staff that has to be dealt with in one way or another under the change must be an improvement from the point of view of the policy-holders, because those persons rendered surplus by the amalgamation will be persons who, at the present time, are being maintained by the policy-holders in the amalgamating companies. That question of staffs can be dealt with if and when an amalgamation scheme is formulated. I am not at all sure that the best method of dealing with the problem of surplus staffs, from the point of view of the staffs, or of the companies, or of the State, is to provide cash compensation for those not to be employed. Whatever methods are adopted, however, I have given my undertaking that, so far as I am in a position to control it, the intention is to see that the staffs of the various companies affected by the provisions of the measure will be fairly dealt with, and by fairly dealt with I mean precisely what the words convey.
That is a nice definition.
Where is the Minister's power? The Minister made the same promise to the employees of Gallaher's factory, and we all know what happened.
I made no such promise. Any promise I made I kept, including the promise to put the Party opposite out of office.
According to your own interpretation you kept it. That is why you are putting a vague interpretation on it now.
I have no doubt whatever that the proposal in the Bill will recommend itself to the public. It may not recommend itself to the directorates or staffs of the existing Saorstát composite companies who dislike change, but in the course of a few years they will realise that the change was effected in their interests and they will change their opinion in relation to it. But in the interests of the public, the interests of the policy holders of Saorstát companies, and we hope the number of such policy holders is going to increase very considerably in the future, this change is being made and is providing them with an essential safeguard. At the present time, as I explained yesterday, in relation to a life company the basis of valuation is fixed by the directors of the company, fixed by them at their own discretion, and the State has no power to reject the valuation no matter how inadequate the basis may be upon which it is prepared. The directors of a company can fix the surplus they want to bring out and arrange their valuation so that it will bring out that surplus. Having brought it out, they can use it of course to pay dividends to their shareholders if they wish, but also to make good whatever losses may have been incurred in their general business, although on the winding up of the life fund of that company, depleted in that particular way, a deficiency would be revealed. By that method, or some other method, any arrangements which we could make to secure the effective separation of funds within one company can be nullified. On that account, we recommend the adoption of the much sounder principle of legislating to provide that life and ordinary industrial business must be carried on by separate companies, as has been legislated for in a number of countries, the names of which I have given to the House.
I do not know why the Minister deems it expedient to bring forward arguments that were clearly invalid. One argument which he advanced for the division of funds is that the directors can choose the basis of their own valuation and thereby hoodwink the Department of Industry and Commerce and outmanouvre them in this matter. He knows as well as we do that when any intelligent person is perusing the quinquennial valuation of a company the first thing he looks at is the basis of the valuation.
They have to follow the basis in reading the valuation, and it is not calculated to deceive anybody. If the valuation is above 3½ per cent., it is not conservative. In this country a considerable number have a 4 per cent. basis, which is the maximum provided in the 1923 Act in Great Britain. If any higher valuation is accepted, that puts any person on guard to inquire into the reasons for altering the basis and could affect the judgment of no sane person reading the valuation of an insurance company. On the contrary, an attempt of that kind warns all and sundry that there is something to look for and that the condition of the company is not secure. It is true that dud assets can be brought in, and have been brought in, to the accounts of a company. How the proposed separation under Section 12 is going to assist in the elimination of that practice nobody on earth knows, because the Minister knows well that the provisions of Section 12 will do nothing to remedy that situation. There are other powers which may be sought, analogous to those in the 1923 Act in Great Britain, giving the Minister the right to query the value and intrinsic worth of any securities contained in the assets of any company or in the fund of any company.
The Minister bases his whole case for Section 12, as it appears in the Bill, on the ground that the 1923 Act in Great Britain is founded on the Clausen Report, and that the Clausen Report says that a scheme to separate funds is not flawless. Of course, the Clausen Report stated that, because the Clausen Committee was not labouring under the misapprehension that they suddenly would be transported to Heaven. Nothing in this imperfect world is flawless. They went on to say that they thought it to be an excellent scheme. The Minister says that of its very nature it was bound to fail. If that is true, the provisions of Section 12 are going to fail, and fail ignominiously, because the provisions of Section 12 require that life business of all kinds has to be segregated in one class of company and general business of all kinds in another.
There are two classes of life business, and sound insurance practice requires that separate funds shall be maintained for ordinary branch and industrial life insurance. The report of 1933, on page 46, says that the law requires separate funds to be maintained for ordinary and industrial life business in Great Britain. If the law requires that to be done in Great Britain, and if the consensus of opinion in this country is that it is sound insurance practice to do it, it is just as necessary to maintain separate funds for industrial life business and ordinary branch business as it is to maintain separate funds for life business in globo, apart from general business on the other hand.
How is it that the Minister has not brought in legislation here to separate industrial life business from ordinary branch business, and to prohibit any campany from carrying on the two? Why does he not make the case to us that you cannot supervise separate funds in one insurance company; that there is going to be misuse of one fund to subsidise the expenses of the other, and that, therefore, you must have ordinary branch insurance companies, industrial life insurance companies and general insurance companies? He does not make that case. He does not make that case because such a proposal would be impracticable and absurd. Our contention is that the Minister approaches this question not from the point of view of effecting his purpose with the least possible interference with the legitimate activities of the business community, but his idea is that he has a divine right to enter any man's house, office or place of business, and impose his sacred will upon him, and that because he wants to do so that is good enough reason for doing it. Our view is that with regard to the legitimate interests of policy-holders in the particular class of people with whom we have to deal—largely simple people, who are easily put upon if they encounter an unscrupulous person—the State is obliged to intervene there, to constitute itself the custodian of those people's rights, and in fact to rewrite their contracts for them. The rule of the common law is that it is no business of the law to write a man's contract; that that is his own responsibility. We depart from the level of the common law in respect of industrial insurance, and say that up to a limited point we are going to write the contracts on behalf of the working man, and let the insurance companies write it on their own behalf.
The Minister wants to go beyond that. He wants to uproot the whole existing system and recast it in a frame which will please himself. The only argument which he has in favour of that is that it seems good to him. He disowns any right to speak as an insurance expert, but he expects this House to consent to legislation which is looked upon with grave askance by the people whom it is going to affect, for no better reason than that he thinks it right. He then says: "There is no other way of securing the object upon which we are all agreed, and that is that separate funds should be maintained for separate businesses." That is the only outstanding argument he has advanced. Against that I set this reply: If there is no other way, why do you not separate ordinary branch and industrial branch business, and forbid those two being carried on under the same roof? If the Minister's argument is valid it applies to that with just as much force as it does to the other. I do not think it applies to either. I think that, while abuses will creep in no matter what legislation is passed in this House, the Minister would have ample power under other sections of the Bill to deal with any abuse that did arise and to bring it to an early end. I do submit that what is happening here is that an experiment is being tried on the dog. People just want to see how it will work here. They believe they have an experimentalist Minister; they believe they have a docile people, and they will try it on the dog. If disaster to the Irish insurance companies ensues, the attitude is: after all they are very small; they are not very powerful, and will not give much trouble.
The Minister makes great capital out of the fact that Deputy Costello challenged him to-day to produce the legislation which he says enshrines a principle similar to that contained in Section 12; he quotes from the statutes of four or five countries, no single one of which he was in a position to refer to last night. Overnight he has got some references; he charges in here with those references in his hand, but he does not think it worth his while to tell the House what were the circumstances in Norway which induced that Government to legislate in the way it did, or what is the exact nature of that legislation. We were told recently by the President, with terrible emphasis, with indignant emphasis, that he had been cruelly misrepresented when he was reported as having said that there was only monocameral government in Norway, when, in fact, there was bicameral government. But when we come to examine what the President had said and what truth there was——
The Presiden's speech has nothing to do with this Bill.
No, Sir, except by analogy. In any case we found him wrong.
That has nothing to do with this Bill.
There are so many examples of inaccuracy now that it really does not matter.
The Minister adduces the Norwegian example but he gives us none of the surrounding circumstances. If the Minister was in a position to say to us: "We had in Norway a case where the Government found that it was desirable to separate the funds of assurance societies. They passed legislation analogous to that incorporated in the 1923 Act in Great Britain, and they found it did not work. Then, in 1911 they passed a new Act enshrining the principle which I have in this Bill, and they found that that worked," then, I confess, that we would be obliged to examine the position anew. That would be very strong testimony in support of the Minister's position, but it strikes me that if the Norwegian Government have legislated to separate life from general business it must be for some reason other than the supervision of funds, because there is no facility in an arrangement of that kind to supervise the distribution of the ordinary branch life fund and the industrial branch life fund. Therefore, I suggest that the Norwegian Government had some entirely other purpose in mind when passing legislation of that kind. The same applies to the Japanese Government.
Can the Minister show us any case in which Governments have said: "It is necessary to keep those three separate groups of insurance apart in separate buildings or we will be unable to disentangle their funds." Can he tell us, having made that experiment, what was the result? Until he can, I do not think he has made any case for this proposal at all. The Minister—and again I want to repeat this protest—has got into the habit, during this debate, of talking about putting Irish insurance on a sound basis, the implication being that Irish insurance is at present on a very rotten foundation.
It is a mere bagatelle; the Saorstát companies are doing only an infinitesimal part of the total business available.
The Minister talked about "reputation.""Reputation" was the word used. That does not mean small business; it means bad business.
It is very hard to pin the Minister down to his words, but the impression he has sought to create throughout this debate is that the condition of the Irish insurance industry is rotten, insecure and dangerous, and that the Government is no longer prepared to take the responsibility of carrying on without introducing legislation to remedy the very grave situation.
That is the whole reason.
It may be that there are one or two companies in difficulties, but it is very necessary and essential that it should be made abundantly clear to the public and to the country that there are insurance companies in this country which have been run on the most strictly conservative lines, and which compare favourably for solvency with any of the great companies in Great Britain.
Does the Deputy not believe that if the weaknesses which are there were revealed the sound companies would be affected exactly like the weak companies.
I find it a little difficult to follow the Deputy. Does the Deputy mean that if one insurance company smashed it would react very unfavourably on the other companies?
On the other Irish insurance companies.
It would react on them in this way: that it would tend to delay the increase in their debit, but if an insurance company is really solvent and properly run, and its assets are in a properly liquid condition, no shock can bankrupt it. However, it may be materially retarded in its development, and I do not deny for a moment that, if one or two Irish companies were allowed to go to the wall, that would injure the remaining Irish companies, inasmuch as they would be seriously prejudiced in the public mind as secure institutions. There is, however, an impression abroad—and I think it ought to be disposed of—that, in order to be solvent in the insurance world, you have got to be a big company. That is not true. The Minister curls his lip in scorn when it is suggested that there are Irish companies in as sound and solvent a position as any of the biggest companies in Great Britain. Well, there are; and there are Irish companies, taking their basis on the quinquennial valuation basis under the British Insurance Act of 1923, whose valuation is as high as that of any company in Great Britain and, in some cases, higher than the statutory law of Great Britain requires. I say that it is not just that these Irish companies should be held up, by implication, as companies conducting a rotten business and as being insecure and in urgent need of Government supervision and Government assistance. There are companies in this country that want no Government assistance: companies which are prepared to comply with the strictest requirements of the Insurance Act of 1923 in Great Britain. These companies are prepared to co-operate with the Government in any legitimate scheme to save any other Irish company from going to the wall, but they strenuously object to being held up to the public of this country as if they were seedy institutions and as if an apology were to be made to the people of this country for their existence, because the companies to which I refer were started without Government assistance, carried on without Government assistance, and have no desire now for Government assistance. They want, however, to have this country brought into conformity with the 1923 Act of Great Britain and they have no objection to helping any Irish company which has allowed itself to get into difficulties. On the other hand, they have no reason as yet to understand why the Minister has struck them this deadly blow of splitting their business, as is proposed under Section 12, and they have heard nothing from the Minister, so far, to justify it.
The Minister says that the reduction of any surplus of staff, which is revealed, will react to the benefit of the policy-holders because, at present, this staff is living on the policy-holders and, if the staff is shown to be superfluous, the policy-holders will benefit by being relieved of them. How will the policy-holders benefit if the Minister is going to see that substantial justice is done to these employees and if, at the same time, he refuses to make provision for the compensation of these employees? It is all very well to say to the people, whose livelihood is going to be taken away, that you cannot be providing them with lumps of money. I do not think so either, but neither do I think it is a good thing to put them into the South Dublin Union. If you do not provide them with alternative employment, you must do the next best thing—compensate them—and, if the State does not do it, who will do it, unless it be the policy-holders of the company, and, if the burden is on the policy-holders, how are they going to benefit by the removal of the surplus employees from the staffs of several companies if they are going to be put back as pensioners on the staffs of the amalgamated companies? There is no use in the Minister generalising here and saying that the members of the staffs of the several companies are going to have substantial justice done to them. They cannot live on "substantial justice," and they are entitled to know now, for the reasons we set out on an earlier stage of the Bill, what does "substantial justice" mean. We know what it meant with regard to one firm in another line of business. We know that it meant permanent unemployment for a number of employees in Gallaher's factory at the East Wall. What does it mean here? The very fact that the Minister will not say what it means is, in itself, a menacing warning.
Will the Minister try to meet the difficulty that I put to him? His only argument, so far, for the division of these companies is, he tells us, in order to facilitate the supervision of funds. If that be the principle on which he is arguing, why does he not divide the ordinary life insurance branch from industrial insurance? Is not the reason that he knows that the only practicable way of doing that is by Government supervision within the company? If the division is practicable for two branches of the business, why should it be impracticable for three? Why should a condition be imposed that, even on the British companies, will prove to be a heavy burden, and on the Irish companies will prove to be an insupportable burden, and which will, undoubtedly, destroy many of the Irish companies, which do not now need Government assistance—which have carried on hitherto without Government assistance, and which are prepared to carry on now without that assistance and under the strictest supervision that may be necessary in conformity with the 1923 Act?
The Minister, in the course of his remarks, said that some of the English insurance companies built up business on the basis of practices that are now illegal in Great Britain and that are still legal in Ireland, but which will become illegal in this country under this Bill. I should like to state, on behalf of members on this side of the House, that everybody is in favour of the most stringent supervision of insurance companies, and that there is no controversy about any powers the Minister likes to take in order to supervise insurance companies or to declare illegal practices that have become illegal in other countries and that we do not consider should be allowed here. As far as that goes, the House is in entire agreement. I should like to draw the Minister's attention to another matter, concerning which he stated that directors can fix the basis of valuation and bring out any profit they like. Why would the Minister not take powers to revise that position, or to refuse to accept it? These are questions that are agitating Deputies on this side. The Minister does not seem to think that Section 12 is the most important one in the Bill, but people outside whose livelihood depends on insurance business are, apparently, greatly alarmed at it. I suppose the most charitable thing for us to do is not to say that they do not know their own business but that they do not know what is good for them. I suppose that is the basis on which we must approach consideration of this Bill. The Minister stated last night that Germany and the United States of America had prohibited insurance companies from embarking upon more than one type of insurance business. I said that it was my belief that one result of this Bill would be an increased cost of running insurance companies. There can be no doubt about that.
What there is a doubt about is, whether the shareholders will get less dividends or the policy-holders less benefits. I admit that the question can be faced up to in various ways, but in a small country like this, which is face to face with the fact that policies can be issued in other countries, the only way for insurance companies to offset the tremendous cost of working insurance business was to do all classes of business. I submit to the Minister that that point has been overlooked.
I do not think that any insurance manager in this country who received an offer to be transplanted to the United States of America to specialise on one line of insurance would not be delighted with such an offer. We are comparing a country with a population of over 100,000,000 with a small country like this. In my opinion the Minister's analogy of Germany and the United States as to the cost of getting insurance business in these countries and here is absurd. He has not told us why these companies are being separated. He said it was impossible to keep the funds and the assets separate. I suggest to the Minister that if that is not possible under the present law or under this Bill he should take powers to make it possible. I gathered that the Minister seems to think that the amalgamation of industrial insurance companies is essential, but that it is not so necessary for other classes of insurance business. He should put frankly before the House what difficulty he envisages, because in my opinion amalgamation will only mix things up a bit. If an insurance company is—I will not say insolvent—not all that it should be in the way of solvency, and if it is decided to split the business of that company, I suggest it would be like thimble-rigging, a pea under one thimble and then a couple of thimbles under which there would be nothing.
At the time of amalgamation, is the Minister going to enter into an examination, not only of the skeleton outline of the way the capital of the company is to be distributed, but of various other matters? I imagine that the Minister, in order to do the job fairly, will have to go into it just as minutely as the insurance company did, and possess greater powers, apparently, than he has at the present time. It seems to me that companies which are not all that they ought to be, when faced with the question of separating their business, will endeavour to get rid of the insolvent portion at the least cost to themselves, and some other insurance companies may be put in a difficult position by the transfer of a lot of business of which they may not have the same experience in management, or may not understand as well as the company that handed it over. Under these circumstances, I suggest that at least the Minister should take power, so that any insurance company doing a composite business that is absolutely above suspicion should be left as it is, and that with regard to other companies he should take power to separate them. I do not know what the Minister thinks of Deputy Dillon's suggestion that life business would have to be separate from industrial insurance business. It seems to me that if the Minister left the companies which did not require any attention alone, and took power to deal with companies that are not all they ought to be, or that do not satisfy him with their returns, he would speedily produce a situation in which companies that are not in the sound financial position that they ought to be, would proceed to put their houses in order. I think the Minister would then very quickly get down to the real problem, instead of merely handing on what I am convinced will be handed on, an increased rate of premiums on various classes of people who are paying insurance premiums. After all, they ought to be considered and ought not to be regarded merely as cannon fodder in an insurance battle. I suggest to the Minister that a general rise, either in the cost of doing insurance business here or in insurance rates generally, in comparison with those prevailing in England and in Northern Ireland, might create a state of affairs just as objectionable as the failure of some insurance company here.
As far as we can gather from the Minister, his main reason for introducing this section is to safeguard the funds of the life and industrial side, and to see that these funds will not be used to make good any loss on the fire, accident and general side of the business. I do not think, as Deputy Dockrell has just said, that any member of the House will object to the Minister taking whatever steps are necessary to ensure that end, but what the Minister has not, I think, convinced the House of, is that this is the only means by which that effective safeguard can be obtained. Might I suggest to the Minister that if this section becomes law it does not necessarily mean that the life and industrial funds of a particular insurance society are fully safeguarded? I want to put this point to the Minister and to the House for what it is worth. If, following the passage of this Bill, an insurance company or a number of companies is set up in this country to carry on a fire and general business, there is nothing to prevent a life and industrial company from investing its life and industrial funds in that company. Is there anything to prevent it underwriting the greater part of the capital of a company set up to carry on a fire and general business? You will have the same state of affairs there as the Minister is trying to prevent by this section, and the funds are in as great danger as they would be if used by the composite company in the way in which the Minister suggests. So far as I can see from this Bill, there is nothing to prevent that state of affairs arising.
The Minister talked on this section a while ago as if it were conferring a benefit on the companies that will be affected by it, the companies which will be compelled to dispose of part of their business. He went further and said that this could not be done in England without creating tremendous dislocation and chaos in the whole insurance business in England but, he added, it can be done here because the Irish companies are in their infancy. It can be done, he said, with very little hardship to anybody and very little dislocation. I suggest to the Minister that the hardship and dislocation will be proportionately as great here as in Great Britain. I think it is right to say that it will probably have greater effect on the Irish companies than it would have on the greater number of British companies if a law, similar to that proposed in this section, were enacted in Great Britain. Then, of course, we had the Minister talking about industrial assurance, the cost of obtaining it, and about the policyholder having to pay for it. That is so, and one of the objections I raised to the Bill on the Second Stage was that the Minister was not getting to the root of the matter so far as industrial and life insurance is concerned in this State. Certainly so far as industrial business is concerned it is not touched. The Minister has touched upon only a few of what are looked upon as evils. The Minister talked about the practices which obtained in Great Britain in securing business there until the law stepped in. These practices still obtain in this country. Does the Minister believe that he is getting rid of them under this Bill? If he does, he has something yet to learn.
The Minister also talked about redundancy of staffs and the question of compensation. He thumps the desk and tells us he is not concerned with staffs, that he was concerned only with the policy holder. That is quite proper. Naturally his prime responsibility is to the policy holders, just as that is the prime responsibility of every other member of the House, but I suggest to the Minister that he has also a responsibility to those who will be deprived of their livelihood by reason of this legislation. The Minister asks the men who will be deprived of their livelihood under this measure to accept his assurance that, as far as he can see, they will get substantial justice. I want to suggest to the Minister that the workers of this country have very little reason to place any reliance whatever on the Minister's assurances or promises.
They seem to do it, nevertheless.
There is a rude awakening before them.
He can bluff them for some litle time, but eventually he will be found out. There are people in the country who, unfortunately for themselves, relied on the Minister's promises in the past. The Minister asks those people who are likely to lose their employment to accept his assurance that, as far as he can do it, they will get substantial justice. I ask the Minister what power he has to see that they get compensation or, as he says himself, substantial justice. Even if he has the will to exercise such power, I do not see it in any part of the Bill. Of course he made some reference in passing that he was not satisfied with monetary compensation, that the compensation should take some other form that would be more useful to these people. What other form of compensation has he in his mind? He was very vague about it. He is usually vague when he is talking about such matters. On the Second Reading of the Bill the Minister was equally vague, and he refused to answer questions put to him on this matter. I wish to raise the matter myself on this section, and for that reason I am now pressing the Minister to say whether he will be able to plan something more substantial than his mere assurance to these people, that if they are deprived of employment as a result of the passage of this Bill, and particularly as a result of the operation of this section, they are not going to be amongst those—some of them at any rate— who will be covered by Period Orders such as we discussed last night, and that they will have something more substantial to get from the Minister than was conveyed in the suggestion last night that they could apply for home assistance. These are the few points I want to make on the section.
I should like the Minister to deal, firstly, with the point I put to him in reference to the safeguarding of the funds of life and industrial companies after this section comes into operation. Secondly, I should like that he would be a little more clear with regard to the question of compensation, if there is to be compensation for those who are to lose their employment as a result of the operation of the Bill. I should also like him to say, if there is to be compensation, what form the compensation is to take, how the amounts to be paid will be arrived at and by whom will the men be paid, or what had he at the back of his mind when he asked workers in the insurance business to accept his assurance that their interests will be safeguarded and that he will see that substantial justice will be done to them.
I should like the Minister to answer the point raised by Deputy Morrissey as to whether there is anything to prevent investment by one group of insurance people in the funds of another company.
There is nothing in the Bill to prevent that.
I wonder would it be possible to get this matter clear as there is a possibility of agreement on one of the outstanding principles. The Minister puts to this House a proposal that can be accepted, that funds should not be mixed. How far does the Minister propose to go with that? The peculiar thing, as far as I can read into this Bill, is that the Minister accepts, as far as this Bill is concerned, certain main proposals of the Clausen Committee and refuses to accept others. The Clausen Committee undoubtedly recommended very definitely the point that Deputy Morrissey has raised, that is to say, investments that have been accumulated by those insurers who were in one class of business should not be permitted, except with the sanction of the Board of Trade, to be invested in another. The Minister does not accept that. It is, therefore, possible that the practice that Deputy Morrissey speaks of is of common occurrence in this country, and that any one of these life-industrial companies, when segregated, may invest their moneys in an accident or a general company. If that is the situation and if there is no way of supervising them, if the Minister does not propose even to have his attention called to that matter, when done, you are in a worse position, I think, than if we had in this country the 1909 Act with the proviso to Section 3 refined and better understood. The Minister says that it is impossible to prevent the funds being used in this way—that is to say, the funds of one type of insurance in the funds of another type, that they will be used by one device or another. You will not need a device in the future. There is no necessity for any device. All that is required is simply an investment.
The Clausen Committee did recommend, in connection with the objections taken against Section 3 of the 1909 Act, that not merely the moneys received in the life and industrial branch should be carried to a particular fund, but that the income arising from the investments backing that fund should also statutorily be carried to that fund. There is no such provision in this measure. The only provision is in regard to moneys coming from a particular type of business. It is possible to have a particular type of business run, a fund built up of investments or assets backing that, and the income from those investments carried to a completely different fund, and, of course, the income accruing from the particular investments, invested in, say, the accident or general business of what used to be the same company but what will be in the future a separate body. No device is required. Under the law, that course will be open and there will be an avoidance of the recommendations of the Clausen Committee. There will be almost an invitation to do what I am speaking of, because it has not been safeguarded in any way. These are two small points.
While the Minister can put to the House, again and again, and get adherents every time for the view that funds should be kept separate, he cannot pretend that he has given to this House any reason for the proposal in the Bill. When we speak of separation of funds, let us be quite clear as to what is meant by that in the measure before us. Under a later section—Section 96 —the proposal is not to have a variety of statutory funds, all separate. The only separation required is ordinary life-plus-industrial on one side and everything else on the other side. A company which gets a licence to do life and industrial and a variety of other matters need in the future have only two funds. A company that is going to do neither life nor industrial, but which is going to do six other classes of insurance business need have only one fund. The only separation that is required is in regard to funds. That has nothing to do with income or investment. The only separation of funds required is that the fund by way of receipts arising from business of the life or industrial type should be kept in one account, and everything else in another account.
Does the Deputy differentiate income from fund?
I do. It is differentiated in the Bill. The Clausen Committee, who were faced with the Act on which this country is at present operating, made a special recommendation with regard to income, and made a special recommendation with regard to investment—that investment by one class of insurer in the business of another insurer or in another class of insurance business should not be permitted except after notice to the Board of Trade and with the approval of the President of the Board of Trade. Leaving out these difficulties about investment and income, and having only two separate funds, the Minister will get adherence from every Party here to the doctrine that it is right to separate the funds that back the permanent type of contract from the funds that back the temporary type of contract— life, industrial, capital redemption and a few other things, as opposed to accident, fire and all the other forms of insurance on the other side. The Minister proposed to go further. He says you must split the companies, that you must have partitioned business. Cannot we agree that there are likely to be disadvantages arising from that partition? If you have an Irish company carrying on a composite business, will it or will it not be strengthened by having to transfer its general business to another company? I think that that question has only to be put for the answer to shout itself aloud. The company will definitely be weakened. Reading another recommendation of the Committee which considered the grouping of insurance matters, you come on to consider redundancy and there, again, the question has only to be put to be immediately answered. There appear to be two disadvantages. Apart from these disadvantages, there is certainly going to be inconvenience caused. As a deliberative assembly, we should be able to have argued here and to appreciate the reason why these inconveniences and disadvantages are deemed desirable. I do not know what the advantages are.
The advantages, disadvantages and inconveniences must be related to Irish insurance, and not to insurance in America, Germany or anywhere else. Of all the countries of which the Minister spoke, Norway is the one which I should like most to get examined. The position in Norway might have some bearing on the position here. Immediately you mention America, you must cast aside the American case. If you had information as regards some of the inland States of America of an agricultural type, some of the States in which there are not many large towns, you might get comparable circumstances with those in this country. I do not care what they do in Japan, America or Germany, but I should like to hear arguments in support of the partition proposals from any country in which the conditions are similar to ours. Norway does seem to offer some sort of possible comparison. Irish insurance must surely be regarded as somewhat different from insurance in some of these other countries unless they had somewhat abnormal features with regard to the growth of insurance similar to those we have here.
The Minister said that the Clausen Committee forbore to recommend partition because of the peculiar circumstances of English insurance. I waited to hear what the peculiar circumstances were. We got one point which seemed an amazing one—that none of the English companies who do a composite business had gone into the second class of business until they had been a 100 years in the first class. That was a phrase which came from the Minister in that connection. When the Clausen Committee thought that, as regards companies who had stabilised themselves in one business for 100 years, it was not a good thing to interfere when they took up the second class of business, the argument does not operate in the way the Minister wants it when he tries to apply that conclusion to companies which started by doing a general business. He spoke about breeding up a health insurance company. Infants have got to learn how to walk. Sometimes they toddle around from one chair to another. If you take one of the chairs away they will get a series of ugly tosses and it is not certain that they will learn to walk any more speedily. Why should it be considered right in this country to deprive certain companies, apparently in the interest of business, which they consider good business——
I wonder do they find it so?
Well, they went into the business and they are in danger by the separation. Let us look at what they put up in the way of reserves. If you like let us say that they are looking at it from the point of view of the shareholders and staff. At all events, the fact is that none of the companies is in favour of this section and none of them has been found to be charmed with the proposal. It is being forced on them. There must be some reason for the belief held by the people in the business that they do not think it is necessary for their safeguard to have this section. They do not believe, as the Minister tries to force the House to believe, that they are going to get greater strength in the future when the plans begin to operate. The Minister may decry the Irish insurance companies, as he does at certain times when it suits his arguments. At other times he praises them. But, at all events, they have been in the business for some time. They have been working under difficulties. One may acquiesce in the view that some of them will have to go, but because of one or two of them let not the Minister malign the whole. It is not because one or two may fall by the wayside that the whole of them should be regarded in the same light. They are now likely to be cut off at a certain period in their growth. It might be said that even with regard to these one or two they might achieve fairly good maturity if they were allowed to mature.
The Irish companies do not think these schemes are in their favour. I had understood that the Bill was to be biased in favour of the Irish insurance companies, but I do not think anybody can hold that Section 12 will do them any good. It is all very well for the Minister to be paternal and to say that in the years to come the Irish companies will bless us for this section. Some of the Irish companies may survive but they will survive in spite of this Bill. If this is the best prospect that can be held out for them, some reason should be given for the proposal. Is it a proposal to better their business? The only explanation the Minister has given for this section is that by some device or other, in circumstances within the law, it was found possible to use the funds in a certain way. In England, where the matter was most thoroughly considered and reported on, this question arose.
I have here a report which is somewhat technical, but it is capable of some sort of explanation on which people here can form a judgment. The Act of 1909 did insist that there should be separation of funds. A clause in that Act contained precise directions as to separation of funds. There is there a proviso, and the proviso was a direction that nothing in the section should require the investments to be kept separate from the investments of other funds. There was a like section which operated on liquidation, whether it was forced liquidation or voluntary liquidation. When liquidation came on there was a schedule by which certain policies had to be valued.
That was the intention of the law. There was no doubt about the intention, but the intention was to provide that the policy-holders of a particular type should have segregated certain funds built up from money that came from their policies and through their policies, and should have the investments and the income of the investments behind them. It was found in actual operation that the direction in the proviso worked out in two ways to the detriment of the policy-holders —(1) that the people got no return for the moneys lodged to their credit; a very small number indeed of the shareholders gained; and (2) if there was forced liquidation according to the terms of Schedule 6 the moneys that went to the life policy-holders was small and there was a surplus left over for the shareholders. That was the only difficulty. There was not a word about mixing funds, not a word as to irregular practices. There is a definite objection to this that the law as it stood allowed certain things to come about, and the committee looked at that and said that the intention of the 1909 Act was clear. They used the phrase, "They had drawn up a scheme which was on an intricate and difficult subject-matter, and they would hope that their work would prove flawless." The Minister has not expressed the hope that this Bill will prove flawless. He may confess that he has his doubts about it. That phrase I have read does not damage the report and the skeleton of the Bill that was presented at the same time. What do they propose to do? They propose clearly to segregate funds and assets arising from particular branches of insurance to be secured for the policy-holders in those particular branches. They did not express any apprehension of irregular practices in the proposals they made. They were quite ready to believe that a court decision might work the proposal away from its intention, in which case there would have to be a further amendment. But there is not a breath of suspicion in the whole of the Clausen Report that there would emerge any difficulty once they had taken the 1909 Act, analysed the difficulties that had arisen, and made the proposals of the type suggested. If the Clausen Report made suggestions to remedy the difficulties that had arisen, they must have been satisfied that a proper piece of legislation segregating the funds would keep the funds as security for particular classes of policy-holders. Without insisting on partition, it is desirable to have funds separate, and if it is thought that it is possible to get those funds separate without partition, why should we venture into this unknown territory of partition now until we get somebody here who will tell us what are the dangers inherent in the Clausen proposals. In this country we may have certain insurance companies that may be limping along at the moment, but we know that some others of them are striding along with life and vigour. They all believe that this proposal is to limit their operations and not to strengthen them. Why should we do that against the advice of the men in the business without any clear argument, while we have alternative proposals before us with which this House would agree as being desirable?
It is quite nice to be ruthless about other people's business and say "We are going to make these companies healthy." The Spartans had a scheme long ago in history when they exposed all the delicate children on the mountain-side, and in that way they bred a healthy race. But if one were to take all the men who came to maturity and compared their numbers with the actual birth rate, one would find there was a great gap. They sacrificed an enormous number of people in that way, and later history showed that many of the men who were exposed on the mountain-side, and left there to die, lived to become great men in history. Why should we expose the Irish companies without having really very solid, substantial reasons for endangering them at the moment? If the Minister studied and analysed the proposals made by the Clausen Committee he would find that there was no evidence referred to—I do not think there was evidence given—in relation to the type of proposals put forward here. The various offices were in touch with them even after the committee's proposals had taken draft shape, because certain amendments were made in order to meet points of objection put forward. But there was nothing in the way of argument used; there was no apprehension that there was going to be any failure to achieve the desired end.
Surely the Minister realises that the less interference we have with business the better? Is it not a good argument that we should interfere as little as possible with existing business? Under these proposals we are definitely going to cleave up a certain section of insurance business. The companies do not want that. I suggest that Clause 3 of the 1909 Act contained a weakness, and an amendment of that is desirable, and there is no evidence before us to suggest that an amendment of the 1909 Act, without partition, would not do all that is required. The companies ought to be considered in this matter. They are very strongly opposed to it. It is worse than being strongly opposed to it; they say they have sought to get information with regard to some parallel, to have examples given them of where these proposals have been worked, and they could not get these examples. We got them only this morning. The Minister could not give them to us last night.
Obviously the Minister did not consider this question from the angle of practice in other countries. Mere legislation in other countries is not of much consequence unless the circumstances prove to be somewhat comparable. The companies here think it is going to weaken their business. They believe that if there is going to be any insurance legislation brought forward it should have the aim of either removing any handicaps that may exist or putting some small handicaps to the progress of companies of a foreign type that are operating against them. This particular proposal will not harm the bigger companies. The Minister says that in England the situation is different, that the foreign companies are generally a long time in one class of business before they go into another. In so far as we have branches of the foreign companies here, they will be able to achieve the change without much discomfort; but the small, struggling companies endeavouring to get business ought to be left the field of enterprise if they think it is a valuable field of enterprise. I really believe that the Government's proposal will work financially to their disadvantage.
Will the Deputy accept the principle for new companies?
I do not see any reason for accepting it. The Clausen Committee did not recommend with regard to new companies that they should be prohibited from doing a composite business. There is one thing accepted by everybody, and that is that certain groups of policy-holders should have certain security, and once that is achieved that is all that is required. There was no viewpoint expressed by the Committee that where new companies were to be established they should be made divide the business in this way. They did not think it desirable with regard to new companies.
The Committee was not infallible.
Possibly not, but let us have any other committee report. At any rate, let us have an analysis made. I am not pretending that the Clausen Committee are infallible or that their names should inspire confidence. But they were discussing a situation which is our situation as far as the legislative side is concerned, a situation governed by the 1909 Act. They had not quite our situation, because they had not this necessity for being tenderly disposed towards certain native companies. They were dealing in the main with well-established companies. It is not so much that they thought of partition in this way and threw it aside; the proposal was not made to them. Nobody thought it was necessary, and nobody giving evidence had the same viewpoint as to a desirable end as we have. The people there had distinctly the view which was clearly expressed and analysed, that the 1909 Act did not do what was intended. They set about to amend that. They said: "There has been a flaw in the law. We will remake the situation as it was intended to be made." They set forth a series of proposals, partition not being amongst them. Why should we not stop at the point of their recommendations? I am sorry that we, or the companies when they were in discussion with the Minister over this matter, did not get some reference to examples in other places. If those references had been given, some examination could be made of what was the previous law, what was the flaw in connection with previous companies requiring change. There might have been a peculiar side to the law there which could only be amended by partitioning the business. Here we have a country quite like our own, and, after a thorough-going examination, all the Committee report is to segregate the funds.
Mr. Bourke
I think there are two matters on which everybody in the Dáil and outside the Dáil is unanimous. The first is, that it is only right and desirable, from every point of view, that the funds of the life companies should be kept separate from the funds connected with a temporary class of business. It has been proved in practice everywhere that that is a very necessary safeguard. I believe all the companies are in favour of that position and certainly everybody in the Dáil seems to be in favour of it. The second point on which we are on common ground is that if companies have to be sacrificed to the good of the policy-holders, then they must be sacrificed. Undoubtedly, the policy-holders have the first claim on the Oireachtas, and any legislation that is passed should give them primary consideration. At the same time, when you are dealing with business of this kind, which affects the public so vitally on so many points, business in which so many people are interested, practically every section of the community, one way or the other, it is a very serious thing to enact a measure of this kind which is very drastic without being sure that it is absolutely necessary. I think if the Minister will inquire further and deliberate at greater length he will be able to find some proviso for seeing that these funds are kept separate without going to the limit of insisting on this major operation on the part of insurance companies. I have suggested an amendment which is consequential on another amendment which has been defeated, so, therefore, I will not move it. I will quote the amendment to Section 96 so that it will appear on the records of the House:—
Before sub-section (2) to insert a new sub-section as follows:—
In the case of assurance companies to which the preceding sub-section applies assets and balance sheets shall be kept separate and pursuant to Section 91 of this Act balance sheets shall be accompanied by a certificate signed by the same persons as are required by the Act of 1909 to sign such balance sheets and by the auditor to the effect that such expenses as are incurred in common have been apportioned in a just and equitable manner and that no part of such assets has been applied directly or indirectly for any purpose other than the class of business to which it is applicable.
I do not mean to say that this amendment, which has been put in under difficulties, would meet completely the Minister's purpose, but I have put it down as a line that he might possibly follow if he wants to keep the funds and assets of those different classes of companies separate without going to the drastic limits to which he is going under the system that he has laid out for himself.
Could I have some assurance from the Minister with regard to the points that I raised.
That matter is being considered.
Am I to take it that the Minister will make some clear pronouncement before the Bill is disposed of?
That is, if the Minister considers it necessary. The Minister has told us that certain people, who may be affected by the operation of this Bill, accept his assurance.
I thought the Deputy was referring to another matter.
I was referring to the point about the possibility of investing funds. I also think that the Minister, either now or on a later Stage of the Bill, should be more specific with regard to the question of compensation.
That was dealt with at some length yesterday. It will arise again on other amendments.
I think it would be well if we could have a clear statement on the matter from the Minister.
All my statements are clear.
In the case of a company doing industrial and life business, would the Minister not think it well to take steps to ensure that such a company will be required to get sanction from his Department before it can invest funds from the ordinary life branch in another company transacting a miscellaneous class of business?
There is nothing in the Bill to prevent that.
Will the Minister say whether he will examine that aspect of the matter with the view to the introduction of an amendment? It is obviously an important matter and one that might be dealt with on the next Stage by a private Deputy if he understood that the Minister was not moving in the matter.
If an amendment is tabled we can discuss it on the next Stage, but in connection with that there are a number of considerations that arise.
The Minister's only defence for the proposal is that this is the only means whereby he can separate the funds. If that is so, are we to take it that the provisions contained in Section 96 represent the considered view of the Government on the desirability of segregating ordinary branch and industrial insurance funds. Do they desire that the companies operating here should keep these funds separate, or do they think it preferable to allow them to be mixed, or is it that they think they cannot ensure their being kept separate?
I suggest that we should deal with Section 96 when we come to it.
Mr. Lynch
On the question of amalgamation, the Minister said that, as far as he is concerned, when a scheme is about to come into effect he will use every power that he may have to see that the staffs are fairly treated. As there is nothing in the Bill dealing with that, I do not know what power the Minister thinks he will have to take any steps in that direction. The Minister said he did not think cash compensation would be the best way to provide for staffs, I agree with him, but it would certainly be better than nothing. It has to be remembered that when these amalgamation schemes are being put through they will not come before the House, so that Deputies will have no opportunity of expressing an opinion as to whether or not in their opinion the staffs are being fairly treated. Is that not so?
That is so. An amalgamation scheme will not come before the House. I do not know whether Deputy Lynch has considered fully all the implications of his proposal that there should be put upon insurance companies that may become involved in an amalgamation scheme a statutory obligation to provide compensation in cash for redudant staff. However, we will have another opportunity for going into that when we come to the part of the Bill dealing with amalgamation. I may mention that the Minister is given power, at his discretion, to accept or reject any amalgamation scheme that may be prepared by the companies. A scheme under that part of the Bill must be prepared by the companies. It is not prepared by the Minister.
Are we to take it then that, while the Minister has that discretion, it is a discretion that he may not find it convenient to exercise because, perhaps, of the extremely insolvent position of one company? Its position may necessitate its amalgamation with other companies with the utmost expedition. Would the Minister, in such a case, not think it desirable to impede the amalgamation if there was no provision for compensating the employees who lose their employment? Should not the Minister require that the proposals for amalgamation would contain some provision for the payment of compensation to dismissed employees?
It all depends on circumstances. Two companies amalgamating may have a surplus of staff. They may have such a staff that a surplus will exist for the time being, but in consequence of amalgamation and of the alteration in their circumstances produced thereby, they may be in a position to contemplate such a development of their business that they will require additional staff. Therefore, all these questions will have to be considered in regard to an actual proposal when it comes before us.
Mr. Lynch
The whole object of amalgamation is to cut down overhead expenses, and one of the ways in which that can be done is to reduce staff. Take the case of two Irish companies amalgamating at the moment. Each has a certain number of superintendents operating in the same district. If they amalgamate, it is obvious that they are not going to keep these two sets of superintendents.
Remember that we are dealing now with the case of two companies of doubtful solvency, because if they are not in that position there is no power to enforce amalgamation at all. Two companies of doubtful solvency would become, in consequence of amalgamation, practically a State company. It will have new capital provided by the State and will be in this position: that its liabilities are, in effect, guaranteed by the State. It is reasonable to suppose that the amalgamated company is going to command an amount of business far in excess of that which could be commanded by either of the companies before the amalgamation took place. Consequently, any surplus of staff may be purely temporary, and may cease to exist altogether if there is an expansion of business in consequence of amalgamation.
Let us take the Minister's presentment of the situation where you have two insolvent companies which come together for the purpose——
I was merely on the point of procedure. We can discuss all this on the relevant section.
I would like to get clear on the Minister's point of view, seeing that he himself has raised the question of the separation of different types of business on the possible future employment of the staff. If there is a situation whereby there is no surplus staff as a result of the amalgamation of two companies, the mere insertion of a provision to provide for compensation on redundancy will have no effect whatever on the amalgamating companies.
You would be surprised at what the insertion of a provision of that kind might produce. Do not tell me that putting in a provision to provide cash compensation will not produce results. It will produce claimants for compensation all right.
It may, but if the House wants to put in a provision to provide for compensation to persons who are rendered redundant and if there is some authority constituted to judge redundancy, it will not be possible for a claimant to get compensation merely because he desires it. He will have to satisfy the arbitrator in the matter that he is, in fact, redundant. Would the Minister not indicate at this stage that he is willing to provide some compensation for persons who clearly satisfy some impartial authority that they are in fact redundant? If we could have the Minister's mind at this stage, it would be useful in approaching the other sections.
I am not prepared to say any more than I have already said.
There is another point that arises in connection with this. Up to this we have been discussing the principle underlying the section and we now come to a position where the Minister stands fast on this division scheme. We are now faced with a situation in which Irish companies are obliged to convey the divided half of their business to another Saorstát Eireann company, whereas foreign companies have an open market to dispose of their half of the business, of which they are obliged to divest themselves, to anybody else. That simply means that a perfectly solvent Irish company which is maintaining a headquarters office adequate to house ordinary branch life insurance, industrial life insurance and general business is suddenly left with offices which are entirely superfluous and is obliged not to sell but to jettison, to throw overboard, their general business, because everybody knows that when they have applied for their licence to carry on a composite business, they only get that licence on condition that they divest themselves of their general business forthwith, and that if they do not do that the Minister will withdraw the licence from them altogether. They cannot hawk their business around amongst all companies operating in Ireland, but they must go to the Saorstát Eireann companies as defined by this Bill and persuade one of them to buy the business from them. That simply means that the Saorstát Eireann companies will sit back and say: "If you do not sell us your business, it will go on to the market in the ordinary course and we will get our share in competition with anybody else who is left in business."
We all know perfectly well that there are going to be two or, at the outside, three general insurance companies left in business in this country and they will simply sit back and say: "If you do not take our price and our terms, you will have to throw your business overboard and it will come into our coffers in due time, because people have to insure themselves somewhere." That amounts to confiscation, and I say that if the Minister is going to stipulate that he will not issue a licence to carry on an existing composite business, unless the company divests itself of its general business forthwith, he ought to provide that certain companies which would apply to him for a licence to carry on a Saorstát Eireann general insurance business in this country shall be under an obligation to take over from Saorstát Eireann composite offices the general business of those composite offices on a valuation, to be arrived at by the High Court, based on a calculation identical with that which would be made in the event of a successful action for conspiracy to prevent the carrying on of the business at all. It is easy to compute the damages that will accure to a company which is obliged to lose its business under the ordinary High Court practice and, unless that is done, you are going to rob the existing Irish companies of their business, and it is in that connection that I peculiarly resent this continual harping on the insecurity of Irish companies.
There are Irish companies carrying on general business and life business at the present time who are perfectly solvent, whose general business is a valuable asset so long as they are allowed to carry it on, and who under this section will be flagrantly robbed and whose whole future as a profit-paying institution will be seriously menaced. There are many people in this House who also forget the fact that a proprietary insurance company, in addition to being actuarially solvent is also entitled to hope that it will get some return on its capital, and a company can be actuarially solvent and remain actuarially solvent and yet be absolutely worthless from the proprietor's point of view. The effect of this proposal on one company at least will be practically to destroy its earning capacity and give it nothing in return. I say that is a gross injustice. Is there any precedent whatever for our passing legislation through this House prohibiting people who have been engaged in perfectly legitimate business and who have no kind of valid complaint made against them from continuing so to engage? You cannot build up business without putting money into it. If you do not put money, you put work into it. You have no right to take from people what they have spent their lives and fortunes establishing. That is what you are going to do to Irish companies in this connection. I should be glad to know from the Minister if he proposes to introduce into the Bill at a later stage a scheme whereunder the Saorstát Eireann general insurance companies will be required to take over at a valuation, whatever that valuation may be, the general business of such composite companies as are required by him to shed that general business. Will the Minister give us an answer to that?
I have dealt with all those matters already.
The answer is that the Minister will do nothing.
He will deal with it by not dealing with it.
Much has been said already by men of possibly more experience and who know more about insurance than I do, but I want to say that I take the ordinary view that the Government should be very slow to interfere in private enterprise. Of course, I know that my friends of the Labour Party, who are wonderful advocates of State socialism in every walk of life, will disagree with me, but in this particular instance these Irish companies have carried on their business fairly successfully for the past 13, 14 or 15 years. At the initiation of their efforts, they had to contend against almost insuperable difficulties, but by the display of grit and determination, backed up by business capacity, and by looking after their business in a thorough-going way, they have succeeded in making a success of that business. Now, after those years, it remains for an Irish Minister, who has stumped this country talking about Irish industries and what should be done and what should not be done to promote them, to say to the managers of these insurance companies: "Thus far will you go and no further; I am going to pass a law that will virtually prevent you from carrying on in the future." That is what this section really means. Any man who approaches this section from a non-Party angle must come to no other conclusion but that, once this Bill is put into operation, the majority of the Irish companies, as they are at present constituted, cannot carry on business. It is very difficult to get from the Minister any information as to the reason that inspired him to put this section into the Bill. There must be some reason. The Minister says in one breath that there is no such thing as an insolvent Irish company. In the next breath he gives the impression, at least to me, that there is something wrong with certain Irish companies in the way they stand, financially, at the present time. I have come to the conclusion, rightly or wrongly, that the Minister is very dubious as to the standing of some of these companies which he and his Party did so much, in the past few years, to set up. Is the Government fearful of the position they have created? Is the Minister afraid that the day will come when they will fail, and there will be an outcry against the present Government for the action they took in past years in inducing people to invest in these companies and to take out life policies in them. The Minister, at least, says all Irish companies are solvent. If they are solvent, what is the necessity for this section? There is no legislation of the character suggested in this Bill operating at the moment in Great Britain. Possibly, the Minister does not like me to refer to Great Britain seeing that we are at war with that country, although he said he and his Party had won the war.
I think it must be admitted that in England they are usually not behind the times, and I am quite certain they are not behind the times in the matter of insurance. I am sure if there was such advantage to be gained by legislation of the nature which this Bill proposes, Great Britain would have availed of it, but, being wise people, they do not wish to interfere unduly in business. As an ordinary member of this House, and an ordinary citizen, I have always been careful not to support anything that would cause undue State interference with private business and especially private business conducted in a very successful way by very capable men.
There is another aspect of insurance in this country to which I would like to refer, and that is the different treatment meted out to insurance companies here compared with the treatment meted out to industry. The Minister said these insurance companies are only in their infancy but, instead of helping enterprises that are only in their infancy, he seems to be placing very great obstacles in their way so far as progress in the future is concerned. There is a wonderful difference in the treatment accorded to these companies and the maternal way the Minister fosters industry and other undertakings in that line, sometimes by as much as 200 per cent. protective tariffs. I cannot refrain from alluding to that. I am not an advocate of tariffs against British industry, but one must take stock of the treatment meted out to insurance companies as compared with the treatment given to industries set up in the Free State.
I do not intend to go over the ground covered by other Deputies in regard to the question of redundancy after amalgamation of some of the companies. It is sufficient for me to say that it is absolutely clear and certain that many people will lose their employment when this Bill becomes an Act and is put into operation. I think the Minister has difficulties enough with regard to unemployment without setting out to intensify these difficulties. My argument is that if these companies are in a position to carry on —and I have no reason to doubt their ability to do so, as they have done for the past 14 or 15 years—surely there is no necessity to interfere. There are other ways and means of safeguarding the policy-holders. I assure the Minister, speaking for myself, and also for every member on this side of the House and, indeed, I think I might say for every member of the House, that we are all out to safeguard the interests of the policy-holders, but that can be done without injuring the insurance companies. I think there are several ways of doing it.
I cannot see why companies that have been successful in carrying on their business, and that are in a position to give a guarantee that will safeguard the interests of their policy-holders, should not be allowed to do so. I cannot see why that would not satisfy the views of the Minister. But the Minister does not seem to take that view. Somehow the companies that are supposed to be solvent are to be sacrificed in order that insolvent companies should be made solvent. It is as if you said that in order to prevent people from being wicked you must first scourge the virtuous. It looks as if before punishing people for breaking the law you must first punish law-abiding people. In the same way insurance companies who make a success of their business must be wiped out in order that insolvent companies will be put in a proper financial position. It is rather a peculiar way of helping insurance companies.
It is mere waste of time for Deputies to try to convince the Minister upon these matters. He is going ahead with this Bill in the belief that in doing so it will achieve the object of safeguarding the policy-holders. At the same time it is the view of the people who are competent to give an opinion on this intricate measure that that object could be achieved without compelling Irish companies operating in the Free State to divide their life business from their general business, thereby making it impossible for these companies to exist. No one requires special knowledge of insurance, or other business, to know that if once you divide your business you must dismiss certain members of your staff. It makes it impossible otherwise to carry on such business. Again your overhead charges will be little reduced, but your earning power will be reduced considerably.
In that way, although the Minister will not admit it, it will be impossible for these companies to continue. As I say, it is a poor recompense to them and rather an inglorious end to all the fine speeches we heard from the Minister and the members of his Party about the £4,000,000 or £5,000,000 leaving this country yearly and going to British insurance offices. Now, as I said, we have the spectacle of an Irish Minister not going to put the British companies out of business, but four or five Irish companies, some of which were started at the bidding of members of the present Government. These companies took financial and other risks and made a success of their business, but when this Bill is put into operation they will not be able to function as they have done in the past.
Question put.
The Committee divided: Tá, 53; Níl, 28.
Tá
- Bartley, Gerald.
- Beegan, Patrick.
- Boland, Gerald.
- Bourke, Daniel.
- Brady, Brian.
- Breathnach, Cormac.
- Briscoe, Robert.
- Browne, William Frazer.
- Concannon, Helena.
- Corbett, Edmond.
- Crowley, Timothy.
- Davin, William.
- Derrig, Thomas.
- De Valera, Eamon.
- Doherty, Hugh.
- Everett, James.
- Flinn, Hugo V.
- Flynn, Stephen.
- Fogarty, Andrew.
- Gibbons, Seán.
- Hayes, Seán.
- Houlihan, Patrick.
- Keely, Séamus P.
- Kehoe, Patrick.
- Kelly, James Patrick.
- Kelly, Thomas.
- Keyes, Michael.
- Killilea, Mark.
- Kilroy, Michael.
- Kissane, Eamonn.
- Lemass, Seán F.
- Little, Patrick John.
- Lynch, James B.
- Maguire, Ben.
- Maguire, Conor Alexander.
- Moane, Edward.
- Moore, Séamus.
- Murphy, Patrick Stephen.
- Norton, William.
- O Briain, Donnchadh.
- O'Grady, Seán.
- O Ceallaigh, Seán T.
- O'Reilly, Matthew.
- Pattison, James P.
- Pearse, Margaret Mary.
- Rice, Edward.
- Ryan, James.
- Ryan, Martin.
- Ryan, Robert.
- Smith, Patrick.
- Traynor, Oscar.
- Victory, James.
- Ward, Francis C.
Níl
- Bennett, George Cecil.
- Bourke, Séamus.
- Brennan, Michael.
- Burke, James Michael.
- Coburn, James.
- Cosgrave, William T.
- Costello, John Aloysius.
- Desmond, William.
- Dillon, James M.
- Dockrell, Henry Morgan.
- Minch, Sydney B.
- Morrissey, Daniel.
- Mulcahy, Richard.
- Murphy, James Edward.
- Dolan, James Nicholas.
- Doyle, Peadar S.
- Fagan, Charles.
- Finlay, John.
- Keating, John.
- Lynch, Finian.
- McFadden, Michael Og.
- McGilligan, Patrick.
- McGovern, Patrick.
- McGuire, James Ivan.
- O'Leary, Daniel.
- O'Reilly, John Joseph.
- O'Sullivan, John Marcus.
- Roddy, Martin.
Tellers:—Tá: Deputies Little and Smith; Níl: Deputies Doyle and Bennett. Question declared carried.
Question proposed: "That Section 13 stand part of the Bill."
What is the necessity for this section? Does such a company not become a company under the provisions of the other law?
Section 13 was inserted by amendment on the Committee Stage. Its purpose is to require that insurers not having the constitution of incorporated companies shall notify the registrar of joint stock companies of any alteration in their constitution. It is a provision consequential upon the insertion in an earlier section of the Bill of a proviso which meets the position of those companies that have not got the constitution of incorporated companies. It merely means that we will get the same information concerning alterations in their constitution as we would get in any event in connection with other companies. The section also provides for the service of a process, and for the issue to such insurers, by the registrar, of a certificate of the filing of documents.
Would not everything in the lettered sub-paragraphs follow if the company were deemed to be incorporated here? Is it not going to be required to become incorporated under our law?
So you may have a body which is a body corporate in some other country functioning here as a non-corporated body?
Those are certain societies which have not got the constitution of incorporated companies in Great Britain. There are two or three of those societies.
The Royal Liver Friendly Society and a couple of others.
The section does refer to bodies incorporated, say, under the law of Great Britain?
Yes—"or otherwise constituted under the law."
Is it possible for a body to be a body incorporated under the law of Great Britain and to carry on here as a non-corporated body?
I cannot understand the "or otherwise constituted."
The phrase "incorporated or otherwise constituted" is, no doubt, put in to ensure that the application of the section will be wide enough to cover the particular societies that we have in mind.
What you ought to put in is "constituted otherwise than by incorporation," because you do not want a body which is incorporated in another State functioning here as a non-corporated body.
Can what Deputy Dillon mentions occur, and is it intended to permit of its occurrence?
There was an earlier section, which I cannot find just now——
On the Committee Stage you said that this was consequential on an amendment changing Section 12.
Yes. It is to meet the case of those societies; to enable them to get a licence under this Bill, and to permit them to operate here. The whole of Section 13 is consequential upon that. It merely provides for the notification to the registrar of joint stock companies of alterations in their constitution; for the issue of a certificate, and for the service of a process.
Question put and agreed to.
SECTION 14.
(1) Whenever an application is duly made in accordance with this Act by an assurance company for an assurance licence, the Minister may (without prejudice to any other power of refusal conferred on him by this Act) refuse such application—
(a) if such company has not complied with the provisions of this Part of this Act relating to the deposit of moneys with the Accountant of the Courts of Justice, or
(b) if it appears to the Minister that there is reasonable ground for believing that such company is insolvent.
Mr. Bourke
I move amendment No. 45:—
In sub-section (1) (b), line 19, to delete the word "insolvent" and substitute the words "is not and will not become solvent".
It is very important to have a clear idea of what is intended by the term "insolvency" in connection with this particular section. People have very different ideas with regard to when an insurance company is solvent and when it is not solvent. That is illustrated by the fact that in the United States it is quite a usual thing for a company to be granted a licence in one particular State to carry on insurance as a solvent company, and to be refused a licence in a neighbouring State. There are apparently very different standards of what amounts to solvency in the case of insurance companies. To demand absolute actuarial solvency in insurance companies at all times and under all conditions is something on a par with demanding that a bank should be in a position to meet all its obligations to all its depositors at any and every time at a moment's notice. We all know that insurance companies are greatly affected by variations in the stock market throughout the world. Probably if any insurance company or a great many of them were valued in England at the time that country went off the gold standard it would be found that some of the strongest companies there would not measure up to the ordinary standard of actuarial solvency.
It is a matter which is affected by all kinds of circumstances. During the Great War those insurance companies which had not inserted provisions protecting themselves against such a possibility found themselves in a very unfortunate predicament, owing to the fact that at that particular period the best lives became the worst lives. A young man of military age, who was perfectly fit, was the most likely to have a very short life. Even in the case of the influenza epidemic which followed the Great War, and was to some extent contemporary with it, it was the youngest and the strongest people who most readily became victims. In the same way, the argument can be used in the opposite direction. Any change in conditions which makes for the prolongation of life is greatly to the advantage of insurance companies, and reacts very favourably on their actuarial position.
The Minister for Local Government and Public Health some time ago told us here that, as a result of improvements in curative and preventive medicine, the span of life had been increased by about ten years during the last 20 years or so. That, of course, would be regarded as a very favourable reaction on the actuarial position of companies doing life business. Accordingly, if, for example, such a thing should occur as a discovery of a cure for cancer, immediately all companies doing life business would profit by that discovery to a great extent. I put down this amendment with the object of trying to put the Minister in a position where he would undertake that this particular provision would not be enforced in a harsh or inconsiderate manner—in other words, that it could not be operated in such a way as to be unfair to a company which, owing to their experience at that particular moment, might not be able to measure up to the standard of solvency which the Minister might consider most desirable.
Before the Minister replies, perhaps I might be permitted to ask for information on two detailed particulars. Is the interest rate set out in the Third Schedule the interest which would be used for the purpose of making out the actuarial rate of solvency under Section 14, and what statutory obligation is there under Section 14 on the Minister to have an independent valuation made of the assets of the company before reasonably believing that the company is insolvent? Two points will arise if, at any given moment, the Minister intervenes actuarially to establish the position of a company. One is the actuarial basis on which he will direct the calculation to be made, and the other is the value that will be put by his actuaries on the assets of the company. As the Minister is aware, I am sure, there can be a very wide divergence of opinion as to the value of assets. For instance, some of the suites of flats held by some of the largest companies in Great Britain would be regarded as liabilities, whereas by others they would be held to be worth millions of pounds. I suppose that the insurance companies who own them would claim that they would be valuable assets, but the Minister for Industry and Commerce in Saorstát Eireann might take a very different view. If a company owns assets in the shape of stocks and shares, is the Minister for Industry and Commerce entitled to come in and value those assets at a time of financial panic such as swept the world in 1931? If he were entitled to do that, he could buckle up almost any insurance company that he went into. Does the Minister not think that it would be necessary to insert a schedule in this Bill setting out certain rules of conduct by which he and his successors would have to be bound in the event of his setting up such an inquiry as is envisaged in Section 14? Of course, the Minister may refer us to Section 15 and say that, in the event of any question of that kind, one can go to the High Court. He can tell us that, if we are not satisfied, we can go to the High Court; but, of course, the moment the Minister serves notice of insolvency on an insurance company, he will do that company a desperate injury. I quite admit that the Minister might honestly believe that the time had come to serve such a notice, but I submit that unless there was some rule-of-thumb by which any such action of the Minister could be reasonably anticipated, and which would afford the company concerned an opportunity of going to its financial advisers and seeking financial assistance to help them out of their difficulties, that company might easily find itself within the Minister's grasp before its own actuaries could come to its assistance. In addition to that, it would be extremely difficult for any company, between the quinquennial valuations which it normally makes, to determine what its exact position would be from day to day, and therefore I think the Minister ought to try to devise some rule-of-thumb method by which the position of such a company could be reasonably forecast.
If Deputy Dillon is seeking the same purpose as Deputy Bourke, I think he would be well-advised to withdraw that suggestion, because, if we were to set out in the Bill rules for determining whether any company is solvent or not at any particular time, we would have to devise, probably, rules much more stringent in their effect than the actual standards to be applied.
I should prefer certainty to uncertainty.
The rate of interest mentioned in the Third Schedule has no bearing on this at all. I think that Deputy Bourke may be assured that we are not likely to interpret this provision harshly in present circumstances. At the same time, I think it would be entirely inconsistent with the whole purpose of the Bill to insert such an amendment as Deputy Bourke has moved. If an insurance company is insolvent—using that term in the sense in which it is used here; that is, unable to pay its debts—it is clear that that company should be prevented, as soon as possible, from undertaking new liabilities.
Mr. Bourke
That might be a different thing from actuarial insolvency at a particular moment.
The Minister is given power here to refuse a licence on the ground that the company concerned is insolvent. If the Minister does so refuse to give a licence, that company is given, under Section 15, the right to appeal to the High Court, and the High Court, if it is satisfied that it is just and equitable that such licence should be granted, may make an order that such licence be granted. Under Part IV of the Bill, there is imposed on the Minister for Industry and Commerce responsibility to protect the public from the operations of insolvent insurers, and it would be entirely inconsistent with that responsibility for the Minister to license a company which, at the time, he knew to be insolvent, even though it might be represented to him that the company had expectations of becoming solvent after a lapse of time. The insertion of the amendment, therefore, would be in complete discord with the purpose of the Bill and with other provisions of the Bill. However, on the general question as to whether or not a very rigid standard of solvency is likely to be insisted upon in the case of Saorstát companies at the present time, I think I can assure the Deputy that that will not be so.
If the Minister cannot tell us the rate of interest that will be assumed in arriving at the actuarial value, how can we know on what basis he will fix a standard for the purpose of ascertaining whether a company is solvent or insolvent? So far as I am aware, certain restrictions are made by the British Board of Trade in regard to the percentage basis upon which companies may make valuations.
There is no English insurance company which values on a basis of more than 3 per cent, and quite a number of them value on a basis of less than 3 per cent.
Well, on that point, I beg to differ with the Minister, but I should like to know on what basis he will value when he comes to ascertain the solvency of any Irish company.
Does the Deputy mean at present?
At any time? I could not answer that question, because, obviously, the standard we will set will be suggested by the circumstances at the time. Under present circumstances we could not fix a rigid standard. We will have to be liberal in our interpretation, but at a subsequent date some successor of mine may fix a much more rigid standard.
As I understand, under the British Acts of 1909 and 1923, there is a standard fixed.
There is no standard fixed under these Acts.
Certain returns are required by the British Board of Trade, and certain restrictions are made as to the percentage basis upon which insurance companies may make valuations. Unless they make the valuations as conservative as the maximum, they are not entitled to pay a dividend.
There is no standard of valuation.
There is also no limit beyond which insurance companies cannot go in trying to make a surplus appear. I understood it was 4 per cent. My submission to the Minister is that some similar limit should be fixed below which he might not go when fixing that percentage for the purpose of ascertaining whether a company was solvent or insolvent for the purposes of Section 14. If that is not done, does the Minister not see that he is free at any moment, if it suited the policy of the Department, to wipe out an insurance company by fixing that standard of valuation, or a low percentage valuation, and then notifying the company that he believed it would be insolvent?
No. The Deputy has not studied the provisions with regard to winding up.
What is to prevent the Minister from saying that the standard of solvency required by the State at a given moment is 2½ per cent.?
Is the Deputy referring to the time that the company applies for a licence?
I believe this and other paragraphs confer power on the Minister to inquire whether a company at a given date is solvent or insolvent.
A company applies to the Minister for a licence, and his reply is that he has reason to believe it is insolvent. I say that to give the Minister the right to make a report of that character, without fixing any limit to his discretion, is to give him power that he ought not to have, because to serve notice of that character on an insurance company is calculated to do it very great damage. It may go to court and after protracted argument get its solvency established. But it will have to make the case in court that it requires to have its solvency established on more lenient terms than the Minister pleads. It will have to go and convince the court that it should take a more lenient view of its financial condition than the Minister. Supposing it succeeds in getting the court to take that lenient view, what would you think the future prestige of the company would be? Absolutely nil. Therefore the Minister should not have unlimited discretion, but should bind himself within such sound limits as he can fix, in order to ascertain the standard of solvency referred to in (b).
A technical matter arises, but I do not know whether it is what Deputy Bourke is aiming at or not. The phrase appears in Clause (b). The section says such application may be refused "if it appears to the Minister that there is reasonable grounds for believing that such company is insolvent." There is no question of estimating its future. The question is brought up when each application is made. The Minister says in the usual type of double answer that if a company is not solvent it will not get a licence, but that by way of mitigating hardship there is an appeal under the section to the High Court. What is the appeal? Can the High Court deal with the Minister's decision on that point, that the company is insolvent, or that there is reasonable ground to believe it is insolvent? I do not believe that the High Court can. Does the Minister intend that the High Court will operate on that and nothing else?
Then the phrasing of Section 15 (b) will have to be looked to:
The High Court, if it is satisfied that such applicant has complied or will in due course comply with the provisions of the Act of 1909 and this Act and that, having regard to all the circumstances of the case, it is just and equitable that such licence should be granted....
Has that to do with solvency? I take it not.
There are other matters besides solvency.
Is solvency the precise aim?
There is an appeal on that ground.
Where does it lie? Is it in the phrase "has complied or will in due course comply with the provisions of the Act of 1909." Is it there an appeal on solvency is contained or in the next part?
I imagine it is in the next part, that a company must comply with the provisions of the Act.
Entirely apart from solvency, deposits, returns and the keeping of accounts?
And the making of deposits.
I take it that, in addition to complying with the Act of 1909, there is this phrase: "It is just and equitable that such licence should be granted." You will find it hard to persuade the High Court that "it is just and equitable" to grant a licence if the Minister has reasonable grounds for believing that it is insolvent. Does the Minister intend under that phrase that the High Court shall be given power to authorise the issue of a licence to a company, notwithstanding the fact that the Minister has declared it to be insolvent at the moment of applying?
The High Court may possibly decide that it is not insolvent.
That would be a different matter. I understood the Minister, when submitting the mitigation phrase in Section 15, was putting this position to the House, that although the High Court might agree that at a particular moment the Minister's decision was the correct one, that a company was insolvent, the court might take Deputy Bourke's view that it had a good chance of becoming solvent, and that it was equitable to grant the licence. Does the Minister think that is contained in the appeal? That is the only point at issue. Deputy Bourke takes the ordinary case. It is well known that if a decision about solvency in regard to a certain company had to be taken at a particular moment, a company that is now in a very prosperous position, it would be ruled out. Deputy Bourke wants him to have in the background when deciding that, although not actuarially sound from the moment of running the business, taking the management and ratio of income, it had a good chance. It is not allowed under this provision to continue. Will it be solvent in five years? All he has to decide is: Is it solvent? On that precise phrase, the appeal has to go to the High Court. The Minister says the High Court is to be given powers, notwithstanding the decision of the Minister that at a particular moment it was not solvent, by which it should be given a licence because it has a chance of surviving. Does the Minister think the High Court has that power?
And he does not intend it to have it. I do not think the High Court has that power. Deputy Bourke has raised the point that there may be a company that on some actuarial calculation, whether a high or a low standard, is not solvent, and that the Minister must refuse a certificate. The High Court cannot object to the refusal of the licence. It must agree with that, and there is no question of an appeal from that. Does the Minister think, with the knowledge he has gained of insurance companies, that there should be a possibility in the immediate future of a company being brought under examination on a decision taken not at the particular time it makes application but, say, two years after?
I have power to interpret the phrase widely, and to institute a liberal standard of policy in relation to a Saorstát company at present.
Even calculating on any standard that a company is solvent at the moment, it is clear that the Minister must say that the company must not incur any new liabilities. The Minister is now almost saying that he is ready to meet Deputy Bourke, but I suggest that he is meeting him in an undesirable way. He is not making his decision on the fact that it is clearly before his mind that a company, on his particular standard of solvency, fails, but that there is a chance of its succeeding, and that, therefore, he will give a licence. He is going to say that, as in the case of the circus jumps and the trotting nags, he will lower the jump to enable the company to get over it. Surely, it would be better to take power to consider the future of the company, that it is or will be solvent. He is still the judge of that.
There is no company operating that does not believe it will become solvent some day.
It is not its belief that will count. It is the Minister's belief, subject to appeal to the High Court, that it has a chance of becoming solvent. If the High Court, on appeal from the Minister, can take into consideration its chance of becoming solvent, should it not get a licence?
I do not think it is a matter that the High Court would be competent to determine. The High Court could, I am sure, determine whether it was solvent at a particular time but whether it could determine the prospects of the company for the future is another matter.
The court can consider the solvency of the company at a particular time but the Minister is going to consider the future. Where is the standard by which the High Court is going to judge? Surely the same considerations he would impose upon himself when judging the future of the company. If it is capable of doing one thing, it is capable of doing the other. If the Minister wants a little bit of latitude with regard to considering the future of the company, there is no harm in giving the High Court power to reverse or uphold him in that regard. They will have to operate some standard with regard to solvency and it is not very much to ask them to carry that into the future. They are as capable of doing that as the Minister is. Where the merits lie with Deputy Bourke's point, the Minister has not power to consider the matter that Deputy Bourke has urged.
And he does not want to take the power but he does want to have this subterfuge that he can raise or lower the standard.
This will be subject to an appeal to the High Court.
The High Court will have to determine, if they have to determine anything in the matter, whether the Minister had reasonable grounds for believing that the company is insolvent. That is the extent of the appeal.
Mr. Bourke
The amendment still leaves a discretion to the Minister.
Are we to understand, if the High Court holds as between two sets of actuaries, that the actuaries retained by the Minister were sufficiently reputable to give him ground for believing that the company was insolvent, the hands of the High Court are tied? That is obviously an absurd position. The number of insurance actuaries operating in this country are few and far between. In any case, where it becomes a question of valuing the assets and liabilities of an insurance company, it becomes a conflict of actuaries' views, and it is highly unlikely that any two actuaries will take an identical view. You will be setting one man against the other. Are we to understand that an actuary on the staff of the Department of Industry and Commerce is to become the permanent valuer and assessor of insolvency for Irish insurance companies? Are we also to understand that once that man reports to the Minister that a situation has arisen which would entitle the Minister to say that he has reasonable grounds for believing that the company is insolvent, the hands of the High Court are tied. Because, if Deputy McGilligan is right, all the Minister has to do is to go to the High Court and say: "It is not a question as to whether the company is in fact insolvent; it is a question of whether I have reasonable grounds for believing it to be insolvent."
"The applicant for such licence may, within one month after such refusal, apply in a summary manner to the High Court for a declaration that such licence should be granted to him." Under that paragraph (a), has the court absolute discretion to reverse the Minister on any grounds?
The court can order that a licence be granted if it considers that it is just and equitable that it should be granted.
The two things must be taken together. They are not disjunctive. First of all, the High Court needs to be satisfied that there will be compliance with the Act of 1909, and, in addition, that it is just and equitable that the licence should be granted. That is the net point. Does the Minister think that the phrase, "just and equitable," will enable the High Court on appeal to decide the net point that the company is insolvent?
Three minutes ago when I was speaking you said "No."
The Minister may at a particular time have a standard of solvency which the High Court may think is not unreasonable but nevertheless, on grounds of equity and justice, it can grant the applicant the licence.
Although the High Court believes it is insolvent at the particular moment?
No, but the High Court can disagree with the Minister whether it is insolvent or not.
The Minister's view is that the High Court, after listening to the Minister's actuaries and the actuaries of the other side, will make up its mind between them?
One thing the High Court cannot say is: "We are going to look at the future."
But we are going to look at the solvency or the insolvency at the present moment.
Mr. Bourke
I think the Minister should accept this amendment, as it leaves the whole matter in his discretion.
I would not have this way of dealing with it. If there is a company which is now insolvent——
With a developing business.
——with some prospects for the future, we have to consider whether that company, before the Act comes into operation, as a result of the changes that will be brought about, will be enabled to qualify for a licence.
That would certainly mean that there will be different standards of solvency for different companies applying at the same time.
And that there will be a more rigid standard for those applying later. Let us take three companies who make application under Section 14 and that they do not find their circumstances those that might be desired. One of them is fairly young and has a good record. Its business is developing. It is cutting down expenses and so forth. New business is coming into it which looks to be a good profitable type of business. Another is in indifferent circumstances. The third is completely hopeless and has been going back, is getting little business and even that of a risky type, and possibly getting along in an uneconomic way. Will the Minister be bound by different considerations in considering the application of these three companies or will he take the same yard-stick to measure each of them?
When it comes to the actual consideration of the licence applications they should be measured by the same standard.
Would the Minister be prepared to add at the end of paragraph (b) "and that there is no reasonable likelihood that the company will, within a reasonable time, become solvent?" That would meet Deputy Bourke's point and would still leave it in the Minister's discretion.
Again, I am looking at this question from the point of view of the prospective policy-holder. I do not think it is good enough to say that there is reasonable expectation that the company will be able to pay out on the policy when it falls due. I think we must be able to say that the company will do so. If we issue a licence to a company we will be issuing at the same time a certificate of solvency. On the basis of that certificate, the average member of the public can take the risk of purchasing a policy in that company.
You will certainly never have any new companies in the country.
For industrial insurance?
For anything. They have got to be solvent from the word "go."
Can the Minister say if any insurance company in the history of insurance has been solvent from the day of its foundation?
That is a big question to answer at a moment's notice.
Does the Minister know of any such case?
I say that that applies to any properly capitalised general insurance business.
What Deputy Dillon mentioned.
At the word "go," it would have all assets and no liabilities.
Would that apply a few days after the word "go"?
If properly capitalised, it would.
I suggest that a little research into the history of insurance companies would bring a new viewpoint to the Minister.
Mr. Bourke
Will the Minister accept Deputy Costello's amendment?
I do not think we could do that.
Amendment, by leave, withdrawn.
I move amendment No. 46, which is in the names of Deputies Norton and T.J. Murphy:—
In sub-section (1), to insert after paragraph (b) the following new paragraph:—
(c) if it appears to the Minister that there is reasonable ground for believing that such company has failed to discharge its contractual obligations to the public or to its employees.
This amendment has been tabled with the intention of popularising insurance. It is considered a safeguard which it is necessary to have in the hands of the Minister so that he may deal with companies who fall below the general standard as regards the fulfilment of their contractual obligations to the public or their employees. It is felt that underlying this measure is the idea of rebuilding confidence amongst the general public in insurance as a whole, thereby securing that a much larger number of people will participate in insurance than has hitherto been the case in this country. The reason why Irish citizens are so timid about insuring is due to a not inconsiderable extent to the unsatisfactory treatment which policy-holders received from certain companies in the past. I am not conversant with the higher forms of insurance, but I have had some association with the poorer types of people who take out industrial and small policies. On behalf of some of these people I have had to deal with unpleasant transactions, involving small amounts of money so far as the companies were concerned, but considerable amounts so far as the policy-holders were concerned. Even though they might feel they were on strong legal grounds, I thought it very unwise for companies to resist the claims of poor persons to the extent of forcing them to take proceedings for the recovery of trivial amounts. This amendment does not suggest that a company should not have a right to resort to the courts, but it does suggest that if a company has distinguished itself by departing from the normal standard of companies operating generally in the country by forcing its clients into vexatious litigation in order to secure their ordinary contractual rights there should be a remedy available. That type of conduct has a very grave effect on insurance, and the Minister should set his face against any such proceeding.
I think that the employees of insurance companies are a very important factor in the success or otherwise of the business. There will be normal standards arranged between employers and employed, and if some companies find it desirable for any reason to adopt standards lower than those generally obtaining, thus producing friction with employees, that will react not alone on that company but on insurance generally. While it can be argued that the courts of law are available to policy-holders to secure their contractual rights, I believe that any company resorting to petty actions so as to make it difficult for poor persons to secure their rights should be made amenable. A company should meet its obligations when policies become due with the same enthusiasm as it displays when looking for new business. The conduct I have alluded to should not be encouraged, and a company which does not see its way to come into line with reputable companies and which persists in that course of action should be refused a licence.
Dr. Ryan
If a company did not meet its obligations to the insured, the courts would be open to the aggrieved party. The same would apply to employees. If there is a contractual obligation, there must be some redress obtainable from the courts. I do not think that the Minister has sought in this Bill any powers to equal the power the Deputy would like to confer upon him—the power of deciding whether a company had fulfilled its contractual obligations or not. That is a matter which should be decided solely by the courts.
Is there not the point that he would have only one "whack" at them—when they applied for a licence?
The Minister has taken certain powers under paragraph (a) regarding the deposit of moneys, and under paragraph (b) regarding insolvency of a company. The question as to what general insolvency means has been debated at great length. I think that the Minister should take power to deal with companies which deal in a vexatious manner with the insured public.
Dr. Ryan
That would be a difficult matter to decide.
The company would, of course, have to go to certain limits in order to warrant action of the kind. The Minister would not be asked to do anything which would be illiberal. I believe that anybody who has studied the progress of insurance amongst the poorer type of people will admit that they have been put to grave annoyance in securing their moral and legal rights. When any company seeks to pursue that sort of pettifogging policy, it should be possible to draw the Minister's attention to it and, if there were a danger of its becoming a grave menace, he should be entitled to refuse a licence to the company.
Dr. Ryan
I think the trouble to which Deputy Keyes has alluded has arisen chiefly from alleged mis-statements of age or relationship. These matters are being tightened up under this Bill. It will not be so in future. I imagine that that sort of vexatious conduct to which the Deputy refers will not be continued in the future.
Amendment, by leave, withdrawn.
Question proposed: "That Section 14 stand part of the Bill."
On the section I want to direct the Minister's attention to some peculiar results which may accrue from its wording if allowed to stand in its present draft. One of the conditions which must be complied with before a licence is granted is that the company must comply with the terms of the Bill in reference to the deposit of money. The provisions in reference to that are contained in Section 20 whereby the company must deposit moneys with the Accountant of the Courts of Justice. That section says that every assurance company carrying on assurance business shall deposit with the Accountant of the Courts of Justice certain sums of money. Under Section 8 a company cannot carry on an assurance business until it gets a licence. The company cannot deposit the money until it is carrying on business. Under the section as it stands you cannot get a licence until you have deposited the money. I would like to know how the Minister gets over that difficulty?
Dr. Ryan
I can only promise to ask the Minister to look into that point.
The company can only deposit the money when carrying on business. Section 8 says that you cannot carry on the business until you get a licence, and this section says that you cannot get a licence until the money is deposited with the Accountant of the Courts of Justice.
What is the necessity for sub-sections (2), (3) and (4)?
To enable another debate to take place on Section 12.
Dr. Ryan
I understand that was fully discussed in connection with the separation of the business.
No; I want to know why have we sub-sections (3) and (4) there at all? We are told, calmly, in sub-section (2) that the Minister is not allowed to grant licences except where the grant of the licence so applied for is expressly authorised by another section.
Dr. Ryan
This is a restriction on the grant of the licence.
Dr. Ryan
That is what the section is dealing with.
Take one section for a brief analysis. Sub-section (2) says: "Whenever the Minister grants to an assurance company an assurance licence to carry on life assurance business or industrial assurance, or both these businesses, the Minister shall, while such licence continues in force, refuse every application by such company for an assurance licence to carry on any other class of assurance business, save where the grant of the licence so applied for is expressly authorised." If it is not expressly authorised he cannot grant the licence. Why then say he cannot grant a licence he is expressly authorised to grant? We do not start off by assuming that under the law the Minister has every power that anybody can imagine, and that he is only clipped in these powers by the express section in the Bill.
Mr. Bourke
On this section I want to say that this Bill has provided already under Section 12, sub-section (3), for the granting of an assurance licence to the Insurance Corporation of Ireland. The only thing that could rule them out is the interpretation that a judge might put on the words "expressly authorised" in sub-section (4) of 14. It probably is not so intended, but does not that section possibly open up the only thing that could rule them out in that particular expression, "Expressly authorised"? I think, under the Bill, they are expressly authorised if their articles of association permit them. No company should be placed in a privileged position.
On this section I desire to recall very emphatically my protest against inserting conditions which nobody in the House understands, least of all the Minister responsible for the administration of the Bill. The Minister is precluded from granting a licence to any insurance company that has not complied with the provision relating to the deposit of moneys, and if it appears to the Minister that there is reasonable ground for believing that the company is insolvent. The Minister does not know what standard is going to be set. The only information he had to give us on that subject was that if there were three companies, each of them in different financial circumstances, he would set a different standard of solvency for each of the three companies in order to make due allowances for the probable prospects of these companies without being obliged to take such prospects into consideration.
I hold in regard to this Bill and in regard to every other measure which gives the Minister discretion over the affairs of citizens of this State, that every man should be equal before the law. I object to legislation which gives the Minister the right to apply a different yard-stick to different citizens in the same walk of life. That is what (b) of sub-section (1) of Section 14 does. It is an intolerable thing to tell a respectable body of men in this State that they are insolvent or that they are liable to be declared insolvent, and to tell them at the same time that you cannot inform them what measures are necessary to bring themselves into such a position that it will not be open to the Minister to declare them insolvent. With the passage of this section there is nothing which will guarantee any insurance company against a declaration of insolvency by the Minister. I object to that section, because I object to leaving men open to condemnation under the law. Once the law is law one likes to obey it. I object strongly to any Bill becoming the law of the land which can operate against me in a penal way. I say again that no person can protect himself against the operation of paragraph (b) because he does not know what paragraph (b) obliges him to do.
Question put and agreed to.
SECTION 15.
Where the Minister refuses to grant an application for an assurance licence the following provisions shall have effect, that is to say:—
(a) the applicant for such licence may, within one month after such refusal, apply in a summary manner to the High Court for a declaration that such licence should be granted to him;
(c) whenever the High Court makes an order under this section declaring that an assurance licence should be granted to an applicant therefor, the Minister shall, as soon as conveniently may be, grant, under and in accordance with this Act, such licence to such applicant.
As amendments Nos. 48 and 50 deal with the hearing of Circuit Court cases in camera they might be debated together.
I move amendment No. 48:
In paragraph (a), line 51, after the word "him," to add the words "and every such application shall be heard by the High Court (or on appeal by the High Court) sitting in camera.”
I was asked to put down that amendment. To be perfectly honest, if I were on the board of an insurance company which had an allegation of insolvency made against it, I would prefer to go to the High Court. I say that because if you seek the protection of a court sitting in camera that would lend colour to the suggestion that you were insolvent. I fully understand what made people ask me to put down this amendment. It was a certain reluctance to allow their business to be examined under the microscopic eye of the public. To satisfy the public of the exact meaning of actuarial solvency is a very difficult thing to do, because the public do not understand actuarial calculations at all. Even after you have satisfied the court, which was assisted by assessors, that you were actuarially solvent you might leave a doubt in the minds of people that you were not. I have the fear that if the Minister has reasonable grounds to believe that you are insolvent that the day is lost already, and that you are sufficiently blackened in the public eye to have all the damage done to you that can be done to you; and that whatever the court proceedings may be if they are being held in public, the public verdict from the bench rehabilitating your solvency is calculated to be more valuable than any decision which would be got under such circumstances in a court sitting in camera. I do not press the amendment. Deputy Bourke has a similar amendment on the Paper.
Mr. Bourke
I have a similar amendment. I think most people associated with the law in any capacity have an objection to asking that any proceedings of this kind should be held in camera. There is a good deal to be said both for and against the amendment. As Deputy Dillon said, once the Minister has ruled against a company and that gets to be public property, it is sufficient to put them out of business, and it would be very little use to have them whitewashed in the High Court. It will be recognised also that an insurance company possesses a number of trade secrets, such as the disposal of its money in investments, and so on, and if any matters leaked out in relation to bad investments the public would be bound to seize hold of them and would be inclined to make mountains out of molehills. I think, on the whole, the balance is in favour of holding such proceedings in camera. However, I have no desire to press the amendment.
I would like to speak in favour of the amendment. I agree that a certain slur is cast on a company once it is known that an application for a licence has been refused. There is, of course, always the possibility of deluding the public until the decision is announced. The Minister may have refused on the ground that there is no compliance with certain provisions or, alternatively, that the company does not appear to be solvent. Of course, the worst rumours are likely to get about in the country—that will undoubtedly be the case. If the company gets a verdict in its favour and the Minister is forced to give a licence, there is this public satisfaction, this guarantee to the public that the High Court, after mature consideration, has overruled whatever are the reasons that operated in the Minister's mind in making a refusal. That may still be bad for the future of the company and it may take some time to get over that, but I submit it is more desirable than to have the whole of the company's business thrashed out in court and the public, possibly, realising that it has only just staggered home by a short head.
It would be a serious matter if the whole of the innards of a company were turned inside out in a public court. If that situation is going to arise, no company will go into court against the Minister's refusal unless it is an absolute certainty that it will get a licence—that there is the chance that it may be declared solvent or that it will be declared a just and equitable thing that it should get a licence. I think that if a case does go to court the matter should be heard in camera. It is not to the good of the company, once the question of solvency arises, that the whole question of solvency should be exposed. Let us take the example afforded to us in the debates carried on in the House here. Whatever suspicions there may be in relation to insurance companies and tending to do them harm, they have been aggravated to a point that is hardly capable of expression by statements made in the House since this debate started. Let me emphasise that Irish insurance companies will take a long time to get over the effect of mere debates here. The Minister has got into the fashion of rolling all Irish insurance companies together and declaring them to be disreputable and unreliable. If these debates had been conducted in camera, even though there might be the old suspicions about some concerns not being too good and about bolstering up bad concerns, still the harm would not have been done by proceeding in camera that has undoubtedly occurred as a result of the debates that have been carried on here.
Dr. Ryan
There is room on this question for either opinion. Personally, I would imagine that if a company were turned down by the Minister and succeeded in the High Court it would be better for the company that the proceedings should be held in public. Their arguments in proving the case would do them a certain amount of good and help to retrieve their position and that would be much better, I think, than if the case were heard in camera. I believe the suspicions would be greater and the company's reputation would suffer more if the case were heard in camera. On the other hand, of course, if the Minister's refusal were upheld by the High Court his case could be made there and published, but that is not so very important. I think this is a matter that deserves further consideration and I believe the Minister will be prepared to consider it further. There appear to be two points of view.
Amendment No. 48, by leave, withdrawn.
Mr. Bourke
I move amendment No. 49:
In paragraph (c), line 61, page 14, and line 1, page 15, to delete the words "as soon as conveniently may be" and substitute the word "forthwith."
We are all familiar with the old phrase "as soon as conveniently may be." We are all familiar, too, with how callous and how indifferent Government Departments can be towards the position of business concerns. We know how the Revenue Commissioners can deal with business concerns and nearly all Government Departments follow the same headline. They give very little consideration to the financial effect on a company of holding up its business, and there are other inconveniences that business people may be put to as a result of Government Departments not dealing in an expeditious manner with the business they have in hand. It is very likely that a company put in the position of having to go to the court in a matter of this kind experiences sufficient financial loss and is put to sufficient inconvenience without being put to any additional loss and inconvenience. I think it is only reasonable that the Minister should be asked to withdraw this particular phrase. It is a very reasonable request.
Is it the intention of the Minister to accept this amendment?
Dr. Ryan
No. I am told it has exactly the same meaning.
To my mind it certainly has not the same meaning, but, if the Minister thinks it has, why not accept it?
Dr. Ryan
The other is better drafting.
"As soon as conveniently may be," I believe, will be interpreted by the courts in a certain way, and on the words a reading can be made by the court that to withhold the licence unduly is to conflict with justice and with established rights. Surely it must be obvious that the word "forthwith" is more explicit than "as soon as conveniently may be." If the amendments are identical and the Opposition ask the Minister to insert another word, my submission is that it is not a correct reply to say "The draftsman likes the word we have got better." It is not the draftsman who is making the law: we are making the law. If the draftsman says "My words are clearer or superior," then I can understand the Minister saying: "We want to achieve the same thing, and expert advice is that our method of doing it is superior to that suggested by the Opposition." If the Minister's advice is that the words are identical and we take the view that our word "forthwith" is superior, then my submission is that the Parliamentary draftsman's word or taste carries no weight; we are entitled to substitute the alternative word.
I want to recall to the Minister's recollection the case that arose under Article 10 of the Treaty where a Minister delayed in performing a statutory duty under the Civil Service (Compensation) Act, 1929. In that case the word used was very distinctly mandatory. It was not either "forthwith" or "as soon as conveniently may be," but "shall." There the Minister delayed for months before he performed a statutory duty. The danger in this case is that reliance will be placed on "as soon as conveniently may be" to delay the grant of a licence. In Mr. Lisney's case he applied under Article 10 for a mandamus against the Minister. It was fought in court by the Minister on the grounds that he had so much business to do in connection with the Finance Act that he had not time to attend to the claim of Mr. Lisney under Article 10. In this particular case the Minister for Industry and Commerce may say: "Although the High Court order me to grant a licence, I have so much to do with the unemployment problem that I cannot attend to insurance business, and, consequently, I am entitled to say under this clause that it is not convenient for me to give the licence at the moment because I am dealing with the unemployment problem." Of course, we will have the benefit of the mandamus precedent in Lisney's case to hold over his head, but at the same time, while we have control here in Parliament over the actual drafting, I think if the intention is that the licence should be granted forthwith, then the word "forthwith" should be inserted irrespective of the tender feelings of the Parliamentary draftsman.
Dr. Ryan
I do not want to bring the Parliamentary draftsman into this.
Is it the Minister's own thought that "forthwith" and "as soon as conveniently may be" are the same?
Dr. Ryan
I am informed that they amount to the same thing.
Apart from your information, do you believe yourself that they are the same thing?
Dr. Ryan
I do. The point made by Deputy Costello has nothing to do with this. I do not want to enter into a discussion on constitutional questions with the lawyers opposite. I believe that as regards Article 10, there was no time stated at all. At least there is a time stated here "as soon as conveniently may be".
My point was that the word in the 1929 Act was much stronger than either "forthwith" or "as soon as conveniently may be".
Dr. Ryan
There was no time stated. It might be 100 years.
In the case referred to, the court decided to give a mandamus on the ground that the Minister's delay amounted to a denial of justice. The Minister for Agriculture believes that "forthwith" and "as soon as conveniently may be" are the same. Surely the Minister cannot say that with any deliberation. The only limit in the matter of time, in the use of the word "forthwith" would be a limit, possibly, of "as soon as can be". Does the Minister tell me that when he gets letters from his constituents asking for a reply "at his earliest convenience" he takes that to mean that he is to sit down at once and send replies?
What does the Deputy mean by "forthwith"?
Immediately. The only limitations that the court would put on that would be such time as would be necessary to get the licence out.
"As soon as conveniently may be."
Surely "convenience" imports an entirely different set of considerations from saying that you are to do a thing forthwith?
Does the Deputy think that there should be an official standing in the court with a blank licence form in his hand ready to have it filled in?
No. The court would look into the prescribed particulars and would take all that into consideration. "Forthwith" would mean that the official would take the time that appeared to him to be most suitable. There is no direction given even to be speedy about it.
"As soon as conveniently may be."
To do it as quickly as possible, subject to your convenience, making due allowance for the time that it would take to get the matter put into proper form and with advertence to the multitudinous duties that officials have put upon them. I cannot believe that anybody who learned English as his native tongue has any doubts about there being a big difference between "forthwith" and "as soon as conveniently may be." If there is any Deputy who believes that the phrase and the word mean the same thing, then he ought to be in favour of the word "forthwith."
Perhaps the use of the word "forthwith" would mean too much.
Will the Deputy argue it on that ground? The only argument that we have been faced with up to date is that the phrase and the word mean the same thing. If the Deputy thinks that the word "forthwith" might amount to too severe an order on the people carrying out the measure, he must remember that they will always have the protection of the court, and the court will interpret the word "forthwith" in a reasonable way. I suggest to the Deputy that there are too many devices known to the Ministers, civil servants and the whole community for delaying proceedings when the proceedings taken against them have had a result that they do not welcome— in the case of actions taken in the courts on the ground of refusing for a period to comply with certain orders —the delay amounting to a refusal to obey an order. Now there should not be any possibility of delay here. An application is made for a licence and the licence is refused. The licence will be in the prescribed form and it will not take a great deal of time to fill in the particulars. Following the refusal, the case goes to the court and the court eventually decides that the licence should be granted. I submit that the company which has made the application should not be kept a single week out of business by a delay in the issue of the licence.
And it will not be because the licence will be issued "as soon as conveniently may be."
Remember that the company will have incurred a certain amount of odium in the eyes of the Minister because it has successfully fought an action against him in the courts. The liberty of that company to begin business, having won its case in the courts, should not be subject to the convenience of the Department.
It will not be subject to the convenience of the Department. The licence will be issued as soon as may be.
Then put in the words "as soon as may be."
What is in amounts to the same thing.
I think that this is the smallest amendment that we have ever discussed in our history.
We on this side hold the view strongly that the word "forthwith" is much more satisfactory than the phrase "as soon as conveniently may be," and that it is calculated to protect the individual better. In view of that, is it reasonable for any sane Minister to say that he is going to stick to his words? Is that a rational attitude for a Minister to take up? I doubt if even Deputy Moore could stand for that.
Question put: "That the words proposed to be deleted stand."
The Committee divided: Tá, 49; Níl, 27.
Tá
- Aiken, Frank.
- Bartley, Gerald.
- Beegan, Patrick.
- Boland, Gerald.
- Bourke, Daniel.
- Brady, Brian.
- Breathnach, Cormac.
- Briscoe, Robert.
- Browne, William Frazer.
- Concannon, Helena.
- Corbett, Edmond.
- Crowley, Timothy.
- Derrig, Thomas.
- De Valera, Eamon.
- Doherty, Hugh.
- Everett, James.
- Flinn, Hugo V.
- Fogarty, Andrew.
- O'Grady, Seán.
- O'Reilly, Matthew.
- Pattison, James P.
- Pearse, Margaret Mary.
- Rice, Edward.
- Ryan, James.
- Ryan, Martin.
- Gibbons, Seán.
- Houlihan, Patrick.
- Keely, Séamus P.
- Kehoe, Patrick.
- Kelly, James Patrick.
- Kelly, Thomas.
- Killilea, Mark.
- Kilroy, Michael.
- Kissane, Eamonn.
- Lemass, Seán F.
- Little, Patrick John.
- Lynch, James B.
- Maguire, Ben.
- Maguire, Conor Alexander.
- Moore, Séamus.
- Murphy, Patrick Stephen.
- O Briain, Donnchadh.
- O Ceallaigh, Seán T.
- Ryan, Robert.
- Smith, Patrick.
- Traynor, Oscar.
- Victory, James.
- Walsh, Richard.
- Ward, Francis C.
Níl
- Bennett, George Cecil.
- Bourke, Séamus.
- Brennan, Michael.
- Coburn, James.
- Cosgrave, William T.
- Costello, John Aloysius.
- Desmond, William.
- Dillon, James M.
- Dockrell, Henry Morgan.
- Dolan, James Nicholas.
- Doyle, Peadar S.
- Fagan, Charles.
- Finlay, John.
- Keating, John.
- Lynch, Finian.
- McFadden, Michael Og.
- McGilligan, Patrick.
- McGovern, Patrick.
- McGuire, James Ivan.
- McMenamin, Daniel.
- Minch, Sydney B.
- Morrissey, Daniel.
- Mulcahy, Richard.
- Murphy, James Edward.
- O'Leary, Daniel.
- O'Reilly, John Joseph.
- O'Sullivan, John Marcus.
Tellers:—Tá: Deputies Little and Smith; Níl: Deputies Doyle and Bennett.
Question declared carried.
Question proposed: "That Section 15 stand part of the Bill."
I want to direct the Minister's attention to the provisions of paragraph (a) of this section. It provides that an applicant for a licence must apply within one month in a summary manner to the High Court. Now, it is rather difficult to come to the precise meaning and effect of this. I say that the Minister and his advisers ought to look into that phrase. Similar phrases have caused difficulties in other cases, the Housing Act, for instance. It might easily be got over in the form of a summary summons. Has the Minister directed his attention to the persons who are parties to the proceedings? If a company is refused a licence it may apply to the High Court for a licence. That means that advertence must be had to the Ministers and Secretaries Act which requires the fiat of the Attorney-General before the Minister can be sued. Unless that is cleared up the month may go by and the company, not having applied for its licence, may be done out of its right. The third point is that of costs. There is no provision for costs. I think if the Minister loses his case he should be liable for costs.
The side-note says "appeal" but it is really not an appeal. The word "appeal" does not appear in the section.
The Minister is not a judicial person.
Not in law, perhaps. I will look into it.
Question put and agreed to.
Sections 16 and 17 agreed to.
Amendment No. 51 not moved.
Section 18 agreed to.
SECTION 19.
(2) Whenever it appears to the Minister that an assurance licence should be suspended or revoked on all or any of the following grounds, that is to say:—
(a) that the licensee thereunder has failed to comply with the provisions of the Act of 1909 or of this Act, or
(b) that, by reason of the insufficiency of the assets of the licensee thereunder, the carrying on by such licensee of the assurance business in respect of which such licence was granted is not justified, or
(c) that such licensee has failed to pay, within one month after a claim on an insurance policy with such licensee is admitted, decided, or adjudged to be due, the amount of such claim to the person entitled thereto,
the Minister may give to such licensee notice in writing of his intention to consider the suspension or revocation of such licence.
Amendment No. 52 not moved.
I move amendment No. 53:—
In sub-section (2) (c), line 5, after the word "has" to insert the word "wilfully".
This amendment deals with the point that arose on a previous section. It is quite conceivable that owing to some oversight in an insurance office the payment would not be made; or there might be some miscarriage which might result in the payment not reaching the person for whom it was intended. As the Bill reads at present that would leave the insurance company open to conviction under this section; therefore, I propose the insertion of the word "wilfully".
There would be no point in inserting the word "wilfully" there. If a company fails to pay within one month of the date on which a debt was admitted or adjudged to be due, there could be no question of "wilfully". All that occurs is that the Minister may give notice of his intention to revoke the licence. The next section provides for an appeal by the company against such revocation. If it was shown that the failure was due to some error on the part of a clerk or other cause of that kind, the company could make representations against the revocation of the licence. But as to the question whether the failure to pay is wilful or not, I cannot agree with the Deputy's contention. We provide that the licence may be revoked if the company fails to pay within a month after the period that it is due.
Suppose the company believed it had already paid. Suppose it says "we actually drew a cheque and believed it was despatched to the payee," but the servant of the company instead of paying the cheque, put it into his own pocket. The company says we have always been ready to pay our debts.
It comes to the same thing, so far as the person to whom the debt is due is concerned.
There is no use running away from the facts. If a person consciously and wilfully defies the law he should be made subject to a penalty, but for something that is no fault of his own it is contrary to the law to make him liable to a penalty. This is handing over to the Minister the right to inflict a penalty.
There is no penalty. It gives us the right to say we will revoke the licence if the debt is not paid.
It gives the right to the Minister to inflict the penalty.
It leaves the person open to notice of the intention to revoke the licence.
And such notice should be given.
Surely not, if a person is in the position to satisfy the Minister that there was no such intention and that he believes payment has been made.
I cannot agree. It would be foolish to put the word in there. It would give a mere excuse to a person who did not pay.
Supposing it is represented to the company that the payee has not received payment——
——and the company says we have taken every step to do our duty, the Minister could warn them that if they did not pay this w section would be put in operation against them. But the fact that they did not pay cannot be evidence that they were wilfully withholding payment. What I object to is that this should operate against persons not wilfully breaking the law and who believed that they had paid.
The Deputy knows that the paragraph is directed against the company which is in an insolvent state and is unable to pay its debts.
Amendment put and declared lost.
Amendments Nos. 54 and 55:—
In sub-section (2), line 9, page 16, to delete the word "may" and substitute the word "shall".
At the end of sub-section (2) to add the words "and the grounds for such decision".
These two amendments hang together. They are designed to compel the Minister to give notice in writing of his intention to consider the suspension or revocation of a licence and to include in the notice a statement of the grounds upon which he has decided to give such notice. As it reads at present, the Minister may give the notice in writing. I want to compel him to give the notice in writing, and include in the notice a statement of the grounds upon which he proposes to act.
So far as the first amendment is concerned, the word "may" there has the same effect as "shall" and it is better to leave it in the form in which it appears in the Bill. I should like to consider the matter of giving a statement of the grounds upon which the notice is issued. I think that that would be the practice, in any event, and I do not see much difficulty in providing for it in the Bill. I shall look into the point.
Omitting amendment No. 55 from our consideration in view of the fact that the Minister proposes to consider it, let us examine the question whether "may" and "shall" mean the same thing.
I heard Deputy McGilligan explain it at great length about five years ago.
As Deputy Dillon was not here, he did not hear the vociferous attack made on me by the Minister for daring to say so.
These words relate back to the introductory words of sub-section (2): "Whenever it appears to the Minister that an assurance licence should be suspended or revoked on all or any of the following grounds," the ground are set out in paragraphs (a) and (b), "the Minister may give to such licensee notice in writing of his intention to consider the suspension or revocation of such licence." Surely the Minister ought to be under an obligation to give such notice in writing.
It is clear from the sense. If you read sub-section (3) you will see that no action can be taken unless notice is given.
Because this is considered better phraseology.
I do not think that that attitude by the Government is reasonable. If there are two words which, in the opinion of the Minister, have an identical meaning and, in our opinion, have a different meaning, in my opinion the Government should give way.
Let the Deputy argue it with Deputy McGilligan. who is much more fully informed.
I shall not argue it with Deputy McGilligan. We are desirous of facilitating the Minister in getting a highly technical and tedious Bill through.
You are facilitating us? I did not notice it.
It is largely because of the attitude taken up by the Minister. There should be accommodation in matters of this kind. Our recourse, in the event of the Minister refusing to give way, is to mark our objection by a ten minutes' adjournment commonly known as a division.
The Deputy can take it that the words "may" and "shall" have the same meaning there. There are no grounds for altering "may."
In practice, they may operate in the same way. If the Minister will alter the word to "shall" we can pass on to the next matter.
It is better to keep to the established form.
What is the established form?
Surely there are two separate things.
It is clear from sub-section (3) that nothing can follow unless notice is given.
That is not correct. The Minister may be himself deceived and so deceive the House. Sub-section 3 is a consequential section:—
Whenever the Minister gives under this section to the licensee under an insurance licence notice of his intention....
There is no obligation inherent in that to give notice in writing. That is a sub-section which can operate consequent and verbal notice.
It is notice under this section, which is notice in writing.
It does not say so. The Minister can give verbal notice.
The Minister gives notice under this section.
If "may" does not mean "shall," notice can be given verbally.
You are only begging the question by arguing that notice under this section is notice in writing. It may be that "may" is equivalent to "shall" in that connection. Then notice under this section must be notice in writing. If it is not so, the notice may be verbal. You are only twisting back to the same argument. I do not know whether it is bound to mean "shall" in this context or not. It is clear that "may" does not always have the meaning of "shall." There must be some context capable of being expressed in which "may" will have the meaning of "shall." What is the context?
I refer the Deputy to his speech on the Minerals Act in 1931.
The sections there are entirely different from this.
Under these circumstances I shall have to press the amendment.
Question put: "That the word proposed to be deleted stand."
The Committee divided: Tá, 43; Níl, 31.
Tá
- Aiken, Frank.
- Bartley, Gerald.
- Beegan, Patrick.
- Boland, Gerald.
- Bourke, Daniel.
- Brady, Brian.
- Breathnach, Cormac.
- Briscoe, Robert.
- Browne, William Frazer.
- Concannon, Helena.
- Corbett, Edmond.
- Crowley, Timothy.
- Little, Patrick John.
- Maguire, Ben.
- Maguire, Conor Alexander.
- Moore, Séamus.
- Murphy, Patrick Stephen.
- O'Briain, Donnchadh.
- O Ceallaigh, Seán T.
- O'Grady, Seán.
- O'Reilly, Matthew.
- Pearse, Margaret Mary.
- Derrig, Thomas.
- Doherty, Hugh.
- Flinn, Hugo V.
- Fogarty, Andrew.
- Gibbons, Seán.
- Houlihan, Patrick.
- Keely, Séamus P.
- Kehoe, Patrick.
- Kelly, James Patrick.
- Kilroy, Michael.
- Kissane, Eamonn.
- Lemass, Seán F.
- Rice, Edward.
- Ryan, James.
- Ryan, Martin.
- Ryan, Robert.
- Smith, Patrick.
- Traynor, Oscar.
- Victory, James.
- Walsh, Richard.
- Ward, Francis C.
Níl
- Bourke, Séamus.
- Brennan, Michael.
- Broderick, William Joseph.
- Coburn, James.
- Cosgrave, William T.
- Costello, John Aloysius.
- Davin, William.
- Desmond, William.
- Dillon, James M.
- Dockrell, Henry Morgan.
- Doyle, Peadar S.
- Everett, James.
- Fagan, Charles.
- Finlay, John.
- Hogan, Patrick (Clare).
- Keating, John.
- Lynch, Finian.
- McFadden Michael Og.
- McGilligan, Patrick.
- McGovern, Patrick.
- McGuire James Ivan.
- McMenamin, Daniel.
- Minch, Sydney B.
- Morrissey, Daniel.
- Mulcahy, Richard.
- Murphy, James Edward.
- Norton, William.
- O'Neill, Eamonn.
- O'Reilly, John Joseph.
- O'Sullivan, John Marcus.
- Pattison, James P.
Tellers:—Tá, Deputies Little and Smith; Níl, Deputies Doyle and Bennett.
Question declared carried.
Amendments Nos. 55 and 56 not moved.
I move amendment No. 57:—
At the end of the section to add a new sub-section as follows:—
(4) The Minister may at any time by Order declare that any class or classes of assurance business specified in such Order shall as from a date to be declared in such Order be transacted solely by a Saorstát Eireann company and the Minister shall as from such date alter or revoke as the case may require an assurance licence granted to a foreign company authorising it to carry on any such class or classes of business.
The object of this amendment is to take note of the possibility that at some later stage it may be possible for Saorstát companies to carry on a greater volume of internal insurance business; to give the Minister power under the section to make an order at any time specifying that certain types of business must be placed exclusively with a Saorstát company; and to give the Minister power to alter or revoke a licence which may have been granted to a foreign company authorising it to carry on one or more classes of insurance business. The Minister, in his Second Reading speech, indicated that his object was to endeavour to transfer to Saorstát companies the maximum volume of insurance business that it was practicable for them to maintain, having regard to their financial structure and to the solvency of the companies, particularly in relation to their responsibilities to persons who would undertake insurance business with them.
This amendment seeks to provide for the possibility that from time to time it may be possible to transfer an increasing volume of business to Saorstát insurance companies, and that ultimately one Saorstát company or group of Saorstát companies may between them be able to undertake entirely a particular type or a number of types of insurance business. In that event, I think the Minister ought to have power to make an Order the object of which would be to provide that that type of business must be placed exclusively with an Irish company, and to revoke any licence which he had previously granted to a non-Saorstát company for the carrying out of that particular type of business.
I cannot agree to this amendment. It would introduce an element of uncertainty into the conduct of insurance business to such an extent that it is extremely improbable that external companies would accept licences at all. In any event, I think that if it were considered desirable at a later stage to confine any class of business to Saorstát companies it should be done by a separate measure and not by an Order under this Bill.
Does the Minister see any particular difficulty in, let us say, limited types of insurance business which exist from year to year, being for particular years of which adequate notice would be given required to be transacted by an entirely Saorstát company or group of Saorstát companies? Let us take the case of insurance business which is carried on let us say from year to year, where the liability is covered for a period of say three, six or 12 months, and at the end of that period the contract of insurance lapses. A non-Saorstát company might naturally object to that type of business being confined to a Saorstát company or a group of Saorstát companies. However, it could not possibly plead that it would cause any serious inconvenience, apart from the loss of business, to a non-Saorstát company, because the normal premium on the insurance policy would have expired, the risk would have lapsed, and there would be no difficulty in transferring that type of business to a Saorstát company. A non-Saorstát company, and, in fact, every type of company, knows that certain types of risks are limited and that they lapse after a certain period. What is the difficulty, therefore, of giving adequate notice to non-Saorstát companies of an intention to require persons to transact certain types of business with Saorstát companies? I hardly think that the Minister contemplates, even if there are pretty substantial gains to Saorstát companies, coming to the House again and asking for authority to make Orders the object of which is to enable Saorstát companies exclusively to transact certain types of insurance business. Of course, if it is not practicable to make an Order, or if the Minister does not desire to make an Order, this section can remain inoperative, but so long as it is there I think the Minister ought to have powers to make Orders enabling the Saorstát companies to carry a risk of that kind. If the sub-section proposed were inserted in the Bill, the Minister could wait until it was practicable to do this and then he could make the Order. In the meantime, I cannot see any objection on the Minister's part to his having a power of this kind and being enabled to utilise it, having regard to the national question generally and the insurance business of this country in particular.
It might be considered practicable at some future time to legislate in such a way as to confine certain classes of insurance to Saorstát companies. If that should be so, however, I hold that it should be effected by legislation in which the particular classes of business would be named. The objection here is the uncertainty, in consequence of which it would be extremely improbable that any external company would consider setting up and maintaining an organisation in this country when there could be no knowledge as to the time at which an Order might be made affecting any class of insurance business. I would be utterly opposed to any amendment of this kind in principle, and I think that, in the circumstances in which this kind of business is carried on, any proposal of this kind should be embodied in separate legislation and should name the class of insurance which it is desired to include.
If Deputy Norton had been here yesterday, he would realise what the Minister's attitude is to this type of amendment which is aimed at putting some kind of restriction on foreign companies and at giving that amount of a handicap to the Saorstát companies. The Minister's whole outlook seems to be clouded by the feeling that, if there is any restriction at all on foreign companies, they will clear out of the country. That idea seems to cloud the Minister's mind entirely, but I wonder if he is serious in that fear? Does the Minister think, for one moment that these foreign companies are going to leave a profitable field merely because certain restrictions are put on them? I must say that this particular amendment is not one which I feel I could conscientiously support myself, but there were other amendments of, perhaps, a minor type, and the Minister came forward with a similar reply to these amendments to the effect that, if there were any restrictions, such as were proposed, on these foreign companies, they would not continue to carry on here. Surely the Minister realises that these foreign companies are not here from any altruistic motives. They are here because they are making a very good profit out of the country, and some of the restrictions that were suggested here already would not have prevented them from making quite a considerable profit. If those restrictions had been imposed, they would still be able to make a considerable profit, and they would still carry on. I think the Minister ought to get out of his head the idea that it is quite so easy as all that to hunt these foreign companies out of the country. They are not likely to be run out of the country until their business becomes unprofitable.
As I said already, I do not think I would be likely to support this particular amendment, because there is an indefiniteness about it which would hamper the administration of the scheme when the Bill becomes law. There were other amendments, however, which were perfectly definite and in connection with which they would know where they stand. Those were amendments that, I think, should have commended themselves to the Minister, because their effect would have been to give a certain amount of preference to the Irish companies, which, I think, would have been helpful.
No more than Deputy Lynch do I believe that foreign companies are engaged in insurance business here—any more than Saorstát companies are engaged in insurance business here—through altruistic motives. Both classes are here because they consider that the business is, or may become, a profitable undertaking for them. We have, however, framed proposals for legislation in this Bill upon certain definite lines. We think that the Bill is going to be extremely beneficial to Saorstát insurance companies, and that it is going to encourage the growth in the number and in the resources of these companies. The assistance which the Bill proposes to give, however, is along certain definite lines, and we have rejected the idea of the direct exclusion of external companies from specific classes of business, which has been suggested. We do not think that direct exclusion is right, and we think that the manner proposed in the Bill is better, and that, in the long run, it will prove more beneficial to the Saorstát companies.
Amendment No. 57, by leave, withdrawn.
Question proposed: "That Section 19 stand part of the Bill."
On Section 19, Sir, there are a few small points to which I should like to refer. I wish to refer to paragraph (d) of sub-section (3) of Section 19 which, I take it, is an amalgamation of the comparable provisions contained in paragraphs (a) and (b) of Section 15. There is, however, one change in Section 15, and that is, that, when there is resort to the High Court, the High Court is given power to declare that the licence should be granted if it is satisfied that the applicant has complied or will, in due course, comply with the provisions of the Act of 1909. That occurs in Section 15, but it does not occur in this section.
No, because this relates to a company which has been carrying on business.
Yes—because for some reason or other, it has been discovered that some part of the provisions of the Act of 1909 has not been complied with. It must be remembered, however, that the time for this is short. First of all, there is the notice given; then there are seven days, and then there are 15 days. The machinery is not just easy to manipulate from time to time, as can easily be seen. If the decision is to be with the High Court, and if it finds either that the company has complied with the provisions or will, in due course, comply with the provisions, should not that be sufficient?
Oh, no. The question here is that the licensee has failed to comply.
Yes, I can understand that if the failure was a failure of what one might call the aggressive type—that of a company which simply says that it will not comply.
The phrase used here is that the company has failed to comply.
Yes. There is a similar provision in Section 15, which is an appendage to Section 14, and in Section 14 there is power of refusal of a licence if the company applying for the licence has not complied with certain provisions. Nevertheless, the High Court has power to say that that company should get the licence, either because it has not failed to comply with the provisions or because, in due course, it will comply with the provisions. Suppose then, that it is suddenly discovered afterwards that there has been non-compliance, surely the High Court should be given liberty to determine again whether the company has complied or will, in due course, comply—because, after some time passes, despite the High Court determining in this way, the Minister can have another attack upon it. I think it does not weaken the section at all; it will give the High Court recourse to a particular phrase which it will not even want to have resort to, but which should be there. The point that Deputy Costello raised on Section 15 arises here in a very special way. An application is to be made in a certain manner. There was a case under the Housing Acts and there was a great deal of argument as to whether it meant procedure on summary summons or certiorari, and a particular decision was given. In regard to Section 15, the phrase is still vague. Nobody is declared as the person to be named as the defendant or respondent. When we come to Section 19 the Minister is to be named as respondent. Remember the seven-day period in paragraph (a). The period in which the erring company is to become alert is only the 15-day period set out under (d). That means there is a 15-day period for the Minister to be named as respondent. Certainly in these cases the Attorney-General will be required, yet the whole thing has to be done in 15 days. Something ought to be put in, though it would probably be considered a dangerous precedent and unconstitutional to say that the fiat of the Attorney-General could be dispensed with in applications of this sort. If that is raised, sound objection could be made on these lines. There should be some provision allowing movement of that type, say within 15 days after the Attorney-General's fiat is granted. Alternatively, make it a longer period of say 30 days or a month. I think Deputy Costello's objection to the one month, and to the 15 days particularly, a good one; it will have special application here. Another point has raised a slight suspicion of doubt in my mind. Clause (f) reads:
"When an application is made to the High Court... the suspension or revocation which is the subject of such application shall not take effect unless or until the High Court shall have refused to annul such suspension or revocation..."
The length of that temporary suspension or annulment is only until the High Court shall have refused to annual. There is contemplated an appeal to the Supreme Court, which is not merely proper but will be always there unless taken away by this Act. The clause continues:
"but subject to the right of the High Court further to postpone such taking effect pending an appeal from the Supreme Court."
Surely that ought to follow as a matter of course. If there is an appeal to the Supreme Court it ought to be at the beginning.
This power is given to the High Court and it may decide a case but the company may give some indication that it is going to the Supreme Court. The High Court could stop the effect of such an appeal by saying that it would not further postpone the taking effect of its decision. If an appeal could not be made to the Supreme Court within two or three days it is no good.
The High Court may decide that it was in the public interest.
Although the company has the right to go to the Supreme Court against the High Court's assumption on the point? Apparently you are wobbling about unsteadily on two feet. While there is a right of appeal to the Supreme Court if there is suspension, the position is that the company might have to look for a new licence.
The Attorney-General
Is not that the way in most cases where there were appeals? Will not the High Court always have power to refuse a stay of execution notwithstanding that there is an appeal?
That may be. We are establishing a new type of case here. I would not mind the matter being dealt with directly where the High Court thought it was in the public interest that it should refuse leave to go to the Supreme Court. It is dubiously done here. The section says you can go to the Supreme Court but the High Court says "if you do we will make it a fatuous proceeding." We will proceed no further on the taking effect of the revocation.
Or suspension. Does the Deputy say that the High Court will not take into consideration the fact that the company may be hopelessly insolvent, and that it might be unfair to allow new business?
Will the Minister stop there? There are proceedings and a company's licence is suspended because it is insolvent. The public are going to know that. Action is taken in the High Court and the court refuses revocation. The Minister thinks that company will do business.
If that is the situation, how is a company which, say, has succeeded before the Supreme Court going to get back into its position, because the revocation of the licence has taken effect? Must it apply for a new licence?
No. The revocation is cancelled.
It has taken place. There is nothing said about the Supreme Court being able to cancel the revocation.
The appeal is for the annulment of the revocation.
It went to the High Court and then went to the Supreme Court, which says: "We do not think this should happen." What is done?
The Attorney-General
Surely the company has been brought to an end by that time, so far as the licence is concerned?
In practice, but not in law.
If they discharge the order there is annulment.
I do not know what is going to end this mess up. Surely the Minister should take a clear-cut decision. He may say that in the public interest this is essential. I suggest that if there is an appeal to the Supreme Court and, if it is allowed, automatically suspension or the taking effect of the revocation should follow. Another point is as to the matter of time. There is a special period limit in which the Minister is named as respondent. I am referring to Deputy Costello's argument as to the fiat of the Attorney-General. All that is done within 15 days, as well as consideration of the application in a summary manner. The point was raised definitely on a housing question.
The point raised by Deputy Costello on Section 15 applies also to this section, and I undertook to have it examined, and if necessary to have the section amended to see if the necessary period cannot be nullified by some other requirement. On the question of giving the High Court power to annul a revocation and to grant to a company which may at some time comply with the requirements of the Act of 1909 and of this Bill, I do not think there is anything in that suggestion. If a company fails to comply with the Act of 1909 or with the provisions of this Bill, the Minister is entitled to revoke the licence, and the only ground on which there is an appeal is whether in fact it has so failed.
It may have effected compliance within seven days.
The Minister could speed up this procedure to keep it inside the seven days.
The Minister cannot act until he is satisfied, or at any rate that it appears to him, that the company has failed to comply with the provisions of the Act.
And he then notifies the company. Then there is a minimum period of seven days within which the company makes representations to the Minister. Immediately after that consideration, although it might only take an hour, all this might happen.
It takes effect on the fifteenth day from which notice has been given. Then the company can go to the High Court for the annulment of the revocation on the ground that the Minister's decision was based on a misunderstanding of the position, in other words, that it had in fact complied with the requirements of the 1909 Act and of this Bill. It is on that point, and that point only, that the High Court decides.
These matters as I pointed out before are all conjunctive. The High Court cannot decide in its favour until it has complied with the requirements of the Act. There is a seven-day period and a 15-day period. Supposing the machinery does not work to have compliance made effective on the 22nd day?
If there is compliance within that period there is a revocation of the annulment because there has been compliance.
Does "has complied with" mean "has complied with after the Minister took action?"
That it had failed to comply before action was taken. The Minister cannot act until he has reason to believe that it had not complied with the provisions of the Act.
After this procedure has taken place the Minister may find out that the company quite inadvertently has failed to comply with some of the provisions of the Act. The Minister may have given that company notice. The company might then comply and might pass muster. Supposing it put up that case, I think that as the section stands they would be entitled to go to the High Court and say, "Whatever was the fact at the end of the 21 days, on the 22nd day we had complied." There is nothing in the section to prevent the High Court then giving them an annulment.
I agree that (b) can be interpreted in that way, and I should like to look into the matter to see whether it might not be put in another form. It would be a much more serious matter than the making of a mere statutory return which would result in the suspension of the licence. It might be that the company had not made the necessary deposit.
If there was any word like "wilfully," that imported a criminal default in the section, it would be a different matter, but non-compliance might be due to the merest inadvertence.
It is a matter on which the Minister would undoubtedly act when representations were made to him under (b) if it were shown that failure to comply was due to an inadvertence.
Then the Minister would say that "may" did not mean "shall."
I presume that after the suspension by the Minister, they would go to the High Court and there would be a certain amount of publicity. That would save the situation one way or another.
I had an amendment down here to insert the word "wilfully" in paragraph (c), sub-section (2), but that amendment was rejected. I want to point out to the Minister again, that if he studies that paragraph he will discover that while the immediate consequences of failure to pay is that the Minister gives notice, out of that notice springs suspension.
It is different from suspension.
Yes, but it is the giving of the notice that creates the possibility of suspension; so if the licensee has failed to pay, he becomes liable to suspension. I say that that liability should not devolve on any man unless he has been wilfully guilty of failure to pay.
We give him a month to pay. It is failure to pay a claim of insurance which such licensee has admitted to be due. If he fails to pay within a month, it can reasonably be assumed that the concern has gone bankrupt and that the licence should be withdrawn.
If it is a reasonable assumption that the concern has gone bankrupt, then the money is wilfully withheld, but suppose he has instructed a clerk in the ordinary course of business to send out 100 or 200 cheques falling due on that day, that one of the cheques has fallen into the wastepaper basket, that the person who is legally entitled to that money and whose right he does not challenge is possibly a well-known insurance nuisance. He stumps into the office and says, "I have not been paid on my policy and I shall report you." Then the licensee will say, "We shall look into the matter. We must be careful to see that he does not get a duplicate cheque." Inquiries go on and this insurance crank goes round and says, "Here I have an admitted claim which will not be paid. It is now a month overdue," whereupon the insurance society becomes liable to the series of events, outlined in paragraph (b) of a most alarming character, as a result of which they may be dragged into court to vindicate their good name. Anybody who is familiar with insurance business will know that they have a complete vindication but they will be dragged into court.
On a point of order, I am anxious to know whether it is in order for the Deputy to raise on the section a matter which has been discussed and already decided on an amendment.
The House has already decided.
The question raised on that amendment.
I am now on the word "consciously." I am deploring the passage of this section without the insertion of the word "deliberately."
The Deputy can speak certainly to the section and, with some care, can speak to the amendment that has already been decided.
Let us forget the word "wilfully." I deplore that this amendment does not include the word "intentionally." I think I am fully within my rights in speaking to the section and in directing the attention of the House to the question of how much better the section would look with that word "intentionally" in it. I put it to the Attorney-General, on the section as it stands, that the absence of the requisite mens rea in that paragraph is a grave defect and that it should be rectified. It is not reasonable that the Minister should be free to condemn anybody for having culpably failed to pay when in fact failure to pay was the purest oversight and when he had taken every precaution that a reasonable person could take to comply with the Act.
The Attorney-General
I do not agree with the Deputy that such an objection can be raised on the section.
Question put and agreed to.
SECTION 20.
(1) Subject to the provisions of this section, every assurance company carrying on assurance business in Saorstát Eireann shall deposit and keep deposited with the Accountant of the Courts of Justice such one or more of the following sums as is or are applicable to the class or classes of assurance business so carried on by such company, that is to say:—
I move amendment No. 58:—
In sub-section (1), line 56, to delete the word "assurance" where it first occurs and substitute the words "Saorstát Eireann".
Amendments Nos. 58 and 60 somewhat cling together, and probably you would allow me, Sir, to discuss both of them on this amendment.
I was about to suggest that to the Deputy.
We can get a decision then on the matters in issue by relating them closely. The object of amendment No. 58 is to provide that the liability in respect of a deposit of £20,000 for life assurance business and industrial assurance business will be confined to Saorstát companies. The object aimed at in amendment No. 60 is to provide that the amount of the deposit shall be doubled in the case of foreign companies. Right through this Bill, it may be said that, at best, Irish companies are placed on a basis of approximate equality with foreign companies. At most, that is the benefit which Irish companies derive from the Bill. Ultimately, greater benefit may be conferred upon them because of the tendency of the Bill, but, for quite a considerable time, Irish companies will be in approximately the same position as foreign companies. My complaint is that, in respect of that apparent equality, Irish companies will suffer severely. To place a company with relatively limited capital, and with a relatively small volume of business, on terms of equality with a company having large capital and a large volume of business is to do injustice to the smaller company. In this particular instance we require wealthy foreign companies operating here to make a deposit of £20,000 in the courts in respect of two types of business, and we require Irish companies, with capital which is only a fraction of the capital possessed by the foreign companies and whose volume of business is small in relation to that of foreign companies, to make precisely the same deposit with the courts. If we are anxious to give Irish companies the benefit of special protection and preferential legislation with a view to encouraging their growth and assisting their development in every possible way, this is one of the respects in which we could usefully confer benefit upon them.
Under this Bill, Irish companies will be required to deposit in the courts a sum equal to that which foreign companies will be required to deposit. Although there is apparent equality in that, the imposition of this burden on Irish companies, having regard to their strength in comparison with foreign companies, is very onerous. I think the minimum the Minister might do in this respect would be to increase the deposit in the case of non-Saorstát companies.
I do not quite know how Deputy Norton makes out that doubling the deposits to be made by the foreign companies will benefit the Saorstát companies. The only purpose of the deposit is to prevent unsound or mushroom companies engaging in insurance business. It is not even a security to which policy-holders would look. They look at all the assets of a company, and not merely at the amount of money held within range of investments permitted by the court. I do not think that Deputy Bourke would agree that this provision would in any way assist the Irish companies. If there is an insurance reason for doubling the deposit, it must apply equally in the case of the Irish companies, and I notice that Deputy Bourke has down an amendment the effect of which would be to halve the deposit.
I can see no case for this amendment at all. In the case of the great majority of the British companies likely to qualify for licences under the Bill, the mere requirement that they should hold £40,000 instead of £20,000 within the range of a certain class of investments would make very little difference. In any event, it could not possibly be of assistance to the Saorstát companies, nor is there any necessity for it from the insurance point of view. There is, certainly, no necessity for it from the point of view of the protection of the people doing business with these companies.
I think that Deputy Norton's proposal would defeat its own object. The ordinary person will be guided by the reserve of the company. He will choose the company with the biggest reserve. Taking the ordinary prospective insuree, he would see in this case that there was a deposit of £40,000 by one company and a deposit of £20,000 by another company. I think he would go where the £40,000 was. For that reason, I think the amendment defeats its own object.
I do not know whether the insurance experts of Fine Gael entirely agree with Deputy Minch in that respect, because a deposit in the courts of £20,000 or £40,000 is not, in itself, an index of the solvency of a company. A bankrupt company might have £40,000 deposited there, and a solvent company might have only £20,000 deposit.
Is the Deputy arguing for or against his amendment?
I am dealing with Deputy Minch's argument. Unless the person about to insure were as guileless as the Deputy, he would not treat the deposit in the High Court as a factor in determining the company with which he would do business.
I can imagine an agent using that as an argument. They use worse arguments than that.
That may be, but I think the Minister ought to give a preference to the Irish company. A decided preference is given by the amendment to an Irish company by reason of the fact that the amount which is required to be deposited by it in the court is only half that which is required to be deposited by a foreign company. The amount of the deposit is, in no sense, a guarantee that the policy-holder can get satisfaction by going to the court, because companies write insurance business for many times £20,000. The amount lodged in court is no guarantee at all that the policy-holder can get satisfaction if the company fails, because, if all the policy-holder of a particular company were to attend court and ask for declarations of their rights, £20,000 would not go very far in satisfying the claims of those who might be heard in the first hour. The deposit is not intended merely as a sum to be available in satisfaction of possible demands by policy-holders. I think the Minister could confer upon Saorstát companies a certain benefit in this respect by not requiring them to lock up, as he does in this section, £20,000 for one type of business, £20,000 for another type of business, £20,000 for a still further type, and £15,000 for another type. It qq may not be possible for them to lock up those sums after this Bill is passed. Conceivably, some of them might be able to do so, and to get through the provisions of Section 12. In that way Irish companies might be required to lock up a sum of £55,000 with the Accountant of the Courts of Justice.
My objection to this section is that the Irish companies are going to have the name of having a benefit conferred on them, while, in fact, they are getting no benefit at all.
Amendment, by leave, withdrawn.
Mr. Bourke
I move amendment No. 59:—
In sub-section (1) (a), line 61, to delete the word "each" and substitute the words "either or both."
In this particular case the Minister has definitely worsened the conditions for the Irish companies as well as for all companies. But the conditions militate much more harshly against the Irish companies because their capital is so much less. It does not matter to the English and foreign companies whether the Minister insists on even a high figure—whether it was £40,000, £50,000 or £100,000, but in the case of the Irish companies, it is a very serious thing for them, particularly in their earlier stages, to have too great a proportion of their funds tied up in this way. Ordinarily they had only £20,000, but under this Bill the Minister is insisting upon an additional £20,000. That may not seem very much when the scheme is going through the House, but Deputies must remember that the more funds a company has at its disposal the more elastic that company is, the better it is for the company, and the sounder the business that is likely to be done. I think this is a wholly unnecessary provision so far as the Saorstát companies are concerned. The Minister has complete control over these companies, over the boards of directors, over the officials, and over their funds. In most cases their investments are completely in Saorstát concerns. The Minister can deal with these in any way he likes. The only effect following this provision of putting up the £55,000 is that, perhaps, a struggling company just when it is getting on its feet is faced with the difficulty of providing these extra deposits. In some cases £20,000 additional might be an embarrassment to them. The Minister made no case for the insertion of the provisions of sub-section (1) of Section 20, and I do not think he should insist on it.
The section provides for the deposit of £20,000 for one class of insurance business, and £20,000 for another class of insurance business. The purpose of the amendment would be to reduce that deposit by £20,000. The sum to be deposited with the Accountant of the Courts of Justice must be kept within the range of investments permitted by the court rules. It is clearly desirable that any company doing this class of business should have a substantial amount so invested. It is not unreasonable that a company which undertakes both life and industrial business should have investments in high-class securities amounting to £40,000. That is all that the requirement necessitates. The main purpose of this deposit is, as I stated in a previous amendment, to prevent the formation of unsound, mushroom companies, engaging in insurance business. There is the secondary consideration that a company doing this class of business should at least have £20,000 in respect of each class of business and that this money should be held in High Court securities, that is the class of securities in which funds deposited with the court must be invested. It is not an unreasonable requirement. On that account I am disposed to oppose the amendment. Any company which goes into this class of business here should have at least sufficient substance to invest without any undue hardship the amount specified.
Amendment put and declared lost.
Amendment No. 60 not moved.
Amendment No. 61 is similar to amendment No. 44, already dealt with.
Section 20 put and agreed to.
SECTION 21.
(2) Immediately upon the commencement of this Part of this Act, the Accountant of the Courts of Justice shall, in respect of every deposit retained by him in pursuance of the next preceding sub-section of this section, calculate and ascertain the market value at such commencement of the investments then representing such deposit, and shall forthwith give to the assurance company by which such deposit was so maintained notice in writing stating the amount of such market value so ascertained and the amount (if any) by which such market value falls short of or exceeds (as the case may be) the full proper amount of the said deposit and thereupon the following provisions shall have effect, that is to say:—
(a) where the said market value falls short of the said full proper amount and such assurance company, not more than fourteen days after receiving the said notice, deposits with the Accountant of the Courts of Justice a sum equal to the difference between the said market value and the said full proper amount, the sum so deposited shall be added to and treated as part of the deposit represented by the said investments and the said deposit shall be deemed to have been of the said full proper amount as at and from the commencement of this Part of this Act;
(b) where the said market value exceeds the said full proper amount, such assurance company may at any time within three months after receiving the said notice, apply in a summary manner to the High Court on notice to the Minister for payment of such excess and thereupon the High Court may either direct the Accountant of the High Court to sell so much (if any) of the said investments as will leave the market value of the residue of such investments on the day of such sale equal to the said full proper amount and to pay the proceeds of such sale (after providing thereout for the costs of such sale) to such assurance company or, if requested by such assurance company so to do, direct the Accountant of the Courts of Justice to transfer to such assurance company or some person nominated by such assurance company so much (if any) of the said investments as will leave the market value of the residue of such investments on the day of such transfer equal to the said full proper amount.
Mr. Bourke
I move amendment No. 62:—
To delete sub-section (2).
The provision in sub-section (2) might work out in a manner that may be very serious for a Saorstát company or indeed for any company. As a matter of fact, it may so happen that at the time when this particular part of the Bill comes into operation investments may be very low. Possibilities that we do not like to contemplate may have worked to depreciate securities. If a great war broke out we might find that there would be a considerable fall in stocks. If securities of the companies were to be valued at that particular time, it might be a very serious thing for them to be called upon to comply with the provisions of the Bill. The Minister in this sub-section uses the phrase "and shall forthwith." When the Minister wants a phrase to apply to himself he uses the words "as soon as conveniently may be." When dealing with the companies he uses the word "forthwith."
It is not dealing with the company. It is dealing with the Accountant of the Courts of Justice.
Who is to give notice to the companies?
Mr. Bourke
Well, perhaps the Minister would be prepared to reconsider the sub-section.
I am afraid the words do not make any difference to the companies. The word "forthwith" is used in relation to the Accountant of the Courts of Justice, not in relation to the companies. They are told they must do it in 14 days. What the section provides is that immediately on the commencement of the Act, the Accountant of the Courts of Justice will have a valuation made of the total sum of the deposits retained by him in pursuance of the section requiring the companies to make these deposits. If he finds that the market value of the securities lodged by him is less than the total deposit required by law, he shall forthwith give the company notice of that fact, and the company is required within 14 days to make up the total deposit to the necessary figure. The Deputy proposed to delete that sub-section. It is impossible to contemplate the deletion of that provision from the Bill. There is no point in enacting that the companies shall make a deposit of a certain sum, if the companies are not required to keep such deposit at the figure provided for in the Act.
Mr. Bourke
Does the Minister realise that this may mean great hardship to some companies if it happens that at the time the value of the securities of all kinds is considerably lessened owing to depressed conditions, and as a result of this provision they may be obliged to sell out certain stocks or shares, and some six or 12 months subsequently these securities may greatly increase in value? Does he realise that in order to comply with the provisions of the Bill, certain companies may suffer considerably in those circumstances? I am not so keen on knocking out this sub-section if we could get an undertaking from the Minister that the period of time will be further extended. I think the period of 14 days is very short when you are dealing with securities, the value of which fluctuates so very much.
It is nominally a period of 14 days. I am sure the managing director of every insurance company has studied the provisions of the Bill. I presume they know the market value of the securities deposited with the Accountant of the Courts of Justice at the present time, and they will have adequate time to make whatever provision is necessary to ensure that they will be able to meet whatever demand may be made on them.
Is it not a continuing section?
This section provides for the procedure which is to take place immediately upon the commencement of this part of the Act. It deals with the situation where there are deposited with the Accountant of the Courts of Justice certain deposits. Sub-section (1) provides that these deposits, which were made with the Accountant of the Courts of Justice by the various insurance companies which are required under this Bill to make deposits, may be deemed to be deposits made in pursuance of the provisions of this Bill. Sub-section (2) provides that immediately this Bill becomes law the Accountant will carry out a valuation of the securities lodged with him. If their market value is less than the required amount as provided in paragraph (a), he gives notice to the insurance company concerned, and if the market value exceeds the amount to be lodged, then provision is made to deal with that situation in paragraph (b).
Amendment No. 62, by leave, withdrawn.
I move, on behalf of Deputy Dillon, amendment No. 63:—
In sub-section (2) (a), line 17, to delete the words "fourteen days" and substitute the words "six months".
I want to make briefly the point which Deputy Bourke made incidentally. Fourteen days seems a short period. One does not know what is going to happen to securities that are deposited, and the 14 days must be taken in conjunction with the word "forthwith". The Accountant sends on notice where the securities fall short of the amount required. What is the necessity for the 14 days? I do not know that there is any special sanctity about six months excepting that it is a longer period and, therefore, it is more elastic than 14 days. If the period were not more than six months, and in cases of emergency some powers were given to the Accountant to move in some court, then the matter might be all right, but it seems to be difficult to justify the making good of these moneys inside a 14- day period.
While I am on that, I want to point out that this section, I gather from the last phrase, has application only to the deposits discovered to be there at the commencement of the Act.
The section relates to deposits already made under the 1909 Act.
There are provisions with regard to deposits where they are found to fall short. This relates to the transfer of existing deposits?
The transfer of deposits already maintained, a transfer that is now made compulsory in consequence of this measure? That, of course, takes away a certain amount of the difficulty I had, but nevertheless, even though what the Minister says has a certain weight, that the 14 days period is nominal— in other words, that the measure is passing, and it will take some time to pass, and they can value their own deposits and make whatever preparation is necessary—still, although I do not know whether the companies feel they are going to be in difficulties, I do know that the companies as a whole felt that the period of 14 days was far too short.
I cannot see that there is any force in that. The Bill sets out that any company carrying on assurance business in Saorstát Eireann shall deposit and keep deposited with the Accountant of the Courts of Justice certain sums. This section deals only with a certain narrow point. Certain companies have already made deposits under the 1909 Act, deposits which, if they continue in business—and I presume they will —they will also have to make under this measure. This section will deem the deposits already made under the 1909 Act to be deposits under this measure. This provision sets out that at the time the transfer takes place the Accountant of the Courts of Justice is required to carry out a valuation of the securities lodged. If he finds the market value of the securities is less than the amount which should be deposited, he requires the company to make good the deficiency. If the value exceeds the amount required, the company can apply to the court for the release of the surplus. There is really no necessity to increase the period of 14 days to six months. To do so would be inconsistent with the main provision in the Bill, which requires that a company shall maintain this deposit.
That is not in this Bill?
It is in this Bill. The companies are required to make this deposit "and keep deposited with the Accountant of the Courts of Justice..."
Is there being carried into this Bill so much of the general sections of the 1909 Act as allowed rules to be made regarding these deposits? What is the procedure with regard to the making good of deficits?
Section 22 provides for the making good of any deficiency resulting from a payment.
What is the position in the event of the deposit depreciating?
There is no obligation to maintain the deposit, and that is why this valuation has to be made at the commencement of the operation of the Act.
They may go down to half nothing, and they are still good deposits under the 1909 Act. Up to this, if there was depreciation they had not to make that good. Is it not a hardship on the companies here that they should have to do it now on receiving 14 days' notice?
It does not necessarily apply to Saorstát companies only. It may apply to any company. We are renewing the provision that securities to the value of £20,000 must be lodged, and it is not unreasonable to provide that the lodgment should take place forthwith, which means, in this case, 14 days, by a company that is continuing to do business here.
The Minister said earlier that the primary purpose of these deposits was to test the financial standing of a company. It is not as if we apprehended serious danger, of the backing of risks suddenly melting away in the case of securities in the hands of the court. That was not the primary purpose. The primary purpose was to put them on their test as to whether they were able to put up this sum of money.
With the secondary consideration that they should at least have that amount in.
In the case of the securities lodged with the Accountant-General of the High Court by an insurance company there may be a temporary fluctuation in the value of them. It does not seem reasonable to require it on receiving 14 days' notice to give new securities to the court, and put it to the trouble of getting these new securities out again if the passage of two or three months would bring the existing securities in court well above the stipulated sum. It seems to me to be a question between 14 days or a month or two months. The insurance companies feel that 14 days is too short a time.
Six months is undoubtedly too long.
The companies would be glad to meet the Minister on this. They do not want to protract anything unduly. There is no question of the policy-holders being put in jeopardy. It is merely a matter of casual convenience. If the Minister says that in three months he wants these matters wound up and disposed of, I am sure they would meet him on that.
They are not required to do this 14 days after the passage of the Bill, but 14 days after they have received notice from the Accountant-General.
The Act passes immediately, and the Accountant makes an investigation forthwith. He gives notice, and after 14 days this provision operates.
Is it not reasonable to assume that each company knows the market value of its deposits held by the Accountant-General at the present time?
No doubt. The difficulty that I am in is this, that this Bill purports to repeal certain sections of the 1909 Act. One of the sections of that Act which is not repealed is the section which says that companies "shall deposit and keep deposited," and then there is a sub-section of that section, which says that "rules may be made with regard to applications for warrant payments on deposits, the investment of them," and so on. That is imported into this Bill. In addition to that we have in Section 20 the provision which says that "each company carrying on insurance business in the Saorstát shall deposit and keep deposited, etc." I understand the situation is that once you deposit up to the amount of the £20,000 it does not matter what happens to it afterwards.
Unless for some reason a valuation is carried out such as to meet payments under Section 22.
The law under which the companies have been operating was this, that if the £20,000 depreciated in value to £10,000 or £5,000 that did not matter, but now suddenly there comes this measure, and what I would like to know is what is the reason for interrupting the old scheme of the 1909 Act, particularly as Section 2 of it is not repealed. Under this Bill they are going to have a new valuation, and the whole matter is to be cleared up 14 days after the commencement of the Act if the Accountant-General acts forthwith. If, under the old scheme of the 1909 Act, it was not considered bad or derogatory to the companies or wrong to the policy-holders if the £20,000 deposited depreciated to £10,000 or £5,000, why say that it is bad now? It is not completely new business. All these deposits were made before under Section 2 of the 1909 Act. Why should this change be made suddenly? At any rate, is there not a case for some consultation with the companies to see what difficulties any one of them may have, and to extend the time so as to enable it to meet its difficulties.
It is entirely incorrect to say that this Bill came suddenly on the insurance companies. It did not by any means come suddenly on them. No company will be in the position that it is going to get an unexpected 14 days' notice to the effect that it has to put up a certain additional sum of money to make good the full amount of its deposit. These companies know, just as well as the Accountant-General of the Courts of Justice, the present market value of the securities which he holds on their behalf. They have had notice from the date the Bill was published that they might be required to make good any deficiency between the market value of their securities and the full amount of their deposits. They have had adequate time to make complete arrangements to meet that situation if and when it should arise.
Is that a matter of substance?
I think it is a sound principle to provide that from the commencement of the Act new deposits will be required from all the companies licensed under the Act. We are introducing the system of licensing for the first time, and that being so, we must ensure that the existing deposits made under the 1909 Act by a particular company and transferred and deemed to be deposits under this Act are at least of the value which the deposits should be. That is the whole purpose of the section.
The Minister says that the insurance companies are well aware of this provision. No doubt some of them are. I suggest to him that a reasonable time should be given to them to carry out the provisions of the section, and that if he thinks six months is too long I think 14 days is altogether too short.
In fact they have two years.
If they have, I am wasting my time talking about 14 days.
The Act does not come into operation on the day that it is passed. It will be brought into operation some time subsequent to that, so that if any of the companies have any difficulties they will have had adequate notice to make arrangements to overcome them between the date of the passing of the Act and the date of its coming into operation.
That is where I join issue with the Minister. Some of the companies will be familiar with the provisions of this measure, but I imagine that the average insurance company will wait until it is served with the notice laid down here. When that is done it will be necessary to summon a meeting of the board. That will take some time. Then in the case of some it may be necessary to make an Order possibly with regard to a power of attorney or something else. Arrangements may have to be made to attend at a bank, and an order may have to be given to a stockbroker to buy a certain amount of stock. The stockbroker may want a few days to acquire stock. The transfers will then have to be made and lodged. I suggest that 14 days are altogether inadequate to make all these arrangements. The Minister seems to think that the average insurance company will look each day at the state of its securities, just as one would look at a barometer. In that case, that insurance company will just about be able to do it in 14 days, but I would suggest that for the ordinary company 14 days is entirely too short. There is no necessity for cutting it so short, and I suggest that a reasonable extension should be made.
Will the Deputy agree to four weeks?
Make it three months and have done with it.
I will double it and make it one month.
What is the difference between four weeks and a month?
A month would be reasonable in all the circumstances, and I will bring in an amendment to that effect on the next stage.
Bring in an amendment and make the period as long as you can.
Amendment, by leave, withdrawn.
Amendment No. 64 not moved.
Section 21 agreed to.
SECTION 22.
(1) Whenever a court makes an order, decree or judgment for the payment of money by an assurance company to any Minister who is the head of a Department of State, or to a statutory body exercising any function of government or discharging any public duties in relation to public administration throughout Saorstát Eireann or for the payment of money by an assurance company to any person in respect of a claim under a policy issued by such assurance company, the High Court may, on the application in a summary manner of such Minister, body, or person (as the case may be), order such money (with or without the costs of such application) to be paid to such Minister, body or person out of the deposit or any particular deposit maintained by such assurance company in pursuance of this Act.
I move amendment No. 65:
In sub-section (1), page 18, line 52, before the word "the" where it first occurs, to insert the words "or for the payment of money by an assurance company to any employee of such company in respect of wages or other remuneration."
I put this amendment down to raise the question as to why money deposited by insurance companies in the courts may be utilised in satisfaction of certain orders, decrees or judgments of a court, but may not be used to satisfy an order, decree or judgment in respect of payment of money due by an insurance company to an employee of the company in respect of wages or other remuneration. Section 22 provides that whenever the court makes an order for the payment of certain moneys in respect of certain types of debts, the High Court may, on the application of the person concerned, pay such money out of the sum deposited by the company; but it seems to me that a person might go to the courts and sue in respect of money due to him as wages or other remuneration, and the courts would not have power under the section to pay the money out of the deposit. I should like the Minister to explain why there is a differentiation in the methods of treatment.
Might I make the representation to the Minister that the section is bad as it stands? If it is amended according to Deputy Norton's amendment, it will be very much worse, because, while it is true that the primary purpose of putting up a deposit is to satisfy the community that the insurance corporation is a solvent body, it has a secondary purpose, as a guarantee for the policy-holders that there is a substantial sum of money there to meet any claim that may arise on foot of the insurance contract. That money should not be susceptible to debts of the kind set out in the section or to debts referred to by Deputy Norton. The policy-holders have first claim against the assets of a company in respect of the policies they hold, and, after those have been exhausted, the creditors may come against the company for the balance.
Surely a debt in respect of wages would have preference?
Not as against the deposit.
In a bankrupt under taking?
Where the money was specifically put up as a guarantee for money put in as security, certainly not. Otherwise, you will have people who have taken out industrial insurance policies being robbed of the moneys they have been laying by for years, in order to pay off the Minister and managing directors who are drawing £5,000 a year and recovering judgments against the company for five or six years' arrears of salary due to them before the company finally went into the ash-can.
The Deputy is surely wrong when he says that wages do not rank first in the matter of claims on a bankrupt company?
I do not think the ordinary rules in bankruptcy apply.
Wages have a prior right on liquidation.
I am surprised at that. I do not think that, when you are dealing with industrial insurance particularly, a managing director, who has allowed his salary to run into arrears for five or six years, while he was watching the company for which he was supposed to be responsible slowly drifting downhill, should be allowed to obtain £25,000 from the deposit.
If it is, it is bad, and let us change it.
I suggest to the Deputy that it is a mythical director he has in mind.
Do not be too sure. The Minister might give the Deputy some remarkable information on that subject. Does the leader of the Labour Party think that when dealing with an industrial insurance fund you ought to allow a gentleman one-quarter of it in respect of his fees, and perhaps distribute the rest amongst a few shareholders who were holding nominal positions as servants of the company on wage claims, and then inform the industrial policy-holders that there was nothing left and that the company was bankrupt? If that is the law, it is bad law. I say again that to develop as against the deposit is bad law; to give the Minister the right to recover against the deposit in preference to the policy-holders as proposed in this section is bad law, and should not be enacted. The Minister has power under Section 19 to wind up a company if it fails to pay its judgment debts, and he can do that in the event of any failure which Section 22 proposes to remedy by allowing him to go to the High Court and get payment from the deposit there. If the stage is reached at which the Minister must have recourse to the deposit in the High Court, in order to recover a judgment debt, surely the time has come to wind up the company, because, there, there is a case where the company is flagrantly holding out on debts that have accrued due and notifying the Minister, personally and directly, that they are either unwilling or unable to meet legitimate debts. I strongly urge on the Minister not only to refuse to amend this section as Deputy Norton suggests, but to take the section out of the Bill, and, in so far as wages have a preferential claim on the funds of an industrial insurance company, to alter the law, and make them a secondary claim, in the event of a winding up.
It is not merely an insurance company.
The general bankruptcy law, I know, but I think we ought to have a special bankruptcy law in relation to insurance companies where very peculiar circumstances arise, as, I think, special steps should be taken in the case of a savings bank, where very peculiar circumstances surround the situation, because, bear this in mind, the wage-earner will never be more than a week in arrear in his wages, so that the wage earner, in the true sense of the word, will be a person whose stake is perhaps anything from £2 to £6 outstanding; but the gentleman who may get away with practically the entire deposit is a corrupt director or manager who has been consciously mismanaging the company for years, believing that when the time comes he will get away with the deposit and leave the policy-holders to whistle for their money.
I am afraid I could not accept this amendment. If Deputy Norton wants to advocate as a new principle that employers should deposit funds in court in order to satisfy claims arising in respect of unpaid wages, I suggest that the principle should be applied not to insurance companies in the first instance. While it is quite proper that a court judgment in respect of a sum due by an insurance company to the State or to a policy-holder should on application be paid out of the deposit by order of the court, I do not think there is any good reason why that provision should be extended to the payment of wages due by a company to its employees. This would introduce a new principle which would have more general application than was proposed by Deputy Norton.
The Minister is introducing a new principle in the section.
The Deputy wants to put a company into the position which was described by Deputy Dillon. It is quite true, as Deputy Dillon says, that if someone has to get a court order against a company for payment that company is finished. The publication of the case in the newspapers would mark the end of it. In that situation the company would have to be wound up and the Companies Act provides that there should be paid, prior to all other debts, first local rates and income tax and things of that kind, and secondly wages to any clerk or servant in respect of service rendered to the company within four months of the winding up, not exceeding £50.
If the State is owed money by an insurance company, it may make such representations as the appropriate Minister deems desirable to the company. If the company persists in ignoring the claim, the State can take the company into court and recover at the discretion of the court, money due to the State Department. A policy-holder who has complied with the terms of this contract, if the company refused to pay him on foot of that contract, may go to court, and the court has a right to satisfy the claim of the insured person if it so decides. That is the present position. A person who is owed wages can go to court, and can say: "The company owes me wages; it has not paid my last week's, or a number of weeks', wages; it has deprived me of remuneration on foot of the contract I have with the company," and the court is entitled to order the company to pay. All these people, at present, can go to the court to get a measure of satisfaction from the court, and the court is entitled to satisfy their claim against the company.
Why put the employees of an insurance company in a different position from those of any other company?
The employee is already in the general category with the State and the policy-holders. But he is in a preferential capacity when a company goes bankrupt because wages are a first charge upon the bankrupt concern.
Up to £25. But this section—and the section provoked the amendment; the amendment would not be there except for the section—says the court may now pay to the State its claim out of the deposits paid by the company.
The amount of the judgment.
The amount of the decree made by the court, and it says that the policy-holder can come into court and have his claim satisfied. But the wage-earner who ranked equally with the State and policy-holder, and in the case of bankruptcy ranked before the State and the policy-holder, is now put at the end.
In bankruptcy, he does not rank before the State.
He would in respect of certain types of debt.
With debts due to the State?
With baronial rates, cess, property, and income-tax.
But the State might render some types of service other than tax. The wage-earner is not equal with the State in this section. The State comes in and takes its debt. The policy-holder comes and takes his debt, but the worker for wages is not entitled to recover money out of the assets. You are putting the workman in a worse position than he was ever in before. I am not seeking to introduce a new principle, I am seeking to get the workman into the same position as the State and the policy-holders. It is the Minister who is putting him behind now, and putting all those other people in front of him. As I said, it is the unusual character of this section that provoked the amendment. I suggest to the Minister that he should look into this section. I would prefer it out altogether because it puts the workman in a totally different position from what he was.
Not in a different position from any other creditor of the company, apart from policy-holders.
Is that all he is entitled to?
The employee of an insurance company is not in a worse position than any other employee.
You are putting him in a worse position.
Nonsense. The money is not deposited to secure the employee's wages.
I would have preferred to make any remarks I have to make upon this section instead of on the amendment proposed by Deputy Norton, but I want, now, to make one or two observations on the amendment. The Minister tried to refute Deputy Norton's amendment on the plea that the words "other remuneration" would include thousands of pounds of fictitious remuneration.
It must cover commission.
The word "remuneration" was the subject of a rather wide decision in the Supreme Courts last week, and would cover all kinds of cases mentioned by Deputy Dillon The Minister tried to refute Deputy Norton's argument by saying that the deposit was not made for the purpose of security for the wages of workers, and that it was put there for the purpose of guaranteeing State debts.
The Minister tried to answer Deputy Norton's case by saying that the additional security to the State does not cover wages. Surely the whole section introduced an entirely new principle that does not appear in any other Act. Not merely is the State, as the law stands, to have an immediate preference in the winding up of these companies, but, in fact, its claim is a Crown debt. The State here takes advantage of the prerogative of the Crown in respect of that. But they are not satisfied with the prerogative of the Crown, they want to create a new prerogative for themselves. Not only are they to get away with the payment to the Crown in favour of a Department of the State. but on the construction of the section they are creating a prerogative in favour of the county councils. I intended to ask the Minister on what particular grounds does he seek to justify the introduction of this section which is one of the most extraordinary provisions of the Bill, when he has at the moment the statutory provision he has read out, and in addition to that, where it is not covered by this statutory provision, the prerogative that attaches to Crown debts? What is the necessity for putting in this new statutory prerogative in reference to debts due to a Department of State, and not merely a Department of State, but bodies performing duties in relation to public administration?
These three or four sentences are taken, as far as I recollect, from one of the sections of the Ministers and Secretaries Act dealing with an entirely different subject matter. In the context in the Ministers and Secretaries Act the words would clearly be held to be limited to bodies discharging the duties of Government. But here in this section, divorced from the context of the Ministers and Secretaries Act, these words can apply to a county council or a board of health. If the Minister indignantly repudiates Deputy Norton's amendment on the ground that the deposit was not to be made as a security for the wages of workmen how does he say that the sum deposited ought to be a security for debts due to a board of health or a Department of State? I fail to see any distinction. The Minister says that a new principle would be introduced by Deputy Norton's amendment. Perhaps it would. But a very much more fundamental principle is being introduced here, and I think the Minister ought to justify it when we come to discuss the section.
This section does not necessarily apply only in the case of a company in liquidation. When a company is in liquidation, the wages and salaries are protected to a certain extent, and so also are State debts, debts due to the State in respect of taxes or local rates. What we are proposing here is to give the State or the local authority the right, if it gets a court judgment for a particular amount to apply for payment of the debt out of the deposit lodged. I think it is not at all unreasonable that the State and the public authority should have that facility.
Why as against the private individual?
It is not against anybody.
If there is liquidation, the priority of the various claimants is fixed by the Companies Act. If there is no liquidation, they are not collecting the debt as against anybody.
Why are they? If there is no liquidation, it is not against anybody.
We assume that the company is able to pay its debts.
Why get it out of the deposit that is security for the policy-holders if it is able to pay?
If the company fails to pay a debt due to the State or a local authority we give them the right to get payment out of the deposit and the company, in these circumstances, is then required to make good the deposit in order to continue business.
Why not give the workman the same remedy?
I am dealing with circumstances in which there is no question of the company being in liquidation. If it is in liquidation, the Companies Act applies and the provisions of the Companies Act protect, to a limited extent, wages and salary claims.
Will the Minister say why a workman who gets a decree in a court cannot have that decree satisfied out of the deposit when the State and a county council can?
Why should a company be put in the position that it has to deposit money to meet claims for wages when no other employer is put in that position? If any other employers had to deposit a sum in court to meet claims in respect of wages there would be something in the proposal.
Why give it to the State? What you say would be equally applicable if you substitute the State for the worker.
Except that the State is obviously in a different position from an individual.
There is no good reason, therefore, why this innovation, as the Deputy called it, should not be adopted and the State given the right to collect it in this way. I think it is a good principle to adopt.
I think it is a most vicious principle. The Minister has made an absolutely pathetic defence of the section. He has been compelled to admit that this deposit was not placed there to be raided by the State or by a local authority in satisfaction of debts. Yet, in fact, he proposes to use it for that purpose. The local authority is to be able to raid this deposit; the State is entitled to raid the deposit; but the ordinary humble workman, to whom money is due by a company for wages, is not to be entitled to ask the court to pay it out of that deposit. The Minister, as a matter of fact, is reversing the whole normal process for recovering debts by the special privileges which he is extending to local authorities under the section.
Does the Deputy object to that?
I object to the inferior position in which the Minister puts the wage-earner in relation to the State. The Minister is prepared to allow the State to collect debts from the sum deposited, and to allow the local authority to get away with whatever is due to it from the deposit fund, but the ordinary workman is not to be entitled to ask the courts to pay him his hard-earned wages out of the deposit. The Minister is obviously putting the workman in an inferior position. Not satisfied with doing that, he puts him in a still more inferior position by elevating the other two classes of possible claimants to a privileged position to the detriment of the workman.
If the company is solvent, the worker can collect under his judgment all right.
Why should not he collect it in the same way as a rich organisation like the State or a local authority? Will the Minister tell us that? What is the case for a wealthy organisation like the State to be put in a specially privileged position as against the ordinary workman?
It is not against anybody.
Of course it is against somebody, when you acknowledge special claims from two sections and deny that to the man who has the least money. It is a vicious section.
If the Deputy will contemplate the circumstances in which a company is not bankrupt and can pay all its debts.
That is what I have been contemplating.
The Minister has given no reason for the section. Throughout the entire discussion on the Bill, wherever he has not been able to defend a provision, he merely resorts to the statement that it is a good principle. Again and again that is the only satisfaction we get, that it is a good principle. He never tells us why it is a good principle. We know why he says it is a good principle. He thinks it is a bad principle, and therefore he says it is a good principle.
If the Deputy says it is a bad principle, will he tell us why?
I shall at the appropriate moment. The Minister stated in reply to Deputy Norton that if the company is solvent the worker can get his wages in the ordinary way. Therefore he says that this section does not interfere with him. If the company is solvent, why does not the Minister adopt the ordinary remedies open to a creditor in the courts, just the same as the worker? Why is there a necessity, if the company is solvent, for the Minister to get this particular class of remedy as against every other creditor, including the worker? The Minister says that the Department of State does not get this privilege as against anyone. Of course it does. If the company is solvent, then it does not matter from what fund the creditors, including Departments of State and workers, are paid. But no company is very solvent against whom a judgment has been got.
The reason why a judgment is got against a certain person is in order to get priority, in order to anticipate possible bankruptcy and insolvency, in order to get your full pound of flesh, your 20/- in the £, rather than to have to rely upon getting a dividend in bankruptcy. That is where the benefit comes in, and where the privilege that the Minister is taking comes in. The Minister says that this is not getting a privilege against anybody. Of course it is, because when the Minister has to sue a company, that company is on the downward path, and the object of getting judgment against that company is to get it in quickly before the company is declared to be insolvent, before the machinery dealing with insolvent companies begins to operate, when he will be in a position, if he hurries up, to get 20/- in the £. If he waited for a few weeks, or even for a week, perhaps he would get only 5/- or less. That is where the worker will be hit.
For this reason—the State gets in first.
No. The receiver must pay the wages in priority even when there is no judgment.
Will the Minister stick to the point he put in justification of this section—that he is not getting this as against anyone? If there is insolvency, then the section that the Minister quoted operates, but if there is only a downward tendency towards insolvency, the Minister gets in quickly with his judgment, gets paid quickly, the crash comes and the worker does not get paid because he has no section of this kind to operate upon. He relies on his priority, given by the statute, in the winding-up of the affair, but the Minister, before that time comes, has at the expense of the policy-holders, at the expense of the workers, and at the expense of the other creditors, got his 20/- in the £, leaving the other people to get perhaps only 1/- or 6d. He will have got the full amount out of a certain pocket named in the section. If the Minister pretends that this section is not giving any additional privileges to the Departments of State, he either does not understand the section or he is deliberately misleading the House.
The Deputy is assuming that all the assets of the company are represented by the deposit.
There is also another point which has not been referred to at all. The Minister is definitely going to operate this section, if he does operate it, to the detriment of the policy-holder.
Will the Minister read the section and will he remember his own statement that this money was not deposited to meet claims for wages or to meet claims by the State; it was deposited for the policy-holders? The money which was deposited as security for the policy-holder is going to be raided by the State.
The policy-holder is given equal rights with the State.
But the money was put there for the policy-holders and not for the State.
The Minister's statement is that it was put there exclusively for the policy-holder. The Minister is changing his ground every two minutes as the debate progresses. The usual complaint which is made in the ordinary way is that there is not sufficient to provide security for the policy-holders. Now, little as that sum is, the Minister wants to reduce it still further, and leave a lesser sum available for the policy-holders. I should like the Minister to address himself to that particular aspect of the matter.
Would the Minister take this amendment and consider it in connection with this section?
It is quite obvious from the Minister's attempt at defence of this section that he probably read it for the first time this evening. He has made half a dozen efforts to justify the section. He puts up one defence, and in a moment or two it is penetrated. Then he makes another defence, only to drop that too. He has put up half a dozen separate defences of this section, and it is clear from his silence on the section that he is not satisfied with one of the defences which he has put up.
Whatever amendment is made to the section it will not be the one suggested by the Deputy.
Take out the section altogether.
I am not concerned with asking the Minister to accept this amendment, although I think it is a million times preferable to the section. I remember the days when the Minister was on the other side of the House——
——and if he then met a section like Section 22 in a Bill there was not a thermometer in the country that could take the Minister's temperature.
Does the Deputy mean it would have left me cold?
The Minister would have burst any thermometer which they put under his arm or in his mouth if he met a section like this in those days. He has put up half a dozen separate defences——
——and he is obviously not satisfied with one of them. As Deputy Costello said, he relies on the device of saying that the amendment is unnecessary and that the section embodies a good principle. The Minister knows perfectly well it is a rotten principle; it is a vicious principle. He knows that he is putting the State in a privileged position, and putting the workman in a definitely inferior position. The Minister ought to admit his lamentable effort here this evening to defend this section; it was obvious both to himself and everybody else. He ought to take this section back, and with it the amendment, and produce a section which will at least leave the law as it stands; or, if he is going to amend the law, he should at least put the workman in as good a position as the State, or as the local authority or the policy-holder. The whole section is to make it possible for the State to get its debts paid easily, while it is worsening the position of the workman, of the other creditors, and of the policy-holders. I think the Minister should reconsider the amendment in connection with the section.
I want to ask the Minister one question. It seems to me that this amendment by Deputy Norton has gone around in several directions. It is not only a question of the half dozen defences which the Minister made; I have heard different points raised in connection with Deputy Norton's amendment. There is one thing I want to get clear, and it is this: If a company cannot pay a weekly wage has it not gone bankrupt?
That is why the Minister wants to get in first.
No. The receiver gives the worker and salary earner priority.
There is a marginal note which says:—
"Payment of judgment debts out of deposits."
That is really the kernel of the matter. I am in rather a difficulty over the amendment and the section. It seems to me that the enterprising burglar goes a-burgling.
He loves to lie a-basking in the sun!
It seems to me that the Minister has thought out a way by which, if a company is on the downward grade, he may get in ahead of the policy-holders and ahead of the bankruptcy crash. There is no doubt, as Deputy Norton says, that if an employee has to sue for his wages there is not much use in talking about the solvency of the company.
That is what I was getting at.
The express purpose of raiding this fund in this way is to get in and out ahead of the bankruptcy proceedings. My attitude is that I say to the Minister and to Deputy Norton "a plague on both your houses."
This fund is sacred for the policy-holders, and ought to remain as such. I just wish to make my position clear, because certainly I think that Deputy Norton—and I sympathise with him—has been attracted by the smell of the jam.
Is the amendment withdrawn?
Will the Minister look into the point?
I am not undertaking to adopt the Deputy's amendment.
I am asking the Minister to look into the point with a view to leaving the workman in his former position vis-a-vis the State.
Amendment, by leave, withdrawn.
Question proposed: "That Section 22 stand part of the Bill."
May I join my voice with that of Deputy Dockrell? It is simply a question of the burglar going a-burgling. There can be no defence whatever for allowing a board of health or a county council to take what they want out of a deposit in the High Court which has been put there, by virtue of a statute passed in this House, to give confidence to the policy-holders in assurance companies. The only purpose of putting it there was to give the policy-holders a certain modicum of security. This House having first provided for the making of the deposit then proceeds to open a trap door under it through which persons other than those for whom the deposit was put there can go in and strip the cupboard bare, and leave the policy-holders, when they go to get their final guarantee, to find that there is nothing there and that the whole thing has been swept away by people who gave credit or allowed debts to accumulate long after their policies first became current.
Is this a new piece of legislation or is it carried over from some other Act of Parliament somewhere else? Wherever it comes from, it is bad, and if it is a reproduction from something in an older Act of Parliament, it ought to be repealed and done away with. I think that the Minister ought to withdraw this section and that he should leave the deposit sacrosanct as against all debtors, bearing in mind that he has the power, within one month, to start proceedings to wind a company up.
If it fails to pay a claim on an insurance policy, yes.
Cannot you do it as a creditor?
It is not the Minister for Industry and Commerce——
In any case, if a Government Department has a claim against an insurance company, or if a board of health or a county council has a claim against an insurance company, they can take effective steps to put that insurance company into bankruptcy, if the insurance company is not in a position to keep its obligations, and take their chance under the bankruptcy law.
Which gives them priority.
Well, let the ordinary bankruptcy law apply, but there is no reason why they could go to the deposit and deplete that unless there is time to allow the ordinary operation of the bankruptcy law to apply. What the exact effect of the Bankruptcy Acts in regard to the winding up of an insurance company of this kind would be, I do not know. I know that, in an ordinary bankruptcy, Crown debts have a priority, but I do not know that county council debts have the priority that is conferred on a Crown debt. It is admitted that a debt due to the Crown—and for the moment the Minister represents the Crown— has a priority in bankruptcy proceedings. To tell you the honest truth, that is an arrangement that I always thought extremely strange, because why the Crown should have that preference, I do not know; and why the Minister for Industry and Commerce of Saorstát Eireann should claim such a preference in the name of the Crown is something that I find very difficult to understand. The Minister has that under the existing bankruptcy law, and I think it is a bad law. It is one of the prerogatives similar to that which denies a citizen the right to sue a Minister except by petition of right. We have abolished that particular prerogative in this country in a previous Act, and I do not see why this other and similar prerogatives should be retained.
There is no reference to the Crown in the relevant section of the Companies Act at all.
That is a bad point, like all the Minister's other points.
Is not the preference which the Minister enjoys in bankruptcy proceedings a Crown prerogative?
It is based on a section of the Bankruptcy Act.
And this Section 22 is an endeavour to carry into this Act a Crown prerogative, which is quite contrary to the general trend of legislation here—and in Great Britain, for the matter of that, where it has been discovered that these prerogatives have become archaic and, in fact, work hardship. There is no reason why the Government, which is owed, say, £1,500 or £2,000 by a large insurance company, should have the right to go in and take that money, thereby leaving the labouring man, who has been paying his money into that company for so many years, short of what he is entitled to, particularly when the Government goes to that deposit on the strength of the workingman's having paid his money into the insurance company. That seems to me to be as plain as a pikestaff. If the bankruptcy law gives the Minister the right to do that, then I think that law should be amended. In Section 22 we are being asked specifically to re-enact that law, and I strongly object to that. In that connection, I would remind Deputies that, when we were asked to pass the Workmen's Compensation Bill, we put into that Bill a special section stripping the Government of the Crown prerogative which protected them from actions against a Minister in respect of damages that might be done by vehicles belonging to the Post Office, and so on.
The Deputy is referring to the Road Traffic Act, and it was not his Party that put in that section. It was the Government itself that put it in the Bill.
Well, I am sufficiently archaic to look upon the Oireachtas of the country as the legislative body. I know that the Minister, knowing that coming events cast their shadows before them, likes to cast his shadow on the floor of this House, and would like to give the impression that he is responsible for this thing. In any event, the effect of it was to strip the Government of that Crown prerogative.
I should say rather that the Government divested itself of the prerogative.
In any case, whoever did it, it was a move in the right direction and a move of the kind that is being made in every democratic country. It is the trend in Great Britain and everywhere else to do away with these archaic prerogatives. This is an attempt to rehabilitate a mouldy prerogative of that character, which has no relation to modern conditions, and I strongly oppose the enactment of this section of the Bill.
I was taught, when I was a student of British constitutional law, that the prerogatives of the Crown had become the privileges of the people. I admit that it was British constitutional law, but, apparently, the constitutional law now being operated by the present Irish Government is quite the opposite, because the present Government here is grasping to itself all the old prerogatives of the Crown and, not merely taking them as Crown prerogatives, but adding to these prerogatives a supplementary security by way of statutory enactments. That is what is being done here.
Perhaps the Deputy will remind us of the song: "We'll Crown de Valera King of Ireland."
The Minister, so far, has not given us any reason for the insertion of this section. I assume— and, I think, quite rightly—that we may remain here until 10.30 to-night talking about this matter, and even all of to-morrow, and we will never get any reason from the Minister for this section. I think the real reason why we cannot get an explanation was that mentioned by Deputy Norton, that the Minister saw this section for the first time to-night, and that this came as a considerable surprise to him.
I have been explaining the section for the last half hour.
Explaining! To avoid displaying any more ignorance than the Minister displayed in the last half hour would be quite impossible. He displayed complete ignorance of this section and of its effect. He carefully avoided giving any reason for it. The real reason he will not tell us; that he knew nothing about the section.
Perhaps we could leave the discussion over until to-morrow to give the Minister more time to read it.
I have nothing to add to the very lucid statement I made.
You have nothing to add to the very lucid statement you did not make. This is really becoming a bit of a joke, but it may be a very serious matter when the Bill comes into operation. I think I know precisely what has happened. In the ordinary course of Departmental procedure the draft of the Bill was sent to the Department of Finance for comment, and out of a little pigeon hole kept by the Minister's officials for matters of this kind a section of this kind was extracted. That was put in as part of the Department's comments. That is how this section got into the Bill. The Minister thought he would try it out on the House, just as the other section was tried on the Irish dog. There is no justification whatever in principle for a section in connection with State debts. It was pointed out that these deposits are there as security for the policy-holders. The section with which we are dealing recognises that principle, because it provides that debts due to policy-holders are to be paid out of deposits, but superadded to that is the privilege given to the Minister definitely and to the State, to county councils and boards of health. The Minister said that this makes no difference as between himself as Minister of State and any other creditor. If it makes no difference why put it in? Perhaps we could get some explanation of the proposals.
I have not heard what the Minister said, but I was trying to get information from other Deputies who were in the House. I gather that the Minister has changed his view-point two or three times.
Each time for the better.
And the explanation I hope to get to-morrow morning——
Will be better, better, better. Why should it ever stop?
I have a vague memory that we started all these proceedings by accepting one desirable principle, and that was that certain funds should not be mixed but piled up as security for the policy-holders. That was the solid ground we set out on this morning. There were certain diversions after that, but one thing the House was completely disposed to was that these deposits and certain investments, everything that could be got under the appropriate term of assets, should be maintained as the security backing for the policy-holders in this type of insurance business. We came a step further later in the night, and on Section 20 we doubled the deposits heretofore required from companies engaged in ordinary life and industrial insurance business. We are now going to have deposits of £40,000 instead of £20,000 to cover both classes. That being the situation, the Minister in attempting to evade the amendment put down by Deputy Norton suggested that it would be robbing the policy-holders in order to pay certain wage-earners. I do not know if Deputy Norton when moving the amendment adverted to that view and argued that that should be done. That could be excused and defended on certain human grounds. If certain people are getting small emoluments from insurance companies and have rights ranking second to the policy-holders, having got deposits and agreed to the principle that they were to be security for the policy-holders, we find they are to be open to raid by the Government. I asked what was the answer given by the Minister on that point. Why should the Government be put in a superior position? I gathered that we are back to the position that the State is supreme and that the Government is going to get its hands on anything it can. I understand from enquiries that that represents the Minister's view-point. That is the old prerogative and it is amazing. I knew that the cloth had been turned very often by the Minister in regard to politics, economics and other matters, but I did not expect so powerful a republican blossoming out with a tremendous idea of the old prerogative of the kings. It took a considerable time to beat down these old prerogatives, but by dint of pushing and pressing they were all definitely done away with, in so far as the State was concerned, and made appropriate to the people.
There is no doubt that the whole tendency of legislation, except in dictatorial States, has been towards recognising that the State has greater powers of exacting moneys than other people, and that, therefore, if anyone is put in a less powerful position they retain powers in certain respects but these powers are always objected to. There has hardly been an occasion when the big powers of the State— take income-tax—come before the courts that the courts did not indulge in very serious criticism of the way in which these powers are exercised. Quite recently the phrase was used concerning certain activity that it seemed unduly oppressive even for a Government Department. State Departments have certain powers. The Minister, by reason of his position, is in a much stronger position than the ordinary person with regard to these companies. Let him take whatever action is appropriate and exercise whatever powers he needs but surely there ought to be one fund excepted —the deposit fund. The aftermath is in the next section dealing with Ministerial activity or Government Departments
"or to a statutory body exercising any function of Government or discharging any public duties in relation to Government administration."
That may be a very wide circle. If they get judgment they can impound almost directly part of the deposits and the aftermath follows when the deposits are lessened. A company is forced to make good the deficit, not because of any depreciation of securities or fault on its part, but simply because the Minister dives into a fund which was piled up for a particular purpose. If the Ministry can say that there is some special difficulty on the part of a Minister—
"who is head of a Department of State or to a statutory body exercising any function of Government"
getting his rights through the courts that case will be listened to. Has anyone power to have any case made on a point like that.
The Minister simply says, because State Departments are strong, they are going to get additional strength; going to take all the Companies Acts heretofore and to add a new class. They are going to get after the deposits. If the deposits are to be cut into I would prefer to have an encroachment on them for the sake of payment of money due to employees than for a debt of a Government Department. I wonder if this matter was given any lengthy consideration, or if there was any argument upon which this whole matter could be founded. None has been given to the House. The scope of the enlargement is of course made vague. There have been cases recently of certain statutory bodies exercising the function of government and discharging public duties in relation to public administration, and people have been so thrown out and other people admitted by the court's decisions from time to time, that there is a region of uncertainty. There are certain people who claim to have entry to that group who may be declared not to be inside it. The Minister could tell us what are his intentions in regard to that. We know that Government Departments are exercising functions of government and discharging duties relating to public administration. What is the group that this is supposed to cover? It is only when we are told that, that we shall get a proper appreciation of the dangers to which the fund is exposed. Again, I return to what I said at the beginning, that to-day we seemed to have agreement on that one point, that the deposit was to be sacred to the policy-holders. It is considered a desirable matter that the funds should not be mixed and that policy-holders should know where their respective securities lay and should know from time to time what the amount of the funds were. Under the 1909 Act and this Bill, the returns are rendered compulsory in such a form that these matters can be investigated and accurate information discovered about them. The Minister has gone away from the extension of that principle further than he has in the matter of partition of business. That was done in the name of protecting the security of policy-holders. The security of the policy-holders starts with the deposit and this section cuts right across it.
On an earlier section to-day the Minister told us that he was not concerned with the insurance companies or with the employees of the insurance companies, that he was concerned with the policy-holders. The whole purpose of the Bill is to get adequate security for policy-holders in this country. On Section 12, the Minister told us that the whole question at issue was to secure the policy-holders and to see that moneys of theirs would not be used for any other purpose. On Section 20, in order to increase that security the Minister insists on doubling the amount of the deposit, the main reason given by the Minister being the security of the policy-holders. Again, on another section, the Minister takes power to compel insurance companies to keep up the value of the deposits made. That is, that where the deposits were value for £20,000 and where that value has depreciated, the companies would be compelled to bring up their deposits to the value of £20,000 again. Here we have a complete reversal of engines as far as the Minister is concerned. Having taken all these powers to ensure that companies will have adequate funds available to meet the claims of the policy-holder, the Minister now proceeds to rob the policy-holder. That is exactly what this section means.
Now that Deputy Norton's amendment has been withdrawn the issue is knit in a closer way. Deputy Norton was merely following the bad example of the Minister's own section. As Deputy Norton said, if the section were not there his amendment would not have been there either. The Minister has given no satisfactory explanation of this section. I might say that he has given no explanation at all. He has attempted a series of evasions on everything said by speakers in this House. Every statement he has made —and he has made four or five statements on this section—was a contradiction of the preceding one. He was simply mending his hand as he went along. He has not given any reason as to why this fund on which he has based his whole policy—a policy which is going to inflict hardship on certain insurance companies and definite damage on others, perhaps on their employees—should be subject to these charges. His attitude has been that the policy-holder has a supreme claim. We agreed to that, but now, as I have said, the Minister wants us to reverse engines and to say that he and the local authorities, any State Department, any county council, board of health or any urban council, can come in and have a claim on the funds which, according to the Minister, should be secured for the policy-holders.
There is nothing in this section about the fund at all.
The deposit is not the fund.
The deposit is not the fund we were discussing earlier.
I am discussing the fund we were discussing earlier. There is a deposit of £20,000, and when this Bill becomes law, so far as the majority of the companies are concerned, it will have to be a deposit of £40,000. Does the Minister deny that he said himself on numerous occasions in this House to-day that that particular deposit was sacred to policy-holders?
I did not. I said that the life fund of the company should be preserved intact for the policy-holders.
And the 1909 Act says that "the deposit made in respect of any class of business... shall be deemed to form part of that fund."
The Minister does not seem to think that it will be any part of it.
Deputy Morrissey is in possession.
We are going to get the same answer from the Minister. We are going to get no explanation or reason—one does not expect reason from the Minister for Industry and Commerce after having four years' experience of him——
I found it was of no advantage.
The Minister's reply to Deputy Norton's amendment was that this fund was not put there for the wages of the workers, that it was put there for the policy-holders. At the time he made that statement he had not read the section, because when he was reminded by Deputy Costello that it was not put there for the State, and reminded of his own statement on this section, the Minister told us that the deposit was there for the security of policy-holders and not for the security of anybody else. Yet, this section is produced for the purpose of raiding it. The Minister in Section 20 finds it necessary to provide, for the security of policy-holders, that the deposit should be doubled. Not only that, but he insists that the Accountant-General shall see that the full value of the deposit is maintained, and that it shall be worth at least £20,000 all the time. Having introduced a section of that kind in the interest of the policy-holders, he now proceeds to use it in the interests of the State. I move to report progress.
Progress reported; Committee to sit again to-morrow.
The Dáil adjourned at 10.30 until Friday, 5th June, at 10.30 a.m.
