I understand that the substance of what Deputy Costello was saying when he moved the adjournment can be raised on Section 59, and he proposes accordingly to do so.
Insurance Bill, 1935—Recommittal (Resumed).
Debate resumed on amendment No. 121.
Amendment, by leave, withdrawn.
Section 56 agreed to.
Question proposed: "That Section 57 stand part of the Bill."
One or two points arise in connection with this section. In sub-section (1) it is provided that every policy of industrial assurance issued after the commencement of this Part of the Act shall, subject to the provisions of this section, contain a copy of such of the provisions of this Act as shall from time to time be prescribed by Orders made by the Minister under this sub-section. I want to suggest that the purpose of this Bill is to create a new departure, and that if this Bill becomes law, there will be an interval until the Minister appoints a date for the Act to come into operation. During that time, the Minister should consider what parts of the Act he thinks it desirable to have set out in the body of a policy, and so to prescribe, so that insurance companies may incorporate whatever they require to incorporate in the policies and let it go at that. Otherwise it might be necessary to alter continually the form of the policy, and that would give rise to very great inconvenience. It does not seem likely that any necessity would arise for prescribing anything over and above what would appear desirable immediately after the Bill had become law, and after the Minister had given the matter his attention.
Sub-section (3) provides that every industrial assurance company which fails to set out on the face of a policy any matter which has been prescribed as a matter which should be set out shall be liable to the policy-holder in a court of competent jurisdiction for the full amount of the premiums which have been paid up to the time of the initiation of the proceedings by the policy-holder, but it does not say that the insurance company ceases to be liable in respect of the policy, even after they have paid the policy-holder damages measured in the amount of the premiums paid. While it is desirable and right that insurance companies should comply with the law, it does not seem reasonable that there should be two penalties because the insurance company can still be made liable on foot of the policy and the policy-holder has had all the benefit of insurance during the period he was paying premiums and can recover at the conclusion of the period of the policy the full amount insured. Why should the company be made additionally liable to a penalty when in fact they have been, throughout the whole currency of the policy, in the position that they were affording all the protection that the person who took out the policy wanted? I should be glad if the Minister has any observation to make on those two matters.
Dr. Ryan
With regard to the first point raised by Deputy Dillon, I think his fear is that the Minister might make frequent changes which would result in leaving stationery on the hands of insurance companies which would be out of date?
Yes. That is my point.
Dr. Ryan
Well, this provision has been working successfully under the English Act, and I do not think the companies had any complaint to make from that point of view because they usually got, of course, a few months' notice of the provisions that they would be required to have printed on the back of the policy form and so on. In that way they got an opportunity of using up whatever stationery they had on hands, and I am quite sure the Minister here would be just as considerate and that he would not put the companies to unnecessary expense by asking them to have their policies changed and new matter printed without giving them sufficient notice to enable them to get rid of the stationery on hands.
With regard to the Deputy's second point, the penalty under Section 57 is that the premiums would be returned to the person who is paying the premium, and the Deputy raises the point that it appears from the section that the company is even yet liable under the policy. Well, that certainly seems to be the way the section reads, but I think that, if it were altered, there might arise a point where the company, by paying back the premiums, would get out of paying the death benefit, and I think that would be a rather dangerous provision to insert—that they should be relieved of the liability at the same time.
As the Minister for Industry and Commerce is now in the House, perhaps he will be good enough to give us an explanatory word on sub-section (3). There is a point in sub-section (3) of Section 57, which is not quite clear, and perhaps the Minister for Industry and Commerce could explain to us what the exact effect of sub-section (3) is.
The Deputy's point is that the company may still be liable under the policy even though the premiums have been repaid. I do not think so. It seems to me that the policy is invalid and that, therefore, no liability under it would arise. The only question to be settled is the clearing up of the position in regard to the premiums, and the provision is that the premiums should be repaid to the person who effected the insurance.
Let us suppose that a policy is taken out by A.B. and that it runs to maturity and falls due for payment. Under sub-section (3), as it stands, the policy-holder can claim from the company not only the amount of the policy but he can recover, by taking action in any court of competent jurisdiction, a sum equal to the amount of the premiums paid on the policy. Why should the company be under the liability of suffering a dual penalty of that kind? If they are willing to pay all the policy-holder is entitled to, why should they be further mulcted in a sum amounting to all the premiums that have been paid?
But that does not follow. The section says that the policy shall conform to certain conditions. If it does not conform to those conditions, it is an illegal policy.
Yes, but does the Minister think it desirable that the policy-holder should be entitled to recover the amount of the policy plus the premiums he has paid?
Where is that?
Or does the Minister think that the policy-holder is not entitled to recover by reason of the default of the company?
Sub-section (3) says:
"Every industrial assurance company which ... issues a policy of industrial assurance which does not not comply with sub-sections (1) and (2) of this section shall be deemed to have failed to comply with the provisions of this Act, and shall, without prejudice to the liability incurred in respect of such failure, be liable to pay to the person who has paid the premiums due on foot of such policy a sum equal to the amount of the premiums so paid, and such premiums may be recovered by such person from such company in any court of competent jurisdiction."
In regard to Deputy Lavery's point, of course it may happen that the sum of the premiums may exceed the actual amount insured and that, in fact, the payment of the premiums would be a bigger liability on the company than the payment of the amount covered by the insurance. Possibly, it is necessary to clarify that in order to make it clear as to the position that will arise. As it stands, I think that the position is that, the policy being invalid, the company is not liable to pay on the claim, but we propose to make them repay the amount of the premiums. Possibly, a better provision—although I say this without having examined the matter— would be to make them pay either the amount of the policy or the amount of the premiums, according to whichever is the greater. No, on reconsideration I agree that is not desirable.
In any case, it is clear that it is not intended that they should pay both?
No.
Is it the intention of Section 57 that the policy should be enforceable or not? As it stands, it would appear that the intention was that the policy should not be enforceable; that is to say, that the amount should not be recovered.
Yes.
I think it would be an advantage if the position were made clear one way or the other.
From the point of view of the person who effected the insurance, it would be better. However, I shall look into the matter between now and the Report Stage.
Question put and agreed to.
SECTION 58.
Question proposed: "That Section 58 stand part of the Bill."
On Section 58, Sir. This is the section which confers on the Minister power to prescribe the form of the policy, and in that connection I direct his attention to the fact that the Parmoor Committee, which sat in Great Britain and dealt with questions of insurance, did make recommendation of this kind, and that that recommendation was subsequently dropped and never carried into effect. The Industrial Assurance Commissioner, giving evidence before, I think, the Cohen Committee, dealing with the issue of prescribed forms of proposals, stated that it was rightly dropped in his opinion because he did not see how it was possible for a rigid form of proposal or policy to be drafted which would suit all conceivable cases that might arise, and certainly that he himself, as Industrial Insurance Commissioner of that period, would undertake no such task. I submit that if the Industrial Assurance Commissioner in Great Britain, who has probably unique experience in matters of this kind, felt himself unequal to the task of prescribing policy forms, owing to the contingencies which might arise, then it is undesirable that we should undertake such responsibility.
We are not undertaking the responsibility of prescribing the proposal and policy forms.
If I may supplement what Deputy Dillon said, the section as it stands gives the Minister power, whenever he thinks proper, to delete or to amend the terms either in the proposal in sub-section (1), or in the policy in sub-section (2). These provisions are wide enough to enable the Minister to prescribe particular terms in either proposal or policy. It has often been said in this House that it is objectionable for the legislature to commit to a Minister or to a Department power to prescribe matters which are fundamental, which are really matters that should be dealt with by legislation. The legislative machinery is such that alterations cannot be easily or quickly made without due consideration, whereas a Minister or a Department, from time to time, might prescribe matters without the fullest consideration or without the fullest inquiry as to what the effect of the prescription is going to be. In this section it is especially important, because it is obvious that an insurance company has to arrange its affairs on what may be described as the law of range. They have to enter into commitments which last for a number of years, the liability on which does not fall due for a considerable time after the contract was made. If contracts are to be altered from time to time, obviously that is going to interfere very seriously with their financial structure and with their arrangements. When the Bill was first before the House I think the section was not limited in any way. The Minister was taking power at that time to prescribe terms, conditions, proposals, without any limitation.
I see that in sub-section (4) there is a saving in that regard, as the Minister is not to be authorised to interfere in respect to two matters, the premium payable on the policy and the date of warranty. These, of course, are two of the most important factors in contracts of assurance. But there are other important factors. It is easy to think of examples. Perhaps the one that comes most readily to mind is that dealing with the health of assured persons. I suppose in life assurance, the two factors governing ordinary contracts are the age of the assured, and the health of the assured, or the person proposed to be assured. Age is something which is capable of being definitely ascertained, but health is a matter that is generally dealt with by some form or other. It is obvious that if an insurance company has issued policies of a particular kind to a very large number of persons, with a particular kind of warranty as to health, their actuarial calculations are based upon experience of liability, and flow from a warranty that was given in a multitude of cases. It might appear and it might be right for the Minister to say that that form of warranty is not an absolute form, but conditional, and that the warranty adopted by that particular company was not satisfactory from the point of view of administration of the insurance business generally, and he might think it right to prescribe a term. If he did so, that would obviously affect very seriously the operations of the particular company concerned. If it readjusted its commitments on the basis of that prescribed form, the Minister might again prescribe something different for different companies from time to time. I suggest that the whole principle is obnoxious, and that contractual relations between insurance companies and assured should be dealt with by Orders or regulations. That would be far better, subject to control provided by the Act, that they should be left to the ordinary come-and-go of contractual bargains. If a principle is to be introduced, and if the Minister is going to ask the House to give him power to prescribe terms and conditions, it would be far better that the terms, conditions and questions should be indicated and limited, rather than give the whole field, excluding only two particular matters. It is obvious that the powers given by the section are immensely wide, and are matters that should certainly be dealt with by the Legislature and find their place in an Act of the Oireachtas. What the Minister is asking is that he should be given a blank cheque to prescribe conditions under which insurance companies are to do business. The Minister has indicated that the section does not do that, but I think he will agree that in effect it does, because he is given the widest powers to prescribe terms. Under the section he is given full power to prescribe the form of the policy, the contents of the policy, and essential matters of contract between an insurance company and the assured, and that, I suggest, is exceedingly objectionable.
Deputy Lavery thinks that the form of contract between an insurance company and a policy-holder should be settled by negotiation between the parties in the ordinary way, or be settled by precedent or by practice. I agree with that so far as any class of insurance is concerned, except industrial insurance. We have accepted the position and, in fact, the same attitude has been adopted in all countries, that in relation to industrial insurance very special provisions are necessary, in order to protect the policy-holders and persons doing that class of insurance business from the various abuses that might be resorted to by various companies, under stress of competition with one another, or the desire to increase their business. Industrial assurance has been a source of very grave abuse in the past, and, as I stated earlier, many of the very big companies engaged in it have become big, and acquired huge reserves by resorting to practices which were very discreditable, and which have, in many countries, been made illegal, and which we are making illegal here. In relation to that, considerations operate which do not operate in regard to other classes of insurance. In the case of ordinary fire and accident, and ordinary life insurance, we can allow policy-holders and persons desiring to do insurance in these classes to look after their own interests, but in relation to industrial insurance, we have to constitute the State as guardian of the interests of the policy-holders, who are, in the main, of a class who are very easily intimidated from pursuing their rights or defrauded of them. We are not taking power to prescribe the form of the proposal or of the policy. We are taking power to intervene when it is brought to the notice of the Department that a particular company has adopted a form or other document which might be used in a manner detrimental to the policy-holders of that company. Various devices might be resorted to by an insurance company to enable it to avoid having to meet liability on a policy issued by it. The sole purpose of taking the power contemplated by subsections (1) and (2) is to give the Minister the right to intervene, if he should notice any such development, for the purpose of requiring deletion of the offending portion, or an amendment of a portion of the form of proposal or policy, where such intervention might, in his opinion, be necessary in the interests of the policy-holders.
In so far as we have exempted from the scope of the section the amount of the sum assured and the date of maturity, we deprive the Minister of any power to effect alterations in the terms of a policy in relation to these matters. I do not see that any intervention by him, even if such intervention were to take place as spasmodically and as casually as Deputy Lavery fears, would seriously interfere with the company's estimate of its liabilities to policy-holders. The essential matters on which its liabilities are determined are the two things mentioned in sub-section (4), the sum assured and the date of maturity. The only matters in relation to which the Minister might consider it necessary to use the powers conferred on him by sub-sections (1) and (2) are comparatively minor matters which nevertheless might be used by such companies—to resort to practices which would invalidate policies or, at any rate, deprive insured persons of their benefits, or in some other way deprive them of their rights under contracts with the company. It is clear that somebody should have these powers. The proposal in the Bill is to give to the Minister for Industry and Commerce the same position in relation to industrial assurance as the Insurance Commissioner exercises in Great Britain. The position in this country does not necessitate the establishment of a separate Insurance Commissioner, as was found desirable in Great Britain, but the Minister for Industry and Commerce must be given these powers, I think, if he is to be effective in discharging his functions as the protector of the industrial assurance policy-holders against possible abuses by the companies.
The Insurance Commissioner in Great Britain has not the right to prescribe the form of policy or proposal.
We are not taking that power.
Has he the right to amend?
I think so.
In giving evidence before the Cohen Committee, he referred to a recommendation of the Parmoor Committee that he should have full power to prescribe the forms of policies. He said that it was dropped and in his opinion rightly dropped, as he himself could not undertake such responsibility.
We are not taking such responsibility.
The Minister is taking the right to amend or delete.
That is a very different thing from prescribing the form. If we set out to prescribe the form of proposal or policy, we would be standardising these forms for all companies or, at any rate, we would have to prescribe such forms as were capable of being used by all companies. We are not doing that. We are taking power, when we see a proposal or policy framed in such a manner as to be in our opinion undesirable, to intervene for the purpose of requiring its amendment.
May we take it that if, in fact, the Minister is taking power to prescribe the forms, at any rate he does not intend to use it?
It is intended that the Minister should have no active function in relation to the form of proposal or policy, but merely that he should have this power to intervene in relation to forms already prepared by the companies for the purpose of securing their amendment if necessary.
Would the Minister give any indication as to the comparatively minor matters which would be dealt with by him, as he stated a few moments ago, under Section 58?
I was referring to the insurance company's estimates of its liabilities to its policy-holders. That is based principally on the two matters mentioned in sub-section (4). In preparing that estimate, the other matters contained in the contract are comparatively minor.
In considering whether a proposal for insurance will be accepted or not, there are certain answers submitted by the proposer which are regarded as going to the root of the contract. Is it intended that the Minister should exercise these powers in relation to matters of that kind, the outstanding one of which is the warranty of health or the statement whether the proposer has suffered from certain forms of disease? Insurance companies could not carry on their business if it was intended to exercise these powers in reference to vital matters of that kind. I want to know if it is intended that these powers should embrace matters which are ordinarily known as health matters.
It is not intended to require that the forms should be amended by deleting any reasonable question in the proposal form or any reasonable provision from the insurance policy. It is, however, desirable that somebody should have power to intervene if there are unreasonable terms in either documents—I mean terms which are so framed that they may prove to be traps for people doing business with the company.
Did I understand the Minister to say that such powers were vested in the Insurance Commissioner in Great Britain?
I had better not answer that directly as I am not quite sure.
I am glad to say that, so far as I can find out from hurriedly looking through the Industrial Assurance Acts, no such power is vested in the Commissioner in Great Britain.
I should say that in Great Britain the Insurance Commissioner has got into a position in relation to industrial assurance far beyond any power conferred on him by statute, because the insurance companies have more or less put him into that position themselves. On that account the position here would not be quite similar.
Perhaps the Minister might reach that position.
I doubt it.
I find it difficult to understand why it should be necessary to take such wide powers to achieve what apparently is a very small matter, if the Minister has correctly stated his intentions to the House. The Minister cannot bind his successors and we must judge this section by the wide terms in which it is framed. Undoubtedly, the section as it stands, enables the Minister to do anything almost with the form of proposal for policy. The Minister tells us that it is only in comparatively small matters he intends to intervene, but the Minister may be succeeded by somebody else who might like to poke his nose into other matters. The fundamental objection I have to the section is that it is a complete interference with the freedom of contract. It leaves proposers and insurance companies in a state of complete instability. Nobody knows what is going to happen in reference to his policy. No insurer knows what interference may take place with his form of policy. I think if there is any particular form of trickery the Minister wants to get or interfere with, cases in which there have been proved abuses, that should be indicated in the Bill. We think that the present powers are far too wide and that they should be limited.
Deputy Costello says that if there is any particular matter that requires attention the Minister should state it in the Bill. I do not think that is workable. I think we should have a sort of general power inserted at the same time with such safeguards as will prevent undue interference with the company and its business. If there are any additional safeguards suggested I am prepared to consider them. Subject to these obvious safeguards, the Minister should have a sort of general power to intervene if he feels that there is good ground for doing so.
Section put and agreed to.
SECTION 59.
(2) Whenever an industrial assurance company receives a proposal for a policy of industrial assurance and such proposal contains an incorrect statement of the age of the person whose life is thereby proposed to be assured, such company may, within four months after the date on which it receives such proposal, so adjust the terms of the policy issued or about to be issued in pursuance of such proposal as to make such terms conform to the terms applicable to the true age of such person.
(3) Where an industrial assurance company requires, as a condition precedent to the issue of an industrial assurance policy, that the age of the person in respect of whose life such policy is to be issued shall be verified by production of a birth certificate or other evidence, and such company defrays the cost of obtaining such certificate or other evidence, such company may adjust the amount of the money payable by such company under such policy by deducting from such money the amount of the said cost so defrayed by such company, if, but only if, the proposal form contained a notice to the effect that the production of such certificate or other evidence would be required as aforesaid and that the cost thereof, if defrayed by such company, would be deducted from the money payable by such company under such policy.
(4) Every registrar of births, every assistant registrar of births and every other person having the custody of a register of births shall, on being requested so to do by an industrial assurance company and on being paid by such company a fee not exceeding sixpence for each certificate, furnish to such company a copy of the certificate of the birth of any person whose birth is registered in such register of births and in respect of whom a proposal for a policy of industrial assurance has been received or a policy of industrial assurance has been issued by such company.
Amendment No. 122 ruled out of order.
I formally move amendment No. 123, on behalf of Deputy Dillon. The amendment is as follows:
In sub-section (2) to delete all words from the word "within," line 40, to and including the word "proposal" in line 41.
The object of Deputy Dillon was, I think, to show that the deletion would render the section unworkable.
I assume that Deputy Dillon's purpose in putting down the amendment was to enable adjustments to be made in the terms of the policy in relation to the age of the insured person at any time during the currency of the policy. The purpose of the section is to enable adjustments to be made within four months after the issue of the policy.
I do not think that the object of Deputy Dillon's amendment is as stated by the Minister.
What we are proposing to do in the section is to provide that a company may query the age of the insured person and effect such changes in the contract as may arise, if the age has been wrongly stated, within a period of four months from the date on which the policy was issued, but if the company does not effect that change within a period of four months, it cannot do so subsequently. The whole purpose is to deal with what has been, in our opinion, an abuse in the past. We have had many representations made to us by persons throughout the country that insurance companies are not at all averse to allowing persons proposing to take out policies to misstate their ages. We have been informed that a number of policies, with the ages of the assured persons misstated, are, in fact, current; that when claims on these policies are made they are queried by insurance companies on the ground of such mistake and then many abuses arise in consequence. In order to clear up this matter of the misstatement of age, we have adopted the proposal set out in the section, which gives the company power to effect alterations in the terms of the policy, rendered necessary by misstatement of age, within a period of four months but no power to query the age of the insured person after that date. I think we should adhere to that. The effect of the amendment by Deputy Dillon would be to enable companies to effect changes in policies on that ground at any time during the currency of the policies. I think that that would be undesirable, having regard to the circumstances I have mentioned.
I do not know whether it would be more appropriate to raise this question of the admission of age and the principle underlying the section on this amendment or whether it would be better to wait until we are dealing with the section.
It would be better to raise it on the section.
Amendment, by leave, withdrawn.
Amendment No. 124 not moved.
Mr. Bourke
I move amendment No. 125, which is in the name of Deputy Dillon, as follows:—
In sub-section (3), line 45, to delete the words "where an" and substitute the word "every".
The effect of amendments Nos. 125, 126 and 127 would be to require evidence of age to be produced before the issue of the policy instead of allowing the period of four months set out in the section.
Mr. Bourke
Amendment No. 125 would make the production of birth certificates compulsory. It would be a good thing in the interests of the companies, the insured, the agents and everybody else if we could get this question of age eliminated once and for all. It is computed by authorities in the insurance business in Ireland that, as a result of misstatement of age, the premiums on industrial policies in this country are 25 per cent. higher than they should be. In spite of what has been said in this House and elsewhere as to the anxiety of insurance companies to drag insured persons into the law courts, that is not the position. Considering the number of bad policies in existence, it is very seldom a company takes a person into court. It is only to keep down this average of bad policies, which has a tendency to keep continually rising, that cases are ever brought into court. Experience has shown that it is almost impossible to keep down this continually-ascending factor. This would be one means of doing away with it—if it were made obligatory on all companies to see that birth certificates were produced. If this practice were not made obligatory on all, it would be impossible for any company to carry it out because the company that did not insist on birth certificates would have a great advantage over the company which did so insist. In the ordinary way, the poor people who take out these policies like to do so with as little trouble and annoyance as possible. The man who goes to a house and says, "We do not want any birth certificate; we are not particularly interested in your age and do not care whether it is a few years one way or the other," is much more likely to get the contract than the man who is meticulous and insists on getting a birth certificate. If this provision is to be put into operation, it will have to be made general and enforced rigorously by the Minister. For that reason, I am anxious that this amendment should be inserted rather than a more general amendment.
Surely these three amendments are worthless for Deputy Bourke's purpose unless the words "or other evidence" in line 50 are deleted. These words leave it open to an insurance company to accept even the weakest sort of evidence of age if they want to do so.
Mr. Lynch
It is necessary to have these words, because it is not always possible to get birth certificates.
This amendment would make it very difficult for companies to work their industrial assurance business. What is proposed is that production of evidence of age should precede the issue of the policy. What we are proposing is that, following the change under sub-section (2), the companies are allowed a period of four months in which to procure evidence, and, on the basis of the evidence, effect whatever change in the proposal form or in the policy is necessary.
Mr. Bourke
The company may not know until the death takes place, and then it will be too late.
I take it that if sub-section (3) is passed, it will be up to the company to verify the age. It is more desirable that the company should so verify the age and effect the change on the commencement of the policy than that the question should arise for discussion when the claim is made. This is an arrangement which seems to us to be practicable and most desirable in the interests of the company. Take the business as it is done. A proposal is made. The age of the person whose life is to be insured is stated. If the age is misstated, the company can change it in the proposal and adjust the terms of the policy accordingly. That is the practical way of dealing with the matter, and it is much more in the interests of the companies that the alternative proposal set out in these three amendments which require the production of the evidence of age before dealing with the policy at all. The company have four months in which to effect the change.
Mr. Lynch
But if the amendment were accepted, every company would then have to take evidence of age, and they would all be in the same position. It would not interfere with any company in the getting of business.
I am not arguing against this group of amendments on principle. What I am arguing against is that they would interfere with the working of the companies. The principle is the same. The only difference is that in the amendment it is provided that the evidence of age must be provided before the issuing of the policy. In the Bill there is a period of four months after the policy has been issued in which, on the production of a certificate of the correct age, a change can be made and the policy adjusted.
Mr. Bourke
But supposing a company was to waive this question of the evidence of age? There is nothing to make it obligatory on them to look for the correct age.
No, but we say to the company: "If you do not query the age within four months you cannot do it afterwards."
Mr. Bourke
It would be possible for a strong company to waive that. A strong foreign company could do it. If that happened and the home companies were to carry out the intention of the Minister and insist on getting the correct age certified, they would be placed at a disadvantage.
What is the objection to making every company insist on getting a certificate of the age of the person proposing to take out an insurance policy?
We are not making them do it. If a company enters into a contract there is no reason why they should not protect themselves in that contract. We do not insist on their getting a certificate of the age, but we do insist that the company cannot evade the payment of the policy after the four months period has elapsed.
Would the company be able to give better terms to honest people if all companies were compelled by law to insist on birth certificates being produced?
Mr. Lynch
The position is this: If the foreign companies were prepared to drop money for a period they could practically take the legs from under the Saorstát companies. They could afford in this case not to take the precaution to secure evidence of age because they could afford to take the risk better than the home companies. Suppose the foreign companies say, "We will take the age given to us and we will go on and not question it," they could take all the business from the Irish companies. I do not say they will do it, but it would be possible for them to do it. If they wanted to do it they could strike a very big blow at the home companies, and this section gives them the chance to do so. If Deputy Dillon's amendment were accepted it would make it obligatory on the companies and then they would all be in the same position.
I will look into the matter between now and the Report Stage.
What happens if during this period of four months in which the policy may be queried it is found that a substantial error has been made with regard to the age of the insured person? Supposing that means such an increase in the premium that the insurer would not go on with his policy, is there any provision in the Bill for a return of the moneys he has paid?
The alternative would not result in an increase in the premium. There would be a decrease perhaps in the amount to be paid when the policy is matured or on death, but no change in the premium. It will be a question of what sum would be assured for the premium of, say, 1d. or 1/- weekly. In the case of a person who effected a policy in respect of which he misstated his age, the sum insured for would be lessened.
Suppose that the policy lapses as a result of the discovery of this error, does the Minister think it necessary to make any provision for that?
I do not think so. There are, of course, provisions for lapsed policies under certain conditions in other parts of the Bill, but they would hardly apply in this case. Take the case of a person who effected a proposal, misstated his age, and found that the misstatement had been discovered, and who because of that let the policy lapse. In that case I would say that it was fairly evident that the misstatement was deliberate.
Would the Minister make it clear what it is that he intends to look into between this and the Report Stage?
The point made by the Deputy is that it is desirable to make it compulsory on all insurance companies to get evidence of the correct age of the proposer before the policy is issued, and he urges that on the grounds that if this is made compulsory on all companies, then there will be no inequality as between one type of company and another. He argues that as the Bill stands it is not compulsory. The smaller companies would be forced to get evidence of age to protect themselves because they could not afford to stand the considerable expense involved in accepting the age as stated without investigation, whereas the larger companies could do it, and thus they would get a higher percentage of the business. I am not satisfied that there is very much in the argument, but I will look into it and make sure that we need to make provision to safeguard against the Bill being used to the serious detriment of the Saorstát companies.
If the Minister accepts Deputy Lynch's amendment is it the intention that the company should bear the expense of procuring the birth certificates, because if it is, I think it will finish the Saorstát companies.
Mr. Lynch
Is there any notice to be given to the person that the terms of his contract have been changed? Sub-section (2) provides that within four months the company may adjust the policy so as to make such terms conform to the terms applicable to the increased age of the person insured. There seems to be no provision for notifying the person who has made the proposal. It seems to be iniquitous that the company should alter the contract without a notification to the other party to that contract.
I will look into the matter, anyway.
Amendment No. 125, by leave, withdrawn.
Amendments Nos. 126 and 127 not moved.
Mr. Lynch
I move amendment No. 128:—
Before sub-section (4) to insert a new sub-section as follows:—
Every person who knowingly makes a false statement to an agent or to an assurance company as to the age of the person in respect of whose life the policy is to be issued shall be guilty of an offence under this section and shall be liable on summary conviction to a fine of £10.
This amendment is similar to amendment No. 115. There the Minister promised to look into the question. He said he was satisfied the ordinary law provided punishment for a person making a false statement. When that was questioned he said he would look into the matter between now and the next stage. As I have said, this amendment is somewhat similar. It provides that any person who knowingly makes a false statement as to age shall be guilty of an offence and shall be liable to a fine of £10. I think that that fine is excessive, but at the same time there is certainly a case for punishing a person who misleads an insurance company into issuing a policy based on an age which is incorrect. It is stated that occasionally companies have actually been shown wrong birth certificates, certificates of other persons, when contracts were being entered into.
The same consideration arises here as on the previous section to which the Deputy has made reference. I hardly think the amendment is necessary. I think a person making such false statement is amenable under existing law. If there is any doubt in regard to that matter, I will consider the amendment.
Amendment No. 128, by leave, withdrawn.
Amendment No. 129 not moved.
Question proposed: "That Section 59 stand part of the Bill."
I would like to get some reasoned statement from the Minister as to why he has adopted this principle which appears in Section 59 for the first time in the insurance legislation of Great Britain and the Irish Free State. The provision in the 1923 Act dealing with similar matters allows the principle of the adjustment of age to operate. The Minister proposes to set aside that principle and to adopt a new principle by which the age stated by the proposer for the insurance policy is taken as admitted unless the company, within four months, are in a position to prove that the age is incorrectly stated. I think I have correctly stated the principle underlying the Bill. I would like to know what are the reasons underlying the adoption of that principle as against the more reasonable principle that appears in British insurance legislation of allowing the companies, when they discover at any time that a misstatement or error has been made in relation to the age, to make the necessary adjustment. I suggest that is fairer to all parties.
The proposal as it stands is open to the further objection that this is really putting into the hands of the proposers an instrument of fraud, because it will be very soon known amongst those who enter into industrial assurance policies that the companies must repudiate or adjust a policy within four months, or else accept the age stated. Accordingly, it will be soon apparent, if a company is carrying on an extensive business in this connection, that it will be impossible for that company to investigate, within the period allowed by the Bill, all the cases for the purpose of getting the certificates of age and comparing them with the person and the age set out in the proposal. We may, for instance, have John Smith, of Mount Town, applying for a policy, and we may have 40 John Smiths in the books of the registrar of births for the district of Mount Town.
I suggest that a company is not in a satisfactory position to get that evidence of age. The person whose age is in question is the person who is more readily able to get the necessary birth certificate. He knows who he is, and where he stands on the registrar's books. The insurance company does not, and the company has to find if the John Smith who sent in a proposal form is the particular John Smith out of the 40 other John Smiths who reside in the barony and whose names appear in the register of births, deaths and marriages. It would be more satisfactory from the point of view of the decent insurers if the Minister were to adopt the method that I have suggested. I admit that the gentleman who tries to work a quick one on the insurance company will benefit by the proposals in this section. But the ordinary decent man wants to know where he stands, wants to know what are his rights and obligations under a policy. It is only right and proper, when the company is accepting a fairly long-term risk, that they should know what are their rights and obligations, and putting this additional burden on insurance companies of ascertaining the age of the person to be insured within a period of four months is rather unfair to them.
I do not know that the Cohen Committee that investigated this matter in England recently has recommended the change of practice embodied in the principle contained in this section. Section 20 (4) of the 1923 Act allows a company to adjust the age. We suggest that that is the fairest principle to all parties. If a proposer states his age is 55 and it transpires subsequently that it is 65, instead of having the policy repudiated it will be open to the company to make the necessary adjustment and pay as if the man had stated his age correctly at 65. That is fair to the proposer. He gets what he was entitled to get if he had stated his age correctly, and it is fair to the company, who will not have to pay a sum of money which they ought not be bound to pay for the purpose of ascertaining the man's age. The Minister should reconsider this matter in the light of these considerations or else tell the House what were the reasons which actuated him in proposing this particular principle rather than adopting the principle of the adjustment of age. He should let us know on what basis this section rests.
This is an important section and I have a good deal of sympathy with the way the Government have framed it; but I think they have not considered all the aspects of the case from their relative points of view. Undoubtedly in the past policies have been repudiated by insurance companies and very inadequate sums have been paid to people who were really entitled to full benefits under their insurance policies. Personally, I think the admission of age of the life assured is the ideal method, if it would work. But I would like to put before the Minister some aspects of this part of the Bill. The Minister stated that some of the sums are very small. For instance, we have the case of 1d. a week. How is a company with a policy such as that to be expected to pay 6d. for a certificate and 1/- for a search? And, mind you, that will be on their turnover of policies, because a certain number of those will lapse and a certain number of them may be transferred to some other benefit or something like that. To my mind, this is putting an extraordinary burden on the insurance companies and one that in time, I believe, they will have to protect themselves against. Now, whether they will pay lower benefits or demand higher premiums, or adopt some other course, I do not know. I am quite sure that the Minister, in spite of all the things that have happened in the past, does not want to stop this class of insurance. I suggest to him that the proposal contained in this section of giving insurance companies four months to make the necessary inquiries is one that, as Deputy Costello has said, people will get to know about after a little time. This is what I consider will happen. The insurance companies will have to make a calculation that a certain number of cases are worth investigating. They will allow a certain number of others to go by because they will feel that the cost of making an investigation in them would be too great. What will happen, therefore, will be that if a person is found out after four months in an obvious misstatement and if this has the effect of enormously reducing his benefits under a policy, and suppose one premium has been paid, the policy will be lapsed. The next point that occurs to one is that, in the case of an obvious fraud, there is apparently no provision for meeting it. Deputy Dillon, on an earlier section, asked if we, in this House, were to condone, or if we were to have the courts condone, obvious frauds on insurance companies. Take the question of certificates. Some enterprising person, for instance, might alter a certificate, and there are various other kinds of frauds that suggest themselves to one which might be perpetrated on insurance companies.
Are things of that sort to go through, provided they occur four months after the policy has been written? I do not think the Minister would stand for that. I suggest to him that in some respects the cure is worse than the disease. Undoubtedly, the repudiation of policies by insurance companies is a thing that ought to be guarded against. I suggest that this admission of age, while theoretically perfect and the ideal solution, is too costly to work, and I would ask the Minister to consider this section from that point of view. Theoretically, I entirely approve of it, but as a practical proposition I think it would be too expensive to work. In the light of all that, I would ask the Minister to consider how, in this proposal, he is going to cure the abuses which existed in the past without opening the door to abuses of another kind, in another form, that are equally indefensible.
Deputy Dockrell seems to consider only the possibility of persons trying to defraud insurance companies instead of insurance companies trying to get rich quick at the expense of policy-holders.
No. I mentioned both cases.
The necessity for this provision arises out of the manner in which industrial insurance is carried on. While the practice operates of insurance companies recruiting agents wholesale, paying them on commission and in such a way that, unless they get new proposals, they cannot get even the semblance of a livelihood out of their occupations, you will have a situation in which agents will adopt all sorts of devices in order to get new business. I think we must face the fact that, if there are a number of persons insured at wrong ages, a considerable portion of them are so insured because agents, in their keen desire to get new business, were in some way or another associated with the misstatements made. That abuse is, I think, of fairly common knowledge. In that connection, the Department of Industry and Commerce has had many representations from Deputies representing all parties in the House—representations concerning particular cases of abuses of that kind. The Department has also noted the comments of various district justices made in many parts of the country on this and cognate matters.
What are we going to do in that position? It is stated that we should let the policy run on to maturity, giving the company power to change the age at any time during its period of currency, or of questioning the age when a claim is made under it. I think that would be an abuse in these circumstances. If we are right in assuming that the insurance of people on the basis of wrong ages is not infrequently due to the desire of agents of companies to get new business by any methods, then it is clearly wrong to allow people to be induced to take out policies on that basis, to keep on paying premiums on these policies only to have the validity of the policies questioned when a claim arises. That I think, would be wrong. Possibly, from the purely academic point of view the ideal solution of this matter is to have the age of the person insured put beyond doubt before the policy is issued. That, I think, would, under certain circumstances, be acceptable to Deputy Fionán Lynch and Deputy Bourke, both of whom advocated it on an earlier amendment. There are practical difficulties in the way of doing that. The expense, to which Deputy Costello referred, is one, although in that connection the expense upon the insurance company of putting beyond doubt the age of an insured person is, relative to the size of the company, of very small importance, compared to the expense to the insured person if policies, on which premiums have been paid for a long period, are invalidated at the end of that period, or, at any rate, rendered less valuable by an alteration in their age in consequence of the fact that the age has been misstated. In our opinion, the device adopted in the Bill, if not theoretically perfect, is, nevertheless, a practical one. It enables us to meet the reasonable difficulties of companies, while at the same time protecting the interests of their policy-holders.
If there is a misstatement of age, the company must accept the age stated as correct, unless it has taken steps to effect an alteration of the policy or an alteration of the age in the proposal form within four months. A period of four months appears to give ample time to the company, in relation to any policy where doubt exists, or in relation to all policies, if it decides to adopt that practice, to get evidence and effect the modification in the terms of each policy. By effecting this proposal we do not interfere unduly with the existing methods of carrying on industrial assurance business while, at the same time, we protect the policy-holders against the possibility of abuses arising out of the present method of conducting insurance business.
If we had insurance business reorganised on a different basis from that on which it is now practised, if we secured that amalgamation of industrial assurance companies into one office which, on an earlier amendment, I referred to as the ideal, a number of these safeguards would become dead letters, I think, because the old system could be varied in a manner which would eliminate a large number of the objectionable features at present existing. But, so long as we have to contemplate the existence of this intense competition between companies, and the adoption of methods such as those now practised to get new business, and new business at any cost, then so long must we have safeguards for the insured person.
We require, as I stated on an earlier section, much more drastic provisions to regulate the conduct of industrial assurance business than any other class of insurance business and, in relation to this matter, I do not think we are unduly drastic or unreasonable in inserting the provision. Certainly I would not be disposed to adopt the alternative which has been suggested of allowing a company to vary the terms of a policy at any time where there has been a misstatement of age. I think it is much better to give them a reasonable period in which to carry out whatever inquiries are necessary and effect any change necessary, but stipulating that, at the end of a particular reasonable period, the policy must remain in the form in which it then exists.
I cannot see what injustice will accrue to anybody if a person effects a policy of industrial assurance on the life of one of his parents, sets out the age of that parent as 60 years, and then proceeds to pay a weekly premium. If the parent dies ten years later and is then found in fact to be 76 years of age, admittedly the insurer will recover a smaller sum than he looked forward to; but he gets the full value of his money if the insurance company is allowed to adjust the policy, instead of being bound to pay on the false assumption that the insured person was 60 years of age when the policy was negotiated. There is no question that anybody in this House suggests that the antediluvian plan—whereunder an insurance company could, at the end of the period, repudiate the whole policy and put all the premiums in their pocket simply because there was a mistake in the age—should be revived. Nobody wants that. I do not believe that any insurance company wants that for a moment. They realise that that practice, in so far as it ever obtained, belongs to a very evil and long-forgotten day. Surely it is not the business of this House to give a man more than his money is worth. All we are concerned to do is to see that substantial justice is done between an industrially-insured person and the industrial assurance company.
We are not here for the purpose of plundering the companies. It is a mistake to think that industrial assurance companies are under any obligation to come before us with their hats in their hands, beat their breasts, and proclaim themselves to be notorious rescals. They are not. There have been malpractices in this industry. I believe that with a very considerable number of companies at present, it is the practice to adjust the policy when a defect as to age manifests itself, and has been the practice for some considerable time. I think that is an equitable arrangement. I do not see how anyone can make out that a person who has paid premiums over a given period and gets the full value of his money on the basis of a full disclosure of the facts when the policy has matured, has anything to complain about.
Let me emphasise again that, so far as I am aware, nobody in this House advocates the right of a company to invalidate a policy and collar the premiums. But, I apprehend that the Minister's scheme is simply going to have the effect of inviting every chancer and potential fraud, who fancies the insurance racket, to try his hand at it. There is no penalty for casually stating that the age of a party whom you wish to insure is such-and-such. There would be a penalty if you could drive home the fact that a person knew well that that was not the age and did it for the purpose of fraud. Of course, it is virtually impossible to prove that where a person simply states that, to the best of his knowledge and belief, the age of a party is such-and-such. If you fix everybody in this country with notice that if you go to a rural insurance agent and say to him, "My father is 63, and I want to insure his life," well knowing that your father is 70, and that if you can keep up that bluff for four months you have got away with it for ever, every chancer and fraud in the country will have a skelp at it. It is a standing invitation to him to do so. Having fraudulently engaged in a campaign of that kind, the Legislature of this State steps in and says, "We now seal and confirm that fraud." Although it is obvious to any commonsense person that that man made no genuine endeavour correctly to estimate his parent's age, for reasons of expediency we confirm that he will benefit by the fraud and collect the full benefit covenanted for under the policy.
I can see endless evil accruing from that scheme. I do not see that anybody, except a fraudulent person and the man who wants to go in for a racket, will get any advantage out of this changed arrangement. The honest people who insure relatives and are fixed with notice that, no matter what age they give, when the death certificate comes to issue they will get the value of their money and nothing more, will take particularly good care to give the correct age of the party whom they wish to insure in order themselves to be assured that the correct amount of money will be available when the policy comes to mature. But, whether they take that precaution or not, they are always fixed with notice that, when the bargain comes to be concluded, the Legislature will step in, not as the friend of the insurance company, not as the friend of the insured party, but as an arbiter between them, to see that substantial justice is done. Surely that is a preferable arrangement to constituting ourselves the champions of frauds and racketeering.
It has been suggested that one way out of this difficulty would be to make it a condition precedent to any insurance policy issuing that the company should procure from some source a birth certificate. As I read this section, even if they did, and a criminal fraud was then practised upon them, by the substitution of one party for another, they might be bound by the terms of this policy. Perhaps it is not the intention of the Minister that that should be so, but if it is not his intenten, he will want to deal with this section along the same lines as he indicated his intention of dealing with another section which related to fraud as well; but, whether that be true or not, our position on this issue is perfectly clear. We believe in any insured party getting full value for all the money he has paid to any insurance company whenever his claim comes to maturity, but we do not believe it is in the interests of the community, or indeed in the interests of the insured parties themselves, that they should be encouraged to attempt fraud on an insurance company in the knowledge that if they get away with it for four months, the Legislature is prepared to step in, to take up the running and to say "Your fraud is successful in the long run."
The Minister certainly has not convinced me that there is any sound reason for the adoption of this principle as against the principle of adjustment of age. I asked him to give me some reasons why this principle was adopted as against the principle of adjustment of age contained in the Act of 1923. He made a statement which appeared to be based on a wrong premises, because he said it was clearly wrong that assured persons should have to pay premiums over a long period and then have their policies challenged, or at least considerably reduced in value. I think that is the substance of what the Minister said. Deputy Dillon has made our position clear. We are not asking that insurance companies should have the right, because of a misstatement of age in the policy, whether by the assured or by the agent or collector, to repudiate that policy, but we do suggest as a more reasonable proposal than the one offered by the Minister in the Bill, that the principle of adjustment of age should be adopted. There is no reason why a person should be allowed to get away with his fraud, and it is really no defence to say that an assured person was guilty of a fraud, but so also was an employee of the company guilty of a fraud. I admit that there have been abuses, but these abuses are comparatively small in number compared with the large number of cases in which the reputable insurance companies have paid on policies in which there were very gross frauds perpetrated.
We must not forget, either, that certain hard-headed people in this country are quite well able to perpetrate a fraud on their own, and without the assistance of collectors or agents of insurance companies, and have successfully done so in the past. If the Minister will look up the records of the criminal prosecutions in this country, he will find many cases where a person, without having an agent near him at all, or without any inducement by a collector or agent, represented that his parents, who were in fact old-age pensioners, were hale and hearty people of 50 or 55. A number of cases of that kind have happened, and those are the cases I want to hit, if I can. Deputy Dillon has pointed out, and I entirely agree with him, that this section is again putting a premium on fraud. I want to get the fraudulent gentleman, whether he be a collector or a proposer for an insurance. This gives an inducement to the proposer for a policy of insurance, and it is putting a premium on this fraud. I want to stop that, and I think it is just and equitable as between both parties that the person who has effected the policy should get paid what he is entitled to get paid and no more on a policy, that if the person whose life he is insuring is of specified age, he be entitled to whatever that age entitles him on the policy, but that he should not fictitiously and factitiously, as this section enables him, take advantage of his own fraud and get something he is not entitled to because of his own fraud. That is what I object to, and object to very strongly.
Agents have in the past gone around and said: "Put down anything for the age of this person you are insuring," and the premium has been collected. That is an abuse, but this section is, in my opinion, an abuse in itself, and you do not remedy one abuse by another. The Minister has not given me any reason why the system in the British Act should be changed to this system. I do not know where this one was obtained, but I asked him to give me some reasons for the change in the principle. I have not got any, and so far as I know there are not any. A four months period is too short, in my opinion, and even if the Minister adheres to this principle of admission of age after the lapse of four months, there ought to be some power in the courts or somebody else—even the Minister—to extend that period on reasonable grounds being shown. It is the experience of everybody that when there is a statutory period put into an Act, injustice and hardship are invariably worked. Look over the statute law of this country for the past ten or 12 years, and you will find again and again that where there is a statutory provision put in, enabling things to be done within a certain period and preventing them from being done after that period, amending Acts had to be passed extending the period because of the hardships that ensued as a result.
It will, I think, be impossible for insurance companies to carry on their business under this proposal of four months. I think it is a bad principle and I have heard nothing to convince me, at all events, that it is a better principle than the principle of adjustment of age which is a principle equitable to both parties. It is a bad principle that is enshrined in this section, in my opinion, but I do suggest to the Minister that there ought to be some power in the courts, or even the Minister, but certainly in some authority, that can be relied on to act reasonably and to extend that time in a reasonable and proper case. It is very often exceedingly difficult to get proper proof of age. It is not merely a matter of going to the Customs House and paying 6d. or 1/6, or whatever it is, for a birth certificate. You have to know the identity of the person whose certificate you are seeking, and you have to be absolutely certain that the certificate you get is in fact the certificate of the same person as the person mentioned in the policy for insurance, but there are numbers of cases in this country of persons whose ages do not appear in the register of births, deaths and marriages, and the obtaining of proof of the age of those persons is a matter of exceedingly great difficulty. It may involve researches and inquiries from old people and people who were at school with the person whose life is insured, and matters of that kind. It will almost certainly take longer than four months in particular cases, but when you envisage the fact that a company, in the ordinary course of its business, has to do perhaps thousands of these cases in a year, I do think it would be impossible for a company to ascertain correctly the age of each particular applicant within the period of four months mentioned in this measure.
Deputy Costello might perhaps have added a comment on the extraordinary difference between the Government's attitude towards fraud on insurance companies and their attitude towards fraud on the Revenue. The Minister for Finance is not prepared to assent to even a six years statute of limitations for anyone who makes a wrong declaration in respect of income-tax.
Next week, we shall have something to say about that.
I listened very attentively to the Minister, and I must say that, as the debate at present stands, the argument of Deputy Costello seems to be absolutely overwhelming. The Minister has not said a single word to explain why he regards the principle of adjustment as inadequate to deal with the situation.
I am afraid the Revenue is not as competent to protect itself against income-tax payers as insurance companies are to protect themselves against the class of people who do business with them, particularly in industrial assurance.
There is a lot of difference between four months and six years.
The Revenue Commissioners will not hear the Minister making that remark about them.
With all due respect to the Revenue Commissioners, the people who attempt to evade our income laws are mostly very clever people. There is much less disparity, much less inequality, in the contest than there is between the insurance companies and the unfortunate working people who are doing industrial insurance business with them. In the circumstances, there is no comparison at all. The situation is that, not infrequently, a person is induced to effect an insurance policy by more attractive terms being offered in consequence of the age of the insured person than would be procurable if the correct age were stated. The first factor that we have got to get clear is that, in industrial assurance, new business is secured by any company, as a rule, by intensive canvassing work. One of the particular difficulties in relation to this class of business, one of the conditions under which it is carried on, which leads to abuses, is this intensive canvassing for new business. People are induced to effect policies on which they cannot continue payment of premiums after a certain time and the policies are then allowed to lapse, and people are also induced to effect insurance policies on the lives of their relatives by being misled as to the possibility of their getting higher benefits than would be obtainable for the premiums payable if the ages of these persons were correctly stated, and there is no reason to believe that, in the misstatement of ages, the agents of the insurance companies are not acquainted with the circumstances.
Deputy Costello referred to the Industrial Assurance Report in Great Britain in 1934. It was there stated:
"We cannot but think that in a proportion of cases the agent is involved and that the misstatement which makes the policy more attractive than it otherwise would be originates in the keen desire of the agent to secure business."
If the agent is only thinking of his own commissions, is it not possible that that sort of practice might continue under this Bill?
It is for the company to control its agents. It is the companies that have been responsible for the system under which the business is carried on, and in so far as frauds are practised on the companies it is the companies themselves that are largely responsible for that fact because, in the circumstances under which they were in intense competition with one another, frauds were often connived at by the companies and, very often, they pay out in cases where they know there have been misstatements.
Would not this open the door to widespread frauds by collusion on the part of dishonest agents or servants of the company?
The companies must control their own staffs.
Mr. Bourke
Why did the Minister not give them that power of control in connection with ages on Deputy Lynch's amendment?
Deputy Lynch's amendment dealt with an entirely different point. They can control their own agents if they wish to, but the circumstances here are circumstances in which people are induced to take out policies by the attractive nature of the benefits represented to them as being payable under these policies. If, after a period, people are told: "Of course, these benefits are not payable at all because of the adjustment in the age of the person insured which is necessary following the receipt of evidence as to his true age, and the terms of the policy are altered, therefore, and the benefits payable under it are considerably less than you thought," such person has been induced, very frequently, to effect that policy by canvassing of the most persistent kind, and if at the end of a period he finds that the benefits are considerably less than he anticipated, I think he has ground for dissatisfaction, and perhaps he might even discontinue the payment of the premiums. I agree that, in those circumstances, in accordance with the provisions of the Bill, we are protecting them to some extent, but on the whole it is much more satisfactory to put the obligation on the companies to see that the business they are carrying on is carried on properly. I cannot understand this tendency of Deputies to avoid putting on the companies themselves the direct obligation to eliminate the disorder and the abuses that have been associated with their industry. As a matter of fact, I think we could have gone even further than we are proposing to go in this Bill in order to force companies themselves to effect the changes which appear to be necessary. We say to these companies: "We will give you a reasonable period, to wit, four months, in which you can query the age in any proposal submitted to you and change the age where necessary; but if, in four months you do not do that, you cannot do it afterwards, and the age on the proposal, and the terms of the policy in consequence of it, will remain unaltered." I am not at all convinced that we would be acting wisely in the interests of the policy-holders, in the interests of the proper conduct of industrial assurance business, if we were to adopt any other proposal than that contained in the Bill. I think that the proposal to allow the adjustment of the terms of the policy to take place at any time that a misstatement of the age is adverted to or brought to light, would not help us to eliminate the evils to which I have referred.
To what extent would it be an evil any longer?
The circumstances under which this intensive drive for new business is continuing would still give rise to certain abuses in relation to it.
Very mild ones. No policy-holder would have suffered any real harm.
Except in so far as people are induced to take out policies, that they would not otherwise have taken out, by this intensive canvassing or by misrepresentation as to the advantages to be obtained. It is in that connection that it becomes necessary to insert some such provision as is contained in sub-section (2), and not in connection with the alternative circumstances which Deputy Costello has in mind. The purpose of the insertion of sub-section (2) is to put on insurance companies themselves a direct obligation of seeing that these things do not occur, and of seeing that they assert effective control over their own agents.
Mr. Bourke
Has the Minister considered the point that the practical effect of this proposal would be to greatly increase premiums; in other words, that the honest policy-holders would have to pay for the cost? That is how it would work out in practice. The companies that cannot afford to be at any be at any loss will put the cost on to the policy-holders by increaseing the premiums.
The Minister has brought forward as a justification of this measure the fact that the insuraince companies have agents who, in their endeavours to get new business incite people to make false statements as to their age. Supposing we admit that that position exists—and I am not quite sure that it does—it is only a question of degree. There is another side to it. The Minister will acknowledge that there are people who without any incitement from the agents at all, make misstatements as to age on the proposal forms. Apparently the Minister takes the view that all the dishonest people are in the employment of the insurance companies, and that they incite innocent people to make false statements. In my opinion it is only a question of degree as to the amount of guilt on each side. At the risk of making a misstatement I say it is probably 50-50, and it is on that the Minister says a certain amount of misrepresentation is incited by agents of insurance companies. He is going to let the other section of the community away with the swag, while putting difficulties in the way of detecting even more flagrant abuses, if they are not discovered for four months after being committed.
As one who has associations with the insurance agents in this country, I think the bounds have been brought a little too far by the Minister using the words "misrepresentation" and "inducement" or a desire to get business whether it is good or not. I want the House to understand that the Minister is speaking of the exception to the general rule. If it could be applied to 1 per cent., or even to 40 per cent. of those engaged in this profession, which is a good clean honest profession, I think it is not right for anyone to brand them as a body of men who would stoop to any tactics in order to get business. I wish that that could be curtailed a little bit. It should not go out that insurance agents as a whole will go to the lengths stated in order to get business.
If insurance companies instituted for their agents more decent conditions than now prevail, this practice might disappear.
I suggest that Deputy Byrne has made a plea for the provisions of the Bill. Is he not pleading for responsible insurance agents rather than for a lot of irresponsible people who know that no importance is attached to their statements, and that if they get policies in any possible form they can be remedied at a future date?
I intervened only to protest against the continued attacks on insurance agents.
And I say that the effect of the Deputy's statement is support for the provisions of the Bill. These provisions make insurance agents responsible people, who have to examine the policies and to use their judgment as to the appearance of the persons to be insured, age, state of health, and so on, and to make a reasonable report. Under the proposals before the House there need be no limit to the period during which an insurance policy can be corrected. Obviously, insurance agents for whom so many eloquent pleas have been made, will, as soon as the Bill comes into operation, become responsible persons. Up to this they could be irresponsible persons who would accept any statement. There was no compulsion on them to use their judgement in regard to any facts or alleged facts that a person who wished to insure might put before them. Agents know that that position can be corrected at any time now. In my opinion, the four months' period is small, and I think it could be extended to six months. To leave matters as they are at present would mean that insurance agents would really have no responsibility. We know that irresponsibility was admitted by Deputy Dockrell, who I take it is in as good position as Deputy Byrne to know that a lot of reckless statements are made and false statements accepted. Accepting that position, it is very desirable that such a provision as this should be included in the Bill.
After the speech of Deputy Moore I am amazed that he went into the Lobby against my proposal on an earlier section, when I proposed that a fund should be created for insurance agents out of which to provide a pension scheme. The whole object of that was to make the conditions of insurance agents such as would attract the very best type of candidate. Deputy Moore went into the Lobby against that proposal.
It was a three-pronged proposal.
Mr. Lynch
I agree with Deputy Byrne. My proposal was aimed primarily to provide compensation for those that the Bill will make redundant, and a scheme of superannuation for future agents. Everybody admits that what Deputy Byrne said is correct, and that when there is talk about abuses by agents, these are the exceptions. The amount of business done by insurance companies is enormous, and in relation to that business the amount of abuse is infinitesimal. It would be a slander on the staffs of insurance companies, whether Saorstát companies or foreign companies, to say that abuse is general, or that honest dealing is rare. That is not so, and the Minister, I am sure, knows very well that the ratio of abuse to the business written is very small.
I have not yet got an answer to the question I put to the Minister: What reasons can he give for adopting the principle of four months rather than the principle of adjustment of age contained in the British Act of 1923? I asked that question repeatedly, and whether the Minister overlooked it or not, he has not given any answer for the adoption of that principle as the main thing. There is nothing in the Cohen report about it, nor can I find the origin of that principle contained in Section 59. No one proposes to leave things as they are. We do not want to let companies take advantage of frauds by their agents, and we do not want to allow a proposer to take advantage of his own fraud. No one wants to get a position in any law of this country which will enable anyone to take advantage of his own fraud. Under the principle of adjustment of age, each party to the contract would be equitably and fairly treated. If a proposer gives a wrong age, whether through the intervention of a collector or on his own initiative, under the provisions of the British Act of 1923, the company is enabled at the end of the term, or at the appropriate moment, to make the necessary adjustment and to give the proposer what he is entitled to, and no more. That is what we want. We do not want to let him, as is at present proposed, take advantage of his own fraud, which may not have been detected within the four months' period allowed by the Bill.
The Minister professes to be very concerned at the anxiety of Deputies on this side of the House to prevent his efforts to coerce insurance companies to put their houses in order. I agree with Deputy Byrne that there has been a little too much talk about abuses and of very heinous actions of agents. That there have been abuses is a fact, and is probably inevitable from the system, but the fact that there have not been more abuses is more surprising, having regard to the conditions that existed. I am more surprised at the Minister's attitude than the Minister has reason to be surprised at our attitude. His attitude amounts to this: "I want to protect the fellow who has entered into a fraudulent conspiracy with the collector of the insurance company, and I want him to get the fruits of his fraud. If the fraud is not found out within four months he is going to get away with it and I am going to let him legally get away." That is the position. It is very analogous to the position we discussed to-day on a previous section. We protested against a person being entitled to get away with the fruits of a fraud. We want a scheme which will prevent a company taking advantage of the fraudulent action of collectors by insisting on repudiating a policy at the end of a certain period, when they collected a number of premiums and, at the same time, prevent either the originator of the fraud, if the proposer is the originator, or the collaborator in the fraud, if the collector is the originator, from getting any benefit from the fraudulent act so started. That is all we want.
We think that this scheme, as it stands in the Bill, puts a premium on the fraudulent action of the proposer whether the fraud is initiated by the collector or whether he started it himself. We think that as an alternative remedy the provisions of the Act of 1923 in England, which appears to have worked fairly well, are preferable, and that they at least have the advantage of doing justice between both parties and preventing any person from getting any fruits from the fraud. If you look over the history of this country, since the Free State came into operation, you will see that the courts of justice were open to the various insurance companies, native, British and foreign, and there were remarkably few cases in the courts in which the insurance companies repudiated policies on the ground of fraudulent statement of age. The general practice was to adjust the age, although in strict law the companies might be entitled to repudiate the policy. There have been some cases of repudiation in the circuit courts and district courts throughout the country but they have been comparatively insignificant and very small in percentage when compared with the number of policies that are issued and paid by the various companies operatin the country. I want again to ask the Minister to give us some reasons as to why this principle is adopted for the first time in our legislation here—the principle of the acceptance of age unless it is disproved within four months as against the principle of adjustment of age which seems to be a scheme more suitable for doing justice between all parties than the scheme outlined in Section 59.
Deputies addressed themselves to this question as if insurance companies were compelled to accept every proposal.
Not at all. That is only avoiding the issue.
If the company has any doubt whatever concerning the bona fides of the proposer or the accuracy of the information contained in the proposal form, it can refuse to do business. They are in no way compelled to do business.
Is not the whole basis of this section fraud on the part of the collector? Assuming that to be so, the collector gets a person to put a wrong age on his proposal form. That goes up to the head office or to some branch office. The responsible people in the head office do not hear about that for months because the collector takes good care that they will not hear of it for months. Therefore, I suggest it is quite likely that the responsible official, in 80 per cent. of the cases, will not know of the fact that there is some difficulty about it and he cannot take any effective steps under this section.
Let us deal with the situation as put forward by the Deputy. We have had Deputy Byrne's statement about the agents. The fact is that insurance agents are employed on terms which compel them to go out canvassing actively and at every opportunity to get new business.
Not dishonestly.
And if they do not get new business they are unable to make a sufficient income and have to fall back on unemployment assistance.
You are suggesting that they do it dishonestly.
I am suggesting that the insurance companies have so arranged matters that if the agents do not get new business they will starve. That is common knowledge. We have, therefore, this intensive canvassing for business going on all the time. You have them trying to earn all the money they can and in many instances getting people to enter into policies which they cannot afford. They endeavour to get new policies, under any legitimate device which will not bring them under the law, in order to get increased commission. Consider the position of these agents in relation to the question which arises here. We shall either have the proposal in the Bill or the proposal of Deputy Costello. In the former case, assuming that this Bill comes into operation, the company must say to its agents: "Make sure that the age stated in the proposal form, so far as you can, is the correct age, because afterwards we stand to lose if the age is understated." That is going to be the position of the company in relation to the agents. They will instruct each agent to ensure that as far as possible the correct age is stated, and any agent who is responsible for any tactics which may result in the understatement of ages on proposal forms will cease to do business for that company.
Let us assume that the other proposal is adopted. The company is put in a very different position in relation to the agent. The company tells the agent: "Go and get business and if there is an understatement of age, we can correct that, either after the policy is effected or after the death takes place, and, on the correct age, we can adjust the amount of benefit we have to pay." The alternative proposal contains no inducement to the company to insist on its agents preventing understatements of age by the person seeking an insurance policy. On the contrary, a situation in which an incorrect statement of age is supplied, in a manner which induces the insured person to believe that he is going to get more benefits than, in fact, he is entitled to, can be proceeded with merrily without the company risking anything whatever because at a later stage, after the policy has been effected and premiums have been paid on it, or even when the claim on the policy is under consideration by the company, the necessary adjustment can be made and the company will only pay benefit at an adjusted rate having regard to the altered age. Under these circumstances, I think the proposal in the Bill is infinitely preferable in that it puts on the company the direct obligation to see that their agents, as far as possible, get a correct statement of age from persons filling in the proposal form.
In any event, the company can put on its proposal form, in accordance with sub-section (3), an intimation that evidence of the correctness of age will be required, and that the cost of producing that evidence is liable to be deducted from the amount insured. The company is given that power, and provision is made for giving birth certificates at a nominal charge. I think there can be no question that that is infinitely preferable to the alternative course suggested by Deputy Costello. If the case is made that the period of four months is too short, that can be considered. I am not committed to the period set out in the Bill, although I think four months is a perfectly reasonable period, and any company which has any proper control of its own business should be able, in relation to a proposal for a new policy, to get evidence of the age of the person to be insured within that period, and effect whatever changes are necessary if the age is found to be misrepresented. If Deputies seriously put forward that case on behalf of the companies, that the period of four months should be extended, I am prepared to consider it, but it is obvious that the wiser course is to insist that there should be a date fixed in relation to policies after which the statement of age could not be questioned.
I should like to say, as far as I am concerned, that I have a good deal of sympathy with this section of the Bill. I think it is absolutely essential if the abuses in industrial insurance are to be remedied to get something definite such as is contained in the Bill. I was rather interested to hear the Minister's statement about the conditions under which the insurance agents are recruited, and the conditions under which they have to live. I stated something similar myself on the Second Stage of the Bill, and I was hopeful that the Minister would make some effort in this insurance code which he is bringing before the House to improve the condition of agents. This will go a certain distance, but it will not clear up the position. Deputies talk about the dishonesty of agents, and about agents being responsible for wrong ages. I have no hesitation in saying that it is the companies that are largely, if not altogether, responsible. There is an unholy scramble in this country for insurance—particularly for industrial insurance. The insurance goes to the highest bidder, and the agent is paid on results. If the agent is to retain even the small amount that he usually gets, not to speak of earning sufficient to enable him to live, he must produce new business. You have an agent going into a house and canvassing people to insure their father, who is 60 years of age, for £20 at 1/- a week. Two or three days later another agent comes along and is told about the previous agent's offer. He offers a policy for £24 on the same terms, and an age is, accordingly, put down. That is not to say that false ages are not given by the persons taking out the insurance, but what are really responsible for 80 per cent. of the trouble about age are the conditions on which agents are recruited and paid. Until the Minister deals with those conditions, he is not going to clean up the position with regard to industrial insurance.
What happens at present? A company does not, generally speaking, give two hoots whether the age on the proposal form is the correct age or not. Certain companies, through their district superintendents, district managers and assistant managers, do take some trouble to see that the ages are approximately right, but generally speaking, it is a question of getting the insurance, and certain companies do not challenge the age until the claim arises. A number of companies, when the claim arises, pay the claim if the age on the death certificate corresponds with the age on the policy. Other companies are not satisfied with that evidence. For the first time, they insist on getting a birth certificate when the claim arises. They then reduce the amount payable to meet the correct or actual age, but they very seldom increase it when the position is reversed. In other cases, they refuse to pay at all, and refuse to give a refund of the premiums. If we want this business done in a proper way, let us have the correct age established at the beginning. That may be somewhat troublesome, but it is better, even at the cost of some trouble, that people should know when they take out a policy that the amount they insure for will be paid to them when the claim matures.
Deputy Costello said that not many cases go into court. The percentage of cases going into court may be small but it is increasing. Many more cases were taken to court last year than the year before and many more that year than the year previously. The position now is that, immediately certain companies appear in the circuit court, they are thrown out by the judge. That is well known. They have gone into court on the flimsiest excuses to try to deprive people of what they agreed, through their agents, to pay them in return for the premiums received. Even at this late stage, I want the Minister to realise that this Bill is not going to remove the abuses he complains of, so long as the conditions of employment of agents continue as they are. Let us assume that there is an insurance agent with a fairly substantial book, though not a book which would give him a salary, or anything approaching a salary. Let us assume that his possession of new business is 20 per cent. He then gets what is called a procuration fee. If he gets a 1/- worth of business he may get £1 for getting it. If he is in a good district and if he is a good agent, he may accumulate what is called a reserve. He is allowed to charge a certain amount of commission in respect of the reserve standing to his credit. This does not apply to all companies but it applies to some companies even at the top of the business. If, having been paid for three or four years, that 1/- worth of business lapses, that agent has to make the 1/- worth of business good again. What is worse, if that 1/- worth of business was got by the agent's predecessor, the man filling the position at the time has to make it good. I should like Deputies to have some realisation of what that means. If the agent is to retain his position or to get anything approaching a decent wage, he must procure new business. Is it not well known to the House that it is the practice of companies to get as many agents as they can in a particular district, knowing that each agent has a particular circle of relatives and friends and will get a certain amount of business from that circle? Generally speaking, as soon as that circle is exhausted, the agent is no longer required. When members of the House talk about what agents do to get business those factors should be borne in mind.
I confess that I am not in love with one or two parts of the section but, so far as the general principle is concerned, so far as the Minister is aiming at establishing the age at the beginning rather than at the end of the insurance, I am altogether in favour of the proposal. I want, however, to say to the Minister, as I said on Second Reading, that he is not by this means getting down to the root of the evil. The root of the evil lies in the manner in which agents are recruited and paid.
I strongly support the view Deputy Morrissey has expressed and I sincerely hope the Minister will not be tempted to alter the period of four months by one day. I think that this is a necessary provision and that the Minister is right in saying that the companies can easily put their house in order within the prescribed period. Deputy Morrissey, speaking evidently with special knowledge of the position, has referred to the driving of agents. Anybody seeing the circulars sent out to agents week after week realises the tremendous urge for new business. To maintain their positions, agents have to press for business in every possible way. These circulars did not emanate from comparatively small insurance companies but, as Deputy Morrissey has said, from companies at the very top of the insurance profession. Another very well known device is worked in the same way. In speaking of this I know what I am talking about. An agent in a certain district, earning 35/- to £2 a week, is endeavouring to do his work as well as he possibly can. That district is sometimes flooded out with part-time agents, whose immediate activities between their own friends are used as a lever to push this man and do more business. I am glad it has been made clear in Deputy Morrissey's statement that this is not a case of representing insurance agents as a pack of swindlers, but it is a reasoned attempt to show how insurance agents are driven through all sorts of difficulties. It is right to make that clear. I came across a number of cases recently, one a very glaring case. These cases arose out of the transfer of business from one company to another. In this particular case the agent went into a certain town and, carrying out the express instructions of the company—instructions very carefully not put in writing—got a number of people to transfer from the one company to the other. The name of the actual agent was put in in pencil in the proposal form and in order to obtain the same amount of benefit as that in the policy that they were proposing to transfer, the transfer card was written up in ink. A whole number of such cases has now arisen and I understand that law proceedings will follow in a short time. Some of the agents have left the company and some are with them still. These agents will go into court and tell the story. That reveals what I describe as one of the most disgraceful things I have ever heard of. A policy for £17 10s. 0d. was transferred and the person is now offered for that policy £7 7s. 0d. I hope the Government will be adamant in this matter, because a greater scandal in insurance I have not heard of than this.
It seems to me that this debate is following a curious line. It now seems that we are holding up to scorn and ridicule every insurance company in this country, as a gang of robbers, rogues and swindlers.
And the collectors as highwaymen.
Yes, as highwaymen. It is pretty hard to understand how a man like Deputy Murphy of West Cork can get up here and talk such arrant nonsense.
There may be truth in it.
This fact is clear. Deputy Murphy came forward and quoted a case where people were induced to transfer a policy under which they were to get £17 10s. 0d. for a policy of £7 7s. 0d. That, quoted as one of the activities of a certain local agent and uttered as a general indictment of insurance companies in this country, seems to me to be so extravagant as to exhaust patience. Personally I have considerable experience of insurance business, both from the agents' and the companies' point of view. Why must it be assumed that all the men engaged in this business in the country are rogues and robbers?
That has not been stated.
Deputy Murphy said it.
Mr. Murphy
I said if this Bill did nothing but to meet cases like that it would have been well worth bringing in.
It does not meet them.
The fact is that we are allowing our minds to think that this section is designed to make an end of all fraudulent practices in insurance business. This section will not do that. This Bill will make it possible to eliminate abuses which nobody more earnestly wants to see eliminated than the insurance companies themselves. The whole objection to this section rests on the ground that while attempting to check abuses which I admit are far less frequent than Deputies Morrissey and Murphy assume, it will work out in such a way as to give rise to a whole body of fraud. I know a good deal about insurance business in this country. I have been in it from the agent's side and from the head office side and I challenge the statement that every insurance agent in this country is engaged in carrying out frauds.
It was never said they were.
A great many things are never said but they are inferred. A good many people will take that idea away with them having heard the speeches of Deputies here. I am glad to draw from Deputy Morrissey the expression that that is an exaggerated view. I doubt if Deputy Murphy would give so bland a disclaimer of his intervention in this debate. I do urge people not to be carried away by the pathetic picture of the innocent simple harmless individual down the country who listens with open ears to everything that the insurance agent says and swallows it all. Neither city nor country people are so innocent as that. The Minister describes an agent rushing in and canvassing people to take a policy for an amount greater than that which they are able to carry. Insurance agents may go in as the gipsies have gone in and say to people: "If you give me 2/6 to buy lead I will bring you back material to make £5 worth of half-crowns." There are a great many people who have done that, but my heart does not bleed for them at all. In the same way if an insurance agent comes in and says to a man: "I know your father is 82 years of age; I will put him down in the policy as 60 years of age," and if the innocent son or grandson finds that after that policy is adjusted and the man's age is found to be not 82 but 60, he gets 3/9 instead of £25, I am not a bit sorry for him. If an agent comes in, canvasses a person and enters into a conspiracy with him to make a false representation to the company, my heart does not bleed for the person who takes out the insurance and finds that he is not getting away with his fraud when the policy comes to be paid. If an agent goes and makes false representations the insured party has a right of action against that agent for getting his money under false pretences. If an agent comes in and says: "that is a document which means that your father being 82 years if you pay 6d. a week, you will get £25 when he dies," but in fact the person who takes out the policy finds he is only entitled to 10/- on the death of the father then that person can recover his money from the agent. But on the other hand if the agent says to a man: "will you enter into a conspiracy with me to put down your father at 60 years of age though he is 82, and by that subterfuge you will get £25 to which you are not entitled," I say such a man taking out a policy thoroughly deserves to be penalised. But we do not propose any penalty. We say that he will get the sum to which he is entitled. No injustice can be done by that to the insured person or to the insurance company. In that way you will withdraw from the field of insurance a potent source of fraud. I have not the slightest hesitation in saying that action will be welcomed by the insurance companies and by the insured persons alike. I was interested to hear the trenchant attack made by Deputy Murphy on insurance companies and indirectly on Irish insurance agents throughout the country. So far as I am concerned, I am proud to say that I am associated with an insurance company, both the agents thereof and the managers thereof, and I never had any reason in my experience of the insurance world to suspect the widespread dishonesty that seems to present itself to certain other Deputies.
Deputy Dillon is rather sweeping in his statement, but then he has gone back to the other extreme. Deputy Dillon says he has a wide knowledge of insurance business in this country, both from the head office side and the agents' side. If he has, Deputy Dillon must know quite well that the statement I made of the position in this country is true, and if what I have said means the version which Deputy Dillon gave it, then I have nothing to withdraw from it. I say definitely that insurance agents in this country are recruited and paid and retained on such conditions, and the scramble for industrial business is so great, and the methods used to obtain it are such, that the business cannot be clean and has not been clean. Deputy Dillon seems to be amazed at the case Deputy Murphy cited, but we know that that is no isolated case. I have had numerous cases brought to my notice over the last ten or 15 years where persons canvassed in order to transfer business from one company to another. I have known cases where persons were induced to allow their policies to lapse, and they then took out fresh policies. The company to which they had been paying premiums in the first instance had not been injured in any way. They had the premiums, and when the policies lapsed their responsibility ceased.
Deputy Murphy gave one case. I can give the House numerous cases, but I will just mention one. A certain policy-holder was approached and appealed to on certain grounds to transfer her policy to another company. Eventually the lady consented to transfer. The appeal was not made on business grounds. She was promised and guaranteed immediate full benefit. The company to which she was originally paying had undertaken to pay her between £18 and £19, as far as I recollect. Four months after the transfer, the insured person died, and instead of getting £18 or £19, her next-of-kin got £3 12s. 0d. or £3 15s. 0d. There are numerous cases of that sort. I do not know whether that has happened recently. I am not in as close touch now with the insurance business as I was some years ago.
The Deputy says that people are not all fools. Does the Deputy realise what it means for the average person in the country involved in industrial assurance? Let Deputies ask themselves how many people in the country understand even a proposal form or a card, not to talk about understanding an insurance policy. Let us keep in mind the particular people who come under industrial assurance. They do not understand the proposal form. If a card were handed to them by the agent and they were asked to fill it in, the vast majority would not be able to do it. They are not able to understand an insurance policy. In any case, even if they can read it, they do not fully understand it.
Just look at the way business is secured sometimes. In Great Britain the Cohen Committee reported that out of 10,000,000 industrial policies issued in one year, over 6,000,000 lapsed. The committee went on to say that was because of the inability of the people to pay. With all respect to the committee, I do not think it was inability to pay. It is inconceivable that out of 10,000,000 industrial policies taken out in a particular year, 6,000,000 would lapse because of the inability of the people to pay the premiums. Perhaps a certain number would lapse through that reason, but I suggest that one of the chief reasons for the lapse was because of the way in which the agents were recruited, and the way in which they secured the business. When a company appoints an agent, he whips around his family and friends and relatives, and they take out policies, not so much because they want to insure, but because they want to give Johnny a shove on in his new job. As soon as the company find out that Johnny cannot get them much more business, they dispense with his services, and many of the policies lapse. That is probably a truer explanation of the large number of insurance policies lapsing; I think that was more likely the cause of the policies lapsing than sheer inability to pay.
I do not know whether dishonesty can properly be applied. I suppose it is literally true that there is dishonesty, but a great number of people unfortunately do not look upon it as a crime in this country to do certain things to get on the good side of an insurance company. Even as regards juries in court, we know that. We know there are people taking out insurance who will deliberately understate the age, hoping that when they claim insurance they will be able to get an age stated on the death certificate that will correspond with the age on the policy and that the company will be satisfied. A number of companies are. There is a scramble for business and, so long as the agents are paid on the present basis, I am afraid the abuses will continue. This section suggests a very big improvement on the present position and in principle it is sound. It will see that the policy-holder gets fairer treatment. I am in favour of the principle, at any rate.
I do not pose here as one who has either an expert knowledge or even a mere passing acquaintance with the practice of insurance companies. I recognise that there is abuse. The extent of that abuse I am not in a position to assess. I might take Deputy Morrissey's, Deputy Murphy's or Deputy Dillon's view as to the extent of that abuse. That there is some sort of abuse is admitted. What we are discussing in this section is not the abuse but the remedy for some sort of abuse, and the question is whether the Minister's remedy is a better remedy than the remedy that has been tried out elsewhere under the 1923 Act. The Minister has produced what purports to be the best method of dealing with an abuse. What strikes me is that that lets out the gentleman who is the participant in fraud. That is what I object to.
The other principle of the adjustment of age does not let the person guilty of fraud, or who participates in fraud directly or indirectly, get any of the fruits of his fraud. I do not want a person who knowingly puts down that his mother is 50 when she is really receiving the old age pension— I do not want a mantle of legality thrown around that gentleman. That has been done to my own knowledge, not through the instrumentality of an insurance agent, but through motives of self-interest and for fraudulent reasons. I do not want to let that gentleman out, and that is why I ask the Minister to tell me why this principle of the admission of age after four months is better than the principle of the adjustment of age. I am not yet convinced that the adjustment of age is not the better method, because it enables justice to be done between the parties. It enables the person who insures to get what he is entitled to get and it prevents the company from getting what they are not entitled to get.
Under this proposal, if by inadvertence, or by the cleverness of the agent or the proposer for a policy of insurance, a period of four months is got over before a fraud is discovered, there is no method left of remedying the fraud. The insurance company must pay, and the persons responsible for the fraud are entitled by law to get away with the fruits of their fraud. That is why I object to the principle in this section, and for no other reason. I think that the discussion as to the extent to which abuses exist either as between insurance companies and their employees, or otherwise, is not relevant to the issue. The relevant issue here is whether the remedy proposed is a good one, and, if it is, is it a better one than the one that has been proved across the water against which there has been no suggestion as far as I know. I have heard nothing from the Minister except that he said it is right, in his view, that there should be a direct obligation put upon companies to order their agents to see that in every proposal form the correct age must be inserted, and that there will, therefore, be no inducement to an agent to commit a fraud in the matter of age.
I entirely disagree with the Minister in that respect, and I think that quite the opposite is going to happen. If the principle of adjustment is adopted, then the agent will know that there is no point to be gained by getting a person to put a wrong age on a proposal form. He will know very well that such a thing will get noised abroad amongst those people, that eventually it will not do them any good, and that all they will get is what they are entitled to under the conditions of a policy applicable to the proper age. Therefore, the agent will have no inducement to commit a fraud if the principle of adjustment is adopted. In the other case, he is ordered to see that the correct age is put in. What is the penalty for not putting in the correct age? Dismissal. Under the proposal in this Bill will he not be under a greater temptation than ever to commit a fraud? There will be the temptation to put in the proposal form some age near enough to the correct age, and then he will be in a position to cover his tracks for the four months. Consequently, I submit that there will be a greater temptation for him, that he will have greater facilities for committing a fraud under the Minister's proposal than under the principle of adjustment. That is what I object to. I am not here dealing with the abuses that Deputy Morrissey and others spoke of, because I think that part of the discussion was irrelevant. It was quite clear from Deputy Murphy's speech that he had not the faintest notion of what all this was about.
What we are concerned with is the principle in this section. I say that that principle is not as good as the principle that has already been tried out. It does not appear to me to be a good principle. It does not appear to be one that has emanated from any commission or from anybody with experience so far as we know. We do not know anything about the origin of the proposal in this section. It has never been tried out and never suggested by any commission. It appears for the first time in this Bill. There is no suggestion that the principle of the adjustment of age has not worked equitably and properly, and for that reason, and not for any of the reasons relating to abuses and so on, I object to the proposal in this section.
I think it is quite apparent from the arguments used by Deputy Dillon and by Deputy Costello that they are not aware of the conditions under which insurance policies are issued in this country. I say that in spite of Deputy Dillon's boast that he has been in touch with the agent side of insurance work. As has been pointed out by Deputy Morrissey, I think it would be correct to say that 60 per cent. of the insurance business obtained in this country is the direct outcome of the activities of agents and their canvassers. I think that the remaining 40 per cent.—I am inclined to think that the figure is altogether too high—is done by people on their own and not as a result of canvassing by agents. Deputy Costello has just said that the method in operation at the moment is far better than the one suggested in the Bill.
Not the method in operation at the moment, because there is no method in operation.
There is as far as the unfortunate policy-holder is concerned.
On a point of explanation. What I said was that the method in the Act of 1923, the principle of the adjustment of age, was a better principle, to my mind, than the principle that is proposed in Section 59. I did not mention the method in operation at all because, as I have said, there is no method in operation.
I would be sorry to misrepresent the Deputy. To come back to the question of insurance, Deputy Dillon complained that Deputy Murphy and Deputy Morrissey were condemning insurance companies for being robbers and so on. I think that Deputy Dillon went out of his way to stress the other side of the question by suggesting that there are policyholders who have deliberately set themselves out to rob insurance companies. I do not think there is any evidence of that. As a matter of fact, there are a great many people in the country to-day who do not know the ages of their fathers and mothers or even of their brothers, and when taking out insurance policies give a certain age in all sincerity and good faith. In my opinion the Minister's method of dealing with this is the proper one. Any insurance company carrying on in a businesslike way will certainly be able to find out inside of four months whether the age submitted on a proposal form is correct or not. Deputy Costello says that what is proposed here will be an incentive to agents to be dishonest. While that kind of thing may go on for a little time, in my opinion a properly conducted insurance company will soon discover whether an agent is committing that kind of fraud or not.
There is one aspect of the question which so far as I know has not been touched on previously, and to which I would like to refer to briefly. An agent calls on a person and gets that person to take out a policy of insurance. He does not bother his head to find out whether the age given is approximately correct or not. That unfortunate person continues to pay premiums on that policy over a number of years. There is a certain sum of money assured in the policy. After the death the policy-holder, expecting to get a certain sum of money under it, incurs a good deal of expense. About a week or a fortnight after the burial of the deceased has taken place, the policy-holder finds that he or she is not getting near the amount laid down in the policy. That kind of thing is largely responsible for putting people into debt and leaving them worse off than if they had never taken out an insurance policy on some relative or friend. I do not know of any better method for dealing with this than the method suggested by the Minister in the Bill. As I have already said, any decently conducted insurance company will be well able to find out inside of the four months whether the age given by the agent is correct or not.
It seems to me that the issue we are discussing here boils itself down to this: whether we are going to have the correct age established at the beginning or at the end. If an insurance company can withhold payment, when a claim arises, for whatever period is necessary to enable it to establish the correct age of an insured person, I do not see any insuperable difficulty in having that established at the beginning. All that is being asked in the section is, that the correct age of the person to be assured is established before the contract is entered into and not at its termination. In my opinion it is not only reasonable to ask that but it is absolutely necessary. While I can see the force of Deputy Costello's point about the principle of the adjustment, still I think that its adoption would lead to greater confusion and trouble, and, eventually to more expense, than the proposal in the Bill. If it is a question of having the correct age established, it must be established at some period. I am for having it established at the beginning, so that both the insurance company and the person effecting the insurance know where they stand.
I should like to ask Deputy Corish this question. Fortunately, this is a debate in which no heat need be engendered. If the Deputy says, and rightly says, and from experience both of us know it well, that there are many people in this country who could not tell what their mother's age was or what their brother's age was, how in the name of goodness does he expect the insurance company to find out?
If there was an obligation on the person who is going to insure to find out the age he could find it out. But the Deputy knows as well as I do that an agent comes to the door of a person, who has not the slightest notion of having anyone insured, and he is not going to bother to find out what the age is. It is because of the amount of pressure brought to bear upon that person by the agent that the business is got. The insurance company could find out through the proper channel what the age is.
In that case, of course, I see Deputy Corish's point of view. But, as we both know, there are a great many people in this country whose mother's birth has not been registered. I imagine that problem will become less common as we pass into the census period. How the insurance company is to find out the age of these people I do not know when their own children find it impossible to do it now when they are looking for the old age pensions for them. I was perhaps moved to some heat by Deputy Murphy's injecting into this discussion another evil altogether and that is the business of the transferring of policies from one company to another. That is, of course, a perfectly dishonest practice. If you go to a person who has a policy with one company and ask him to do something that cannot be done, to transfer his business to another company, it is simply an invitation to him to lapse his policy and hand his premiums over to some other company. That is an intolerable abuse for which there ought to be, and for which in fact there is, a remedy; but that is another day's work which we can discuss at some other time. I have heard no argument from the Minister to explain to us to-day why it is, when he has before him a scheme operating in Great Britain for, I think, ten years——
And operating here. The great bulk of the industrial assurance business here is done by English companies operating in this country in accordance with the 1923 Act.
I said that myself.
It is a scheme now in operation here and it is proving of no effect whatever.
The Minister is not being entirely disingenuous because, in fact, what is happening, and what has been happening for a long time, is that British companies are operating under the terms of the 1923 Act but, in effect, there is no statutory obligation upon them to do so. Certain of the Irish companies have operated along the lines of the 1923 Act, but there is no statutory obligation on them to do so. The fact is that you have in Great Britain, I suppose, the greatest industrially insured population in the world who have come up against this problem we are dealing with and have had commission after commission dealing with this question. They made up their minds that the best plan was the plan suggested by Deputy Costello and they put it into operation. Can the Minister say to us now: "This has failed in Great Britain; they with their experience have found that this is not providing the protection for their insured population that it ought to provide, and it is because it has failed in Great Britain that I have turned from that remedy to look for another." I do not think he can say that. If he was in a position to say to us: "My remedy is manifestly superior and, in so far as the 1923 plan succeeded in Great Britain, my plan will succeed better here," then we could hear him with patience. But he does not make that comparison between the two schemes. He does not meet the case which we put up to him, that where you have something tried out exhaustively over a long period and where it has apparently given satisfaction, the sensible thing is not to try out something new on the Irish dog, but to try out a tried and tested scheme which has given satisfactory results and ended the abuses which existed before the reform was introduced. That is all we want. We do not want to twist anybody's tail or penalise anybody for what has happened in the past. Our concern is to prevent the evil in the future. The 1923 provision definitely achieved that purpose in Great Britain. Why not use it here?
Section put and declared carried.
SECTION 60.
(1) Subject to the provisions of this section, whenever an industrial assurance company or any person employed by any such company takes possession of a policy of industrial assurance or a premium receipt book or of any other document used by such company in connection with such policy, a receipt for such policy, premium receipt book or other document (as the case may be) shall be given by such company or person (as the case may be), and such policy, premium receipt book, or other document shall, unless such policy has been handed over or given up to such company by reason of payment of the sum assured, or of the cash surrender value of such policy, or of the issue of another policy in lieu thereof, be returned by such company or person (as the case may be) to the person from whom such policy, book or other document (as the case may be) was received within 30 days after such taking possession, and may be so returned by delivery or by leaving for him at his last-known place of abode.
(2) Where possession is taken by an industrial assurance company of a policy of industrial assurance, or of a premium receipt book or of any other document issued by such company in connection with such policy for the purpose of legal proceedings by such company against a collector employed by such company, such company may retain such policy, premium receipt book or other document for such period, longer than the said 30 days, as may be necessary for the purposes of such proceedings but, where such retention is for a period longer than the said 30 days, such company shall give to the person from whom such policy, book or other document (as the case may be) was received a copy thereof certified by such company to be a true copy.
I move amendment No. 130:—
In page 35, sub section (1), lines 13 and 14, to delete the words "issued by such company in connection with such policy" and to insert the words "which is a document issued by any industrial assurance company in connection with a policy of industrial assurance."
The object of the amendment is to provide that where a collector, not of the company to whom the policy belongs, but of another company, takes possession of that policy, he should also give a receipt. The object is really to prevent poaching by one collector on another collector's business. The section as it stands merely provides that if a collector of a company takes possession of any policy or premium book, then he has to give a receipt for it. The object of the amendment is that if a collector of another company comes along and persuades a policy-holder in the original company to give up that policy and effect a new policy in his company, then he should give a receipt for that policy also. It is merely an endeavour to put a check on poaching by one collector on another collector's preserves, so to speak.
The amendment goes further than that. In any event, I am not sure that it does not go further than would be justified. Where one of the parties to a contract takes possession of documents which are the holder's evidence of the existence of the contract it is quite a different matter from where the holder of a policy of insurance, for any reason which satisfies himself, desires to hand over those documents to another party. In the first case, the desirability of the holder getting a receipt for the documents is obvious, but in the second case I suggest it is purely a matter for the holder himself. The circumstances are different. What we provide in the section is to cover only the barest minimum, and that is the precise case where there are two parties to the contract and where the holder of the documents, which are proof of the existence of the contract, parts with them to the other person interested in the contract. I submit that that is a very different case from where the holder of the documents for some reason of his own hands them over to a third party who has no interest in the contract. Whether he gets a receipt in that case is not a matter of statutory provision; it is a matter for the holder himself.
Surely the Minister cannot sympathise with us when Deputy Murphy talks about the transfer of policies, and then frown on an amendment which I do not suggest is going to stop it but which will facilitate investigation. Surely the Minister sees that, at any rate, it would tend to decrease the number of transfers of policies by people who are induced to surrender them and who do not get an adequate return for the benefits that they surrender.
May I urge that this proposal of Deputy Dockrell seems to be designed, partially at least, to remedy the evil of the fraudulent transfers of business which are, in fact, not transfers of business at all but simply a lapsing of the old policy and the taking up of a new one with a different company? If only for the purpose of making it possible to track these things down, would it not be a good thing to require one agent to give a formal receipt for the policy of another company which he took up?
I should like to consider it. I think it is going a bit further than we should go.
If the Minister will consider it, I am quite satisfied.
Amendment, by leave, withdrawn.
I formally move amendment No. 131:—
In sub-section (1), line 23, to delete the word "thirty" and substitute the word "forty-two."
Frankly, I do not know what is in the mind of the Deputies in whose names the amendment stands.
The section requires that where a policy or documents relating to a policy are taken by the company from the policy-holder for the purpose of inspection, they must be returned within 30 days. The amendment suggests that that period should be extended to 42 days. I think 30 days is long enough in the circumstances. I cannot quite see why this particular extension is proposed.
Amendment, by leave, withdrawn.
Amendment No. 132 not moved.
Question proposed: "That Section 60 stand part of the Bill."
It appears that sub-section (2) makes no provision for the retention of a policy where an insured person desires to deposit a policy with an insurance company for the purpose of raising a loan. I think a similar difficulty has arisen under the 1923 Act in Great Britain, but I assume the usual procedure would be for a person to deposit the policy which would be a mortgage by equitable deposit. Sub-section (1) apparently precludes an insurance company from accepting such a deposit. That would be a bad thing, because a number of persons who have these industrial policies——
Sub-section (2) makes provision for the retention of the document longer than 30 days for the purpose of legal proceedings.
Under sub-section (1) the company may not hold the policy for more than 30 days. If you want to deposit your policy by way of equitable mortgage by deposit, you can do it with a bank, but, of course, the usual practice for people in modest circumstances who have a policy of this kind and wish to mortgage it temporarily to get a loan, is to negotiate the transaction with an insurance company. If sub-section (1) stands unamended, it will be impossible for insurance companies to do that kind of business in future. I understand that, in the Cohen Report, there is a strong recommendation that facilities should be restored to the insurance companies to carry on that business.
I will look into that matter.
Section 60 (2) provides that where, for legal proceedings, a company retains a policy for more than 30 days, they must issue a certified copy to the policy-holder.
Where it is retained for the purpose of legal proceedings against a collector.
What I was going to suggest was that this puts a statutory obligation upon them to do it in every case. Would it be equally desirable— it would certainly be more economical —if they were only required to do it on request, because one can imagine the situation arising in which a policy-holder did not require a copy of the policy. One cannot imagine his going into court, however, without his legal adviser or the presiding justice calling on the insurance company to provide a certified copy of the policy, for the purpose of defence or any legal proceedings in which the policy-holder might be involved.
He is not involved in the legal proceedings contemplated here. This refers to proceedings by a company against a collector for which the policy-holder's documents are required as evidence. In that case, we provide for a certified copy. I dislike, in relation to industrial insurance, any provision whereby a thing must be done on request, because, in 99 per cent. of the cases the request will not be made or a person will be persuaded not to make it. I think that in, circumstances of this kind, where documents are required for the purpose stated, it is no difficulty to a company to provide certified copies. The cases will be very rare.
The matter is of no great importance. The Minister will look into the other matter arising on sub-section (1)?
Yes.
Question put and agreed to.
SECTION 61.
(1) No person who has effected a policy of industrial assurance with an industrial assurance company (whether before or after the commencement of this Part of this Act) shall incur any forfeiture of such policy by reason of a default in paying a premium in respect of such policy unless a premium payable in respect of such policy is unpaid for not less than ten weeks after it became due.
(2) Where a policy of industrial assurance has become forfeited by reason of the non-payment of a premium payable in respect thereof, and it is shown that the collector or other person having the duty of collecting the premiums payable in respect of such policy was negligent or failed to exercise due diligence in the collection of such premiums during the period between the last payment of any such premium and the forfeiture of such policy, and within two years after such forfeiture all unpaid premiums in respect of such policy (including premiums which would have become payable if such policy had not been forfeited) are paid to the industrial assurance company by which such policy was issued, the said forfeiture shall be cancelled and the rights under such policy of the person who effected such policy shall become and be revived.
Amendments Nos. 133, 135 and 137 might be discussed together. They all deal with the conditions that will operate before a policy can be forfeited.
I move amendment No. 133:—
Before Section 61 to insert a new section as follows:
(1) No industrial assurance policy shall, by reason of any default in paying any premium, be forfeited or, except on the request in writing of the policy-owner, converted into a free policy until after an arrears notice has been served on the policy-owner, and default has been made in complying with the terms of the notice. The arrears notice shall state the amount of the arrears due, and that if that amount is not paid in full to the company or its duly accredited agent at some place to be specified in the notice within 28 days from the date of service, the policy shall be forfeited.
(2) No question shall be raised by the policy-owner as to the service or validity of a notice before forfeiture or an arrears notice whether served before or after the passing of this Act unless raised within 12 months from the date on which any sum in respect of premiums was last paid.
(3) Any sum accepted by the company or its duly accredited agent during the days of grace following the service of an arrears notice shall be entered in the premium receipt book and, where such sum is less than the full amount of arrears stated in the notice and such notice is not waived, the policy-owner shall be entitled at his option to have any sum so paid either returned in full or applied to extending the period for which premiums have been paid for the purpose of calculating the rights of the policy-owner to a free policy or a cash surrender value. Provided that the company shall not be compelled to accept any sum less than the full amount of arrears stated in the notice, and the acceptance of any less sum shall not operate as a waiver of the notice.
This amendment nominally alters somewhat the provisions of the section. It reduces the ten weeks' period suggested in the section to 28 days, and it does not incorporate this idea of a policy which has lapsed being revived after a period of two years. I should like to suggest that ten weeks is really too long a period, and that allowing a policy to be revived up to a period of two years would scarcely be fair unless some of the conditions under which it was taken out were to be reviewed. There are some other matters in the amendment which are not covered by the Bill, and I am sure the Minister, on reflection, will agree that they are highly desirable. I think he will agree that the serving of a policy-holder with full particulars of his arrears, etc., having regard to the class of person taking out such a policy, is a very desirable form in which his default should be brought to his notice. The question of accepting payments on account, which would probably arise frequently in such a case as this, is well worth the Minister's consideration.
Mr. Lynch
My amendment, No. 137, is in the same terms as the amendment in the names of Deputy Norton and Deputy Murphy:
To delete all words from the beginning of sub-section (2), line 45, up to and including the word "thereof" in line 47, and substitute the words:—
"A forfeiture shall not be incurred by any member or person assured in an industrial assurance company by reason of any default in paying any premium until after:
(a) notice stating the amount due from him and informing him that in case of default of payment by him within 28 days and at a place to be specified in the notice his interest or benefit will be forfeited, has been served upon him by or on behalf of the company; and
(b) default has been made by him in paying any premium in accordance with that notice, and"
and to delete the word "and", line 47, and substitute "(c)".
This amendment is more or less similar in effect to Deputy Dockrell's amendment. The words of the British 1923 Act are inserted in substitution for the first portion of sub-section (2) of the section. The section as it stands does not provide for notice of forfeiture to the policy-holder, and if an insured person died when the premiums were 11 weeks in arrears, the proposer would not be in benefit. I think it is very advisable, in the interests of the policy-holder, that the notice prescribed in the suggested sub-section (a) should be inserted, because it would give a policy-holder, where there was a negligent agent who had not been calling for the premiums, an opportunity of communicating with the head office of the company and making the case that the agent did not come to collect the premiums. I cannot see why the Minister departed from the provision in the English Act in this respect. It seems to be equitable from every point of view, and entirely for the benefit of the policy-holder.
The amendment proposed by Deputy Dockrell is taken verbatim from the Cohen Report, page 68, and it is obvious that the Minister in this section has again introduced a new principle for which there is no precedent to be found, and for which, so far at all events, we have got no real basis on which to rest an opinion. The Minister's proposal is to do away with the forfeiture notice that has been in existence, I think, since 1875, and to substitute therefor a system by which the policy automatically becomes lapsed after ten weeks' non-payment of premiums, provided that the collector makes a weekly call during each of these ten weeks. Now, some astonishing results may ensue from that particular system, which appears to me to be a system which, probably, will not work. I cannot see, however, why, in the interests of the policy-holder—and in this connection I am looking at the interests of the policy-holder entirely—the forfeiture notice should be dispensed with and done away with completely and, in lieu of it, there should be the substitution of a ridiculous system of having the collector call to a very unwilling policy-holder for a period of ten weeks, during which period the policy-holder will not have the slightest intention of paying his premium.
The Cohen Report has recommended the reappearance of the three paragraphs contained in Deputy Dockrell's amendment, and I think that for that reason alone the amendment is deserving of some consideration, and I await the Minister's reasons for departing from the principle of forfeiture notice. I think that the policy could not be lapsed until the expiration of 28 days from the service of forfeiture notice. That appears to me, at all events, to be a much better provision in favour of the policy-holder. If he gets a notice by post, say, that his policy will lapse unless he pays the arrears within 28 days, at least he knows where he stands. In addition to that, there is allowed a certain discrimination to the decenter offices and better-class companies. A number of people who had effected policies of insurance were, owing to a variety of causes, such as lack of work or losing their employment for a period, and so on, unable to keep up their regular weekly payments, with the result that arrears accrued. Afterwards, when they succeeded in getting employment again, they were able to pay the premiums and there was an arrangement by which the arrears could remain as they were, or they could pay some little contribution towards the arrears from time to time. That system will be done away with by the provisions of this section because, automatically, after the lapse of ten weeks, the policy has gone and there is no necessity to serve the forfeiture notice, and, in effect, the practice of discrimination in cases of the kind to which I have referred will be done away with also.
I do not know what is the motive behind this new system, but as I say, it will probably be impracticable and it will certainly work against the interests of the policy-holder because you will have the situation very often that the policy-holder, for some reason or another, has made up his mind to lapse the policy. It may be that he has paid a few weekly payments just in order to put a friend of his, a newly-appointed agent, on his feet, or to give him a leg up, and then the policy-holder decides to lapse that policy and, according to this, the company must send around a collector for ten weeks after that knocking at the policy-holder's door. As a matter of fact, I think that the Gárda Síochána should take it on themselves to have this provision in the Bill done away with because it is something that is likely to lead to a breach of the peace since, very often, these collectors will be set upon by the people concerned who will say that they do not want them calling and knocking at the door week after week.
People are getting accustomed to it by this time.
Accustomed to what?
To being called upon by insurance agents.
Being called upon by an agent who wants you to take out a policy is one thing, and being called upon constantly by a collector to pay a premium that you have no intention of paying is quite a different thing.
They are used to being called upon by agents canvassing them to take out a policy that they have no intention of effecting.
Yes, and of course the Minister knows the extraordinary facility with which these poor people do take out policies every week. Indeed, it is a matter of perpetual astonishment to me how it is done. But apparently they have considerable facility for doing it. However, when they have made up their minds that A.B. is the man they are going to insure with, and then when C.D. calls for ten weeks looking for the payment of the premiums, there is going to be a row. Consequently, in the interests of the Minister's own constituency, around about Clanbrassil Street or Winetavern Street or some of these places, I think the Minister should withdraw this section, revert to the principle that has been in operation, and apparently sound operation, for so many years, and adopt the principle recommended by the Cohen Report in 1934. As far as I can see, the provisions in Section 61 have nothing to recommend them. I do not know where they were got or who conceived them. There seems to be a general idea in this Bill that if you follow anything British it will look queer. The Bill seems to be largely designed on that principle. Well, perhaps it would be better for me not to pursue that line of argument as I do not wish to say anything provocative.
We have had both arguments in connection with it.
At all events, this section contains another new principle. Everywhere that it was possible to produce a new principle, the Minister produced it, and he was not able to justify it any more than he is able to justify it here, as far as I can see. Wherever he could quote the report of the Cohen Committee he quoted it— or misquoted it, some of us might think—extensively, but wherever he cannot quote it in justification of his action, he brushes the report aside as of no account. The Minister's attitude evidently is that so long as the principle introduced is something new it must be all right, no matter how ridiculous it is. Perhaps the Minister will tell us now the reasons on which this principle is based and why he thinks that these provisions are better than those recommended in 1934 by the Cohen Committee?
Certainly. There is no longer the same necessity to provide for notice of forfeiture. When provision was first made in the law requiring notices to be issued before forfeiture, there was no obligation on the company to collect the premiums at the policy-holder's address. That is changed by this Bill now. Under this Bill the collection by means of collectors is made a part of the contract, and consequently there is no possibility of forfeiture being incurred through inadvertence. If a company wishes to issue a forfeiture notice, it may do so, but it is not being made a statutory obligation. Section 3 of the Collecting Societies and Industrial Assurance Companies Act, 1896, provides that forfeiture shall not be incurred by reason of default in paying premiums until after the policy-holder fails to comply with a notice informing him that in case of default in payment within a reasonable time, not being less than 14 days, his interest or benefit will be forfeited. The present practice of the industrial assurance companies is to lapse the policies only after notice before forfeiture, allowing 28 days in which to pay, has been issued and payment has not been made within that time. In the Bill no provision is made for the issue of such notice before forfeiture. Section 61 provides that a policy shall not become forfeited for non-payment of premium unless the premium is ten weeks in arrear, and if such forfeiture is caused by the negligence of the collector the policy-holder, on payment of the arrears due, may at any time within two years have the forfeiture cancelled and the policy rights fully restored. Section 62 provides that where a policy becomes so forfeited the policy-holder, if his policy has been in force for a stated period, shall become automatically entitled to a free paid-up policy assuring the payment, on the terms of the forfeited policy, of a reduced sum determined by the Third Schedule. The forfeiture notice for which provision was made in the Act of 1896 served a useful purpose when the free paid-up policy rights depended on application having been made by the policy-holder, but under the Bill no such application is necessary. The provision in the next section provides that these rights automatically are conferred upon policy-holders in the circumstances prescribed in the section. In Section 62 (6) we are providing that in every premium receipt book there shall be notice setting forth the circumstances in which forfeiture for non-payment shall occur and the rights of the policy-holder in the event of forfeiture.
It is never read.
Each time a payment is made it will be brought constantly to the attention of the policy-holder. The combination of automatic free paid-up policies and the non-requirement of notice before forfeiture should be, in my opinion, of material benefit both to the policy-holders and the companies. The only point upon which representations have been received so far is on the requirement that the period of two years for payment of the arrears where the failure to pay the premiums within ten weeks was due to the fault of the collector of the company, is too long and it was suggested the period should be reduced. I should be slow to make any such reduction. There is no sense in carrying into this Bill a provision in existing law designed to deal with different circumstances. When a notice of forfeiture had to be issued before the contract could be cancelled, on the ground of non-payment of the premiums, there existed two conditions which will no longer exist; first, there was no obligation on the company to collect premiums at the address of the assured, and, secondly, there had to be an application by the assured before the free paid-up policy rights provided by law would be conferred. Under this Bill these two conditions are changed. It is part of the contract that the insurer must collect the premiums at the address of the insured, and if default in the payment of the premiums is due to failure of the insurer so to collect the premiums, then the insured has got certain rights; namely, the right to revive the policy by payment of the arrears within two years, and thus secure cancellation of the forfeiture. If and when the policy is forfeited on the ground of non-payment of premiums, then in accordance with the conditions set out in the Bill, if the policy has been in existence for the required period the policy-holder automatically becomes entitled to a free paid-up policy. Under these circumstances I think there need be no special obligation to give notice, but there is nothing in the Bill to prevent a company giving notice, if they so desire.
It is a great pity the Minister did not carry what he has stated into the Bill. One of the most valuable provisions with regard to industrial insurance was the fact that a person had to be served with a forfeiture notice or a lapsed notice, as it is known. Notwithstanding what the Minister stated, I am satisfied that it will be a flaw in the new code unless it is made obligatory on a company to serve such notice. The Minister stated that the necessity for doing so was removed by the fact that there was an obligation on a collector to call at the house of the assured. It is always possible, even with the best intentions, for a space of ten weeks to elapse before the collector met the person who paid the premiums. I know persons who have insured their fathers, mothers, or other relatives in whom they have an insurable interest, and as they may be employed in other towns for three months, during that time it would be impossible for the collector to get into touch with him. A further point is that some people are negligent about paying, and only do so when they get something on paper stating that they are going to be deprived of their policy. It is only when they get a notice they begin to realise that if they do not pay the policy is going to be lapsed. That has a much greater effect upon them than the word of an agent. I agree that agents in their own interests do their best to keep policies alive. They often do more than that, and foolishly, as they are told by the companies, pay certain premiums in order to keep the policies alive. That is a very undesirable practice, but the agents in doing so hope that from week to week the people will be able to pay the arrears. In that way very often some of their money finds its way into the coffers of the companies. The Minister has not given any reason why a lapsed notice should not be served. He did not state that there was any objection to it. I can see every reason for it. It would be a step in the wrong direction to depart from what has been the practice. The Minister mentioned that ten weeks were mentioned in the Bill, but some companies allow 13 weeks to elapse before they serve a lapsed notice, and they then give a further 14 or 28 days' notice. I urge the Minister to make it obligatory to have notice given and to carry that obligation into the Bill. It strikes me as hardly fair that if a person agreed to take out a policy and paid one premium he need not pay another for a period of 10 weeks. That is a small point, but there is something in it. As to forfeiture, I suggest to the Minister that he ought to carry the provision I mentioned into the Bill. The Minister says that there is nothing to prevent a company from giving notice. There should not be any possibility of a company avoiding doing so.
Deputy Kelly can help us here. He is a Dublin man and knows the City of Dublin. If he had taken out an industrial assurance policy and informed the agent to-night, that he now desired to lapse the policy and wished to see the agent no more, and the agent informed him that from now until next August he was going to call at his house every Saturday night to ask him if he was still of the same opinion, what would Deputy Kelly say?
Refer him to my wife.
I have no doubt that that respected lady would deal with the situation and personally I would not blame her if she took the broom to him to drive the agent away from the door. Imagine the persecution that you have to undergo, after you have told the man that you do not wish to continue paying on the policy. You have the agent round the door for ten weeks, advertising to the whole neighbourhood that you had lapsed your policy.
That would not necessarily arise. All the agent has got to show is that it was not due to any neglect or fault on his part that the premiums were not paid. If the insured person after the first visit said "I am not going to continue that policy, I will allow it to lapse," the agent could avoid the nine subsequent visits by getting him to put that in writing.
Is that clear?
Quite.
Quite the contrary is in the section. It is incapable of that construction.
I gathered from the statute that it imposed a certain obligation and was so operated that it was impossible for the industrially insured person to relieve the company of the obligation which the statute put upon them. After all, the whole thread running through this legislation is to see that the insured person will get what he contracts for, to do what the common law has refused to do, to come in at certain points and say "It does not matter what the letter of the bond says, in industrial insurance the policy shall mean this." I believe the courts may take the view that a company shall not discharge itself of the liabilities which are stated to accrue unless it makes ten separate applications and on ten separate occasions has failed to recover the premium due. I think it is exasperating and intolerable to have an agent hanging around your door looking for something when you have not the slightest intention to give him anything. That applies to anybody but suppose a person living in reduced circumstances found that he was unable to carry on paying the premiums or that, for some family reason, he determined to lapse the policy. He has a fellow coming up to his door, to be seen by all his neighbours, for ten successive weeks to ask for a premium that he knows he is not going to get and which the neighbours individually begin to guess is being sought in vain. Yet, this arrangement is preferred to the arrangement set out in Deputy Dockrell's amendment. Surely from the point of view of the policy-holder no conceivable advantages can accrue here at all.
Now, from the point of view of the company, suppose a person evades service. Suppose a person is living in Thurles, takes out a policy of industrial assurance, and then moves on to Cork. Does the policy remain in force indefinitely? How can service be effectively made at a distance? Suppose that difficulty arises where the obligation to serve a forfeiture notice exists. If a person moves away to a considerable distance from the place at which the policy was entered into, the company might be put to very grave inconvenience. You have Irish companies covering places like Waterford, Limerick, Dublin, but they have no agents to cover certain counties in Ireland. Suppose they have a man industrially assured in a place where they are not doing business. They will have to get an agent to travel to that place for ten separate weeks to call on that man. Each journey may cost 25/-. What scheme has the Minister in mind to meet that, because he knows, as well as I do, that most of the Irish companies engaged in industrial assurance have certain prescribed areas of operation, unlike the English companies who have agents in almost every village?
If an Irish company is not prepared to undertake the obligation of collecting premiums in any particular area it would have a proviso in the contract to that effect.
Suppose a man were living in an area where they had an agent and were prepared to collect, and that he afterwards moved to another area where they had not an agent?
If there is any part of the country in which a Saorstát company is not prepared to collect premiums, they would be well advised to prepare their policy in such a way that the obligation to collect in such an area did not arise. I do not think, however, that there is any such company.
I thought there was an obligation on the company to send the collector.
There is undoubtedly. The obligation they must undertake is that they will collect premiums weekly.
If a man were living in Clanbrassil Street at the time the policy was taken out, and if he now lives in the Aran Islands, have they to send the collector who had charge of that policy in Clanbrassil Street?
They could put a proviso in the policy to cover cases of that kind.
What is going to happen? Suppose an Irish company which is operating in restricted areas has a person insured with them who eventually goes down to Aran. Is it seriously suggested that the company should appoint an agent to collect from that one person down in Aran?
It is seriously suggested that they must carry out the terms of their contract, which is to collect the premiums weekly. A company which is not prepared to do that should not undertake industrial assurance for these areas.
I do not believe that there is a single one of the Irish companies prepared to carry on industrial assurance in every county in Ireland. Some of them carry on business in a large number of counties, but I do not think one of them carries on business in every county in Ireland.
No doubt they will be able to put in a proviso in the policy by which they will safeguard themselves or have some arrangement about the cancellation of the contract.
Would the Minister not strike that out under the previous section?
Not necessarily. The Minister is always prepared to exercise his powers reasonably and intelligently.
On that hopeful note, I move to report progress.
Progress reported; Committee to sit again to-morrow.
The Dáil adjourned at 10.30 p.m. until Wednesday, 10th June, at 3 p.m.