The 1936 Insurance Act imposes an obligation on the Minister for Industry and Commerce to require insurance companies to lodge their accounts annually in a specified manner. It does not require the Minister for Industry and Commerce or the officers of his Department to audit the accounts of insurance companies, or to assess the assets of insurance companies as disclosed in the returns made to the Department. I explained at some length on the last occasion, when concluding the Second Reading debate, the details of the procedure—the requirements upon the insurance companies in connection with the lodging of their accounts. I do not think it is necessary to go into them again.
Under section 46, there is an obligation on the Minister for Industry and Commerce to cause inquiries to be made if a doubt arises about the solvency of an insurance company. I do not accept at all what Deputy O'Higgins has said. It is as much a surprise to me as to Deputy Tully that it was common knowledge in the legal profession that the Equitable were in a difficult position for five or six years. If that was common knowledge, it certainly did not reach me or people like Deputy Tully who entrusted their insurances to the Equitable. Apparently it did not reach the other insurance companies either because up to a short time before the liquidation was sought in the High Court, the other insurance companies continued to do business with the Equitable. One would imagine that other companies would be the very first to hear whether difficulties had arisen in connection with a particular company with which they were doing business.
It is true that rumours started some time in the early part of 1963 about the position of the Equitable Insurance Company. The accounts of the Equitable Insurance Company for the year ended 30th June, 1962, were required under the Act to be lodged with the Department of Industry and Commerce at the end of that year, on 31st December 1962. It was common practice for insurance companies to require a further three months within which to lodge their accounts and, again, this was provided for in the 1936 Act.
It was provided in the 1936 Act that the Minister for Industry and Commerce could give extensions up to 31st March in the next ensuring year within which insurance companies could lodge their accounts. A request to this effect was received from the Equitable Insurance Company and they gave the reasons. Their first reason was that the managing director of the company died suddenly in January, 1962, that is, during the accounting year in respect of which the final accounts were lodged. The second reason advanced was that because of a change of auditors in August, 1962, they were unable to lodge their accounts by the end of 1962 and therefore required the extension, which was granted. It is not necessary to show such serious cause for the application for extension of time and it was, as I have said, granted to the Equitable, as, indeed, it was to other insurance companies. During the period of the extension, these rumours circulated. In the meantime, my Department continued to press the Equitable for the lodgment of their accounts, even before the end of March. Nevertheless, they had of course the extension given under the statute.
On 3rd April, 1963—just three days after 31st March—it was found that the Equitable had not yet lodged the accounts for the year ended June, 1962. Officers of my Department contacted the Equitable Insurance Company and pointed out that they were in breach of the statute—although they were not, up to 31st March, 1963 —and pressed them to lodge their accounts. A typescript copy of the returns was then immediately forwarded. Even though that copy of the returns was not complete, it did appear from them that the company was not solvent.
A reference has been made to an asset written into the previous returns of the Equitable indicating assets to the value of some £70,000 or £80,000 in favour of the Equitable Company. The returns made do not require the insurance company to identify these assets. These assets are written into the returns without identification of the investments. They are written in as "investments", with the value of the investments. It is not a function of my officers to evaluate these easements.
As Deputy Tully pointed out here today, the whole pattern of business and trade in this country, and in many other countries, depends on the services of auditors. They are qualified people and are specifically recognised under the Companies Act. Their qualifications are recognised. It is practice here and elsewhere to accept auditors' certificates. The auditors' certificates accompanied all the prior returns of the Equitable—certificates to the effect that the returns and the accounts disclosed the true position of the company and that the value of the assets disclosed was accurate and correct to the knowledge of the auditors. As well as that, they were certified as being so correct by the certifying officers of the insurance company itself.
When it did appear from the incomplete typescript copy of the returns that the company was insolvent, I certainly delayed some further weeks in an attempt to salvage the position of that company. I saw representatives of several insurance companies, both British and Irish. I felt that to act precipitously in any way would damage not only the insurance industry itself but might damage the wider field of Irish economic endeavour.
When my efforts to assist the Equitable over the troubles failed, I had then no alternative but to petition the High Court, as I did on 11th May, 1963, for the appointment of a liquidator by the court. That was done on 21st May. Had it been done on 21st January, I ask the House if the situation would have been materially different. Would it not have been the case that some insured persons would still have unexpired portions of their year of cover and therefore of the value of their policies still to run? Would there not be a considerable amount of money due to policy holders who had claims made against them by people either in their employment, in the case of employer's liability, or people who were injured as a result of alleged negligent driving of the insured person? The fact is that when on 21st May the liquidator was appointed, a certain number of claims were outstanding and there were certain unexpired premiums in respect of which no claim had been made and probably were not made subsequently. Nevertheless, the people who had paid those premiums found they were not covered.
Deputy Tully suggested that some explanation should have been provided as to the value of insurance certificates held by the people who had paid these premiums. I was in no position to say if the assets of the company would have covered the claims against them. I understand that the liquidator who was appointed by the court acted in accordance with the directions of the court and not otherwise. I believe he went as far as the circumstances, as he then knew them, allowed him to go with regard to notifying policy holders. With regard to the amount that was involved in toto——
