Dáil Éireann debate -
Wednesday, 10 Feb 1965

Vol. 214 No. 1

Private Members' Business. - Equitable Insurance Company Limited.

Mr. Clinton

I move:—

That Dáil Éireann is of opinion that effective steps should be taken to indemnify those who have already suffered or are in danger of suffering, loss by reason of accident as a result of the collapse of the Equitable Insurance Company Limited consequent on the failure of the Minister for Industry and Commerce to detect the insolvency of the Company in sufficient time to protect them.

This motion was put down at a time when many people had found themselves in serious difficulty as a result of the collapse of the Equitable Insurance Company, at a time when several Parliamentary Questions had failed to get from the Minister any admission that he had any other responsibility than to receive the accounts of the company certified by a firm of recognised accountants. There seemed to be no evidence of any serious concern on the part of the Minister or the Government for the many people who had got caught by having their premiums placed with this company. At that time one person came to me and said he could not believe it was possible that the law of the country would compel people to spend money on insurance which turned out not to be insurance and when that position arrived that they were thrown to the wolves.

Since that time the Minister has introduced legislation which has passed through both Houses of the Oireachtas providing for the setting up of a fund to be subscribed jointly by the insurance companies and the Government to meet claims arising out of accidents where the premiums were held by the Equitable Insurance Company. That would seem to be a measure which would meet fairly the situation and it was welcomed by all sides of the House, and more especially by the victims of this collapse. They felt that immediately it was passed, their worries were over but these unfortunate people are still on the cross and no effort has been made by the Minister or the Government to take them off it. They are still suffering agonies because of the fact that some of them have already had to meet claims and many more claims are pending.

I know of people who are practically on the roadside as a result of the fact that even though this legislation was passed eight months ago, no relief has yet come to them and no money has been paid out from this joint fund. When will these people get the relief they so badly need; when will payment be made to them?

I know that a joint committee of the insurance companies will consider these cases. They will then be passed on to the liquidator, who, in turn, will pass them on to the court. We are waiting for all this to happen. What I and many people cannot understand is why the Minister has not moved to relieve the plight of these people by using the contingency fund at his disposal. Surely this is the type of case the contingency fund was intended to meet? Surely it is only fair that the agony of these people should be relieved, that they should get help to meet the serious plight they are now faced with? It is a reasonable request. The people concerned expected the Minister to treat this as a matter of urgency. Our compaint is that he has not done so. There is grave worry in the minds of people as to whether or not this joint fund will meet claims under common law. I should like the Minister to clear that matter up, as well, when he is replying.

I do not think there is anything else I can say about it. I know other Deputies are very interested. I am aware that a number of Deputies have themselves been caught. We think the Minister has not fulfilled his responsibility fully under existing law because he has not saved those people in time. Apart from that, he has left grave doubts in the minds of many people. The important thing is to ensure that these people are relieved immediately and I would implore the Minister to use the money at his disposal to end their agony.

Mr. Byrne

I second the motion. Deputy Clinton has put the case very concisely. We apprehend that the Minister, in reply, will tell us he has done all that can be done to meet the cases we are concerned about. He acted reasonably speedily last year when he put through the Insurance Bill, now the Insurance Act, under which an insurance compensation fund was set up, more or less under the control of the High Court. A sum of £30,000 was advanced by the Minister to that fund, specifically carmarked to meet cases arising from the collapse of the Equitable Insurance Company.

I think the gravest case involves a constituent of mine, a small contractor, who at the time of the collapse had pending against him claims by two of his workers in respect of his liabilities under the Workmen's Compensation Acts, against which he was insured with Equitable. The claims were settled on senior counsel's advice in the middle of last year. My constituent, a very small contractor, was compelled to pay the sum of £4,500 compensation. He claimed on the liquidator for that sum and our complaint is that the case is not being considered with the despatch which we in the House were led to believe nine months ago such claims would be dealt with in cases of hardship.

This man is on the verge of bankruptcy. The £4,500 was produced by him at the expense of his working capital. It completely exhausted his resources. The Federation of Building Contractors took up the case with the liquidator who advised them a few weeks ago that procedural delays were inevitable. The liquidator said he regretted that he could not at that time give any clear indication of when the member's claim would be paid.

That situation is a complete breach of faith with this House and indeed with the Minister because I apprehend that until I wrote to him about this case on 26th January last, the Minister was probably unaware of the seriousness of these legalistic, bureaucratic delays which have hampered the decisions of the Legislature. The Minister's responsibility in these matters is to deliver a hard rap on the knuckles where it is deserved, to insist that the bureaucrats responsible for these delays get on with the task assigned to them by Act of Parliament.

It is not good enough that such aid is not available until it is too late. I am not at all satisfied with the reply I received from the Minister's Secretary in a rather formal letter dated 5th February. It told me that the delay had arisen because of the fact that the High Court had been experiencing some difficulty in the matter. The letter assured me that considerable progress had been made and that the Minister had been assured that when the procedure is established there will not be any delay in dealing with individual payments. It said it was hoped to bring the case I have mentioned before the relevant judge within the next few weeks.

They were glib phrases. "Live horse and you will get grass." That is no help at all to this man who, because he had to meet those claims, cannot now pay his creditors. I feel confident it is only necessary to bring this matter to the Minister's notice to ensure that he will do as Deputy Clinton has suggested—make use of the contingency fund which exists for cases such as this. We are not prepared to be stalled by red tape.

It is grossly wrong that the intentions of the Oireachtas should be thwarted by rules of court or what have you. Possibly, it is understandable that difficulties should arise in the first case to which this new Act is being applied but it is not unreasonable to ask the court, the liquidator and the Minister to have regard to the human factors involved. I am deliberately not mentioning the name of the case I have cited for obvious reasons. I have made the fullest details available to the Minister in confidence and I now appeal to him to act speedily in this very urgent matter. I may add that there are two other cases where similar problems arise. They may not be quite as serious but they are something to be deplored.

Mr. Tully

This motion refers to one of the most disgraceful situations that have ever arisen in this country where the public trust is concerned. We had an insurance company supposed to be a reputable company whose records were supposed to be checked by the Department but who went broke months after the Department suspected that something was wrong. The extraordinary thing is that right up to the day they went into liquidation, that company were collecting premiums from unfortunate people throughout the country. I am particularly bitter about this affair for several reasons, the primary one being that I was badly stung myself.

It is shocking that any company existing on public trust should be in a position to collect money from private individuals for any reason whatever for months after the company knew they could not meet their liabilities and when the Department responsible for checking must have had very strong suspicions that they would not be able to meet their liabilities. As a result many people suffered severe loss, financial and otherwise. I am aware that on 23rd May a premium of over £40 was collected from a private motorist. At that time the company must have known, and the Minister should have known, that it could not carry on. But no effort was made to stop them collecting premiums. They continued to do so until the very last moment.

Mr. J. Lynch

On what date?

Mr. Tully

23rd May.

Mr. J. Lynch

The petition was presented on 11th May.

Mr. Tully

On 23rd May payment was made by a colleague of mine now dead. The company went into liquidation and a receiver was appointed. That receiver proceeded to notify people that their policies were cancelled. I took the necessary precautions to get alternative cover for my car, my business and my home early in May. Towards the end of July, I got a note from the receiver to the effect that my policy with the Equitable was being cancelled with effect from 31st July. I replied that as far as I was concerned it had been cancelled on the first or second week of May, that I had alternative cover and that I did not consider I was covered or had any liability for payment beyond that. I got an impudent letter in reply to the effect that as far as the receiver was concerned, I had no right to cancel my own policy and that he alone, as a servant of the High Court, was the only person who had the right to determine when my policy was cancelled.

I can assure the Minister that action of this kind made a bad situation worse. I know a receiver has an awkward job to do and that he must get the best out of the situation. But I would challenge the Minister that the receiver has got the best out of it. Can the Minister say with certainly that all the moneys collected on behalf of the company by agents and brokers throughout the country did in fact pass to the receiver following the bankruptcy or closing down of the company? Were there considerable sums paid which some people felt they had no need to pay back after the action had been taken, despite the fact they went to the people for whom the cover was obtained and got a second cover for them?

These are matters which should be straightened out. It is long after the time when the Minister should make a statement clearing this up. I agree with Deputy Byrne that there is no point in writing polite letters that we are doing the best we can. It is nearly 12 months now since this happened. As the Minister is aware, a colleague of mine was badly involved in this whole affair. Nobody except he and his immediate associates know the annoyance and trouble brought on this man simply because an insurance company, to whom he paid a considerable amount of money, had been allowed to slide out of their responsibilities without very much attempt being made to check on them in time.

According to the Minister's replies in this House, this company had been in the habit of sending in their audited accounts much later than they were liable to do. The Minister had to remind them on more than one occasion that their accounts were overdue and that they should do something about it. Yet right up to the last minute they were allowed to collect premiums for which they must have known they could not offer cover. The people responsible to the Minister for seeing that these things are done should have checked on them before this thing happened.

This has struck a terrible blow at the confidence of the people in companies of this sort. It has been said time and again since that there is no point in insuring anything with a company that has not as much money as some of the big foreign combines. This was bound to happen when these people were allowed to carry on as long as they did. I would be very anxious to know from the Minister whether there is any possibility that the whole case can be wound up and if he could say clearly how far it is hoped to indemnify those who have suffered loss as a result. I appreciate it would be impossible to refund the thousands of premium payments made to that company. I should like to know if all other payments can be covered and, in particular, whether the legal expenses of people who had to go to court to defend claims made against them because of the failure of the company will be fully covered. That is an important point.

Mr. J. Lynch

I did not expect I would be called upon to reply so early this evening. If this motion had been presented by the Fine Gael Deputies who spoke in the manner in which it appears on the Order Paper, I would have accused them of being vindictive and indulging in a witch-hunt.

Mr. Clinton

There was no such intention.

Mr. J. Lynch

Fortunately they have not pursued the implications contained in their motion. They have deplored the delay that has taken place in meeting the claims to compensation of those who have been affected by the failure of this company. If that is so, it would have been sufficient for them to bring a motion in that form—that they deplored the delay and asked me to account for it.

Mr. Clinton

It is a long time down.

Mr. J. Lynch

It was put down after the Bill was passed. We discussed at great length the merits of the action taken when the Insurance Bill, 1964, was passed. I do not think anybody will deny that in that Bill the Government went as far as they might be reasonably expected to go in ensuring that those affected by the failure of the Equitable would be compensated. The Minister for Finance agreed to put up a certain figure and, in the face of much opposition, I ensured that the insurance companies now existing to transact business would also make a contribution, so that those affected will be fully and properly compensated.

Having regard to the manner in which the motion was put rather than drafted, I do not think I need go into the background of the examination of the accounts of the Equitable, but I may say, very briefly, that the accounts of the Equitable for the last full year of their operation were due in the normal way six months after the end of the year, that was, for the year ended 30th June, 1962. Therefore, these accounts would be normally due in my Department on or before 31st December. But, there is a provision in the 1909 Insurance Act which empowered the Minister, on request by the insurance company involved, to extend that period by three months. That provision was frequently availed of in the case of many insurance companies other than the Equitable and it was not considered anything unusual for a company to make such a request. The Equitable made the request in this case and, while it is true there were rumours about the Equitable during the three months period of extension, there was no action that I could have taken more expediously than I did ultimately take to satisfy myself of the true position of the Equitable.

In the meantime, not only did the Equitable do business with their clients but the insurance companies did business with the Equitable and they were financially involved in a number of ways with the Equitable, for example, in the fire insurance pool and, therefore, the widespread knowledge that it was alleged was available about the financial position of the Equitable did not appear to extend to the insurance world itself.

However, the three months extension period to which I have referred lapsed on 31st March and immediately I asked the Equitable Insurance Company to submit their accounts, that they were now in default, and they submitted them on 3rd April, in an incomplete fashion. They were not in the ordinary fashion the statute required them to be in but they were in such form that made it clear that they were not then solvent. It was at that stage I made up my mind to move but I thought it was not unreasonable to give the company the opportunity, mainly in the interests of those insured with the company and, of course, its employees, to recover the ground and they made certain overtures in certain directions that I thought would be successful in providing sufficient new capital, sufficient backing, to get the company out of its troubles.

That continued only over a matter of about a month and when it became clear that these efforts which I felt were reasonable to take in the circumstances were unlikely to be successful, I eventually decided to have the company wound up, and on 9th May the Chief State Solicitor was requested to present on my behalf a petition under section 45 of the Insurance Act, 1936, for the winding up of the company on the ground that the company was unable to pay its debts. The petition was presented on 11th May and came for hearing before Mr. Justice Budd on 27th May.

Mr. Tully

I am sorry—23rd April. I made a mistake.

Mr. J. Lynch

It will just delay the House that much longer because the purpose of retailing these dates was to indicate that it was unlikely that a premium would have been paid on 23rd May.

Mr. Tully

23rd April.

Mr. J. Lynch

When all that was done, it was obvious that I had to do something else because it soon became apparent that the assets of the Equitable, no matter where they could be found, were far from sufficient to meet the claims.

With regard to the point that delay would affect people, at any stage, as the House is aware, the failure of an insurance company would affect the same number of people and in roughly the same amounts because insurance liability is a continuing thing and if, for example, the company failed in April, 1962, all that volume of insurance premiums which represented the payment for cover that people sought would be affected. So, it might have affected different people at different times, but, by and large, the different people would have been affected no matter what time the company went into liquidation. So that the period, of itself, is not as material as was suggested on the last occasion that we debated this matter.

What we are concerned about now is what I can do. I did bring this Bill before the House and the House gave it a very generous reception, even though a critical review, as it went through. Before the Bill was ever passed it was decided to appoint a receiver but he had to act under the orders of the court. Therefore, he was an officer of the court, and I will admit that I am very disappointed too by the lack of expedition in the meeting of these claims. I am reasonably certain that if I had taken unto myself the administration and the adjudication of these claims I would have been criticised by the Opposition. I am certain I would; that then they would attribute to me some designs on certain powers that I ought not to have—and the Fine Gael Party, in particular, are great advocates of leaving matters to courts of competent jurisdiction to decide.

I had no choice in this case, in any event. The court had to make the order and the court appointed the receiver. From there on he was an officer of the court. I had no power over any one of the claims made or over the processing of any one of these claims. Therefore, as far as the bureaucrats referred to by Deputy Byrne are concerned, the bureaucrats are not my bureaucrats. There are other bureaucrats involved, perhaps. I am not saying that there are. But, the delay is certainly not in my Department. Again, I am not going to be a Pontius Pilate in this connection. There is a delay that I am terribly worried about. The delay is in the court, possibly in the court procedures, that people do not seem to be able to get over. It is a winding up procedure and there is nothing I can do to take it from the court.

Apart altogether from this motion, realising the difficulty that people are continuing to face as a result of the failure of the Equitable, I am considering having a petition presented to the court expressing my concern about the delay and bringing to the attention of the court that there are people who are suffering great hardship as a result. I do not know whether this petition will be successful in expediting matters but I feel that the relevant judge or judges must know that hardships are being incurred and I am sure there is no desire on the part of the judges to prolong these hardships. I have already told the liquidator that if he wants any help by way of regulation that I could make, I would be only too glad to do so. I have been on to the liquidator — and wrongly, in my opinion — on a number of occasions with reference to a number of individual claims, asking if he could expedite the matters. I say wrongly because I am not supposed to interfere with an officer of the court. However, I can assure the House I am no less concerned in these matters than the Deputies who have spoken, and if there is a way of expediting the meeting of these claims, I shall certainly adopt it. As a matter of fact, there are quite a number of claims before the court which are nearing the final stages. I do not know really what delay is involved. I have been trying to push them as fast as I can.

Mr. T.F. O'Higgins

Part of the delay, of course, is trying to interpret the legislation we passed.

Mr. J. Lynch

I thought the legislation we passed was as plain as could be.

Mr. T.F. O'Higgins

The Minister will recollect that I expressed a contrary view on the Committee Stage and suggested certain amendments.

Mr. J. Lynch

Therefore the Deputy did not fight for them hard enough.

Mr. T.F. O'Higgins

I fought very hard but the Minister said his view was correct.

Mr. J. Lynch

My view is there would seem to be nothing in the interpretation of the legislation that would cause undue delay. I do not want to be put in a position that what I say here might encourage other people to take up harder positions.

Mr. A. Barry

Somebody should take up a hard position.

Mr. J. Lynch

Our trouble here is that we have a certain position vis-á-vis the judiciary. We cannot tell the judiciary how or when to do their business but I think the fact that we have had this debate here will encourage greater expedition in dealing with these claims.

Mr. Clinton

The Minister seems nearly disappointed that I did not go back over the whole field of his responsibility in preventing the collapse or in detecting it in time to save the many people who had policies placed with the Equitable Insurance Company. I deliberately refrained from doing so because, first of all, the field was fairly well covered when the discussion took place in June last on the new legislation for the setting up of this fund.

Mr. J. Lynch

I have acknowledged the Deputy's restraint.

Mr. Clinton

There is no purpose in pursuing that any further. It does seem to me it was a very great weakness in the existing law that the Minister was obliged only to go through the formality of receiving accounts properly certified. That is the position which has led to the present situation. I am glad the Minister sounds sympathetic but I am afraid his approach today still will leave these people on the cross and their agony will not end quickly. The Minister did not answer my request to use the contingency fund to meet these liabilities as they arise.

Mr. J. Lynch

I thought I said it was in the hands of the court and I could not interfere.

Mr. Clinton

The liabilities are known; in fact some of them are paid. Deputy Byrne referred to a particular case of a small contractor of limited resources who has had to pay already and who has more than exhausted all his resources to meet this case. He is now practically on the roadside. Can the Minister not use the contingency fund to take this man out of trouble and to deal with urgent cases?

Mr. J. Lynch

I have no access to it, not for this purpose.

Mr. Clinton

The Minister has no access to it for this purpose?

Mr. J. Lynch

No.

Mr. Clinton

That amazes me. That is the type of purpose I thought the contingency fund was for.

Mr. J. Lynch

That remark I made may lead to misinterpretation. I have no access to it except through the court, through the procedure set down.

Mr. Clinton

Is that a lengthy procedure also?

Mr. J. Lynch

That is the procedure we have been discussing here tonight on the motion.

Mr. Clinton

All we are asking is that whatever measures are possible should be used to relieve the situation of these unfortunate people who find themselves in this plight and who have been in this plight now for a period of a year or more.

Mr. J. Lynch

When the Deputy refers to a contingency fund, does he mean a fund that was established under the Insurance Act of last year?

Mr. Clinton

No.

Mr. J. Lynch

I am sorry; I thought that was what the Deputy was referring to. We are at cross-purposes.

Mr. Clinton

That is why I could not understand the Minister saying he had not access to the fund. Now that the Minister understands what I am driving at, what is the approach? Is he prepared to use the contingency fund to relieve the situation of a man such as was mentioned by Deputy Byrne?

Mr. J. Lynch

I do not know what the procedure is in relation to the contingency fund. It is the first time I have heard of it in this context. I would not know.

Mr. Clinton

Would the Minister give an undertaking to investigate the possibility of providing relief in this way as being the only way that relief can be rapidly provided?

Mr. J. Lynch

I certainly will see what can be done in that direction, although I doubt whether I can do anything, having regard to the provisions of the Act.

Mr. Clinton

That is meeting us as fairly as the Minister can meet us. The only other question I raised in relation to this was: is the Minister satisfied that common law claims will be met from this fund?

Mr. J. Lynch

Yes.

Mr. Clinton

That really answers all we want to know on this. I hope the Minister will see his way to use the contingency fund to relieve the plight of these unfortunate people who have already had to pay and whose position is in jeopardy as a result of this collapse.

Motion, by leave, withdrawn.