asked the Minister for Industry and Commerce whether in insurance matters Lloyds have operated in Ireland since 1976 under very favourable terms, as they have a global authorisation which allows any syndicate to enter and leave the Irish market at will, and are also exempted from much of the detailed financial disclosures required from other companies as can be seen from the very limited information contained in the Blue Book; the steps he is prepared to take to ensure the insurers who are not members of the Irish Insurance Federation and, in particular, Lloyds contribute in the same meaningful way to resolving problems encountered by firms who cannot obtain liability insurance on a commercial basis; and in view of the recent difficulties at Lloyds and in order to ensure that all insurers are subjected to the same financial controls, if he considers it is now desirable to subject Lloyds to the same financial disclosure requirements as other insurers.
Ceisteanna — Questions. Oral Answers. - Insurance Syndicates' Terms.
The statutory and administrative arrangements for the operation of Lloyds' syndicates in Ireland, which are not unduly favourable to them, reflect the particular structural features of Lloyds. While a global authorisation has been granted, each syndicate is legally and financially independent of the others and is entitled to take commercial decisions in its own right.
Nevertheless, under administrative procedures agreed between my Department and Lloyds, I am required to be notified of new syndicates entering the market; any syndicate wishing to leave the market must comply with certain procedures which require written notice of a minimum period of three months, and in some cases six months, to be given to me together with details of the syndicate's portfolio. Furthermore I require to be consulted before a syndicate may reenter the market. I would take as serious a view of the random entry and exit of Lloyds' syndicates, as I would with any other insurance company.
I acknowledge that the requirements for financial disclosure are different from those of other insurance undertakings but again it must be noted that Lloyds is not an insurance company but a market for insurance. Over 400 independent syndicates underwrite business in Ireland at present, with premium income ranging from as little as £1 to as much as £5 million, which is exceptional. The forms of return required of insurance companies are not, in general, appropriate to the unusual structure of Lloyds and the returns furnished by Lloyds reflect that situation. The quality of information is kept under constant review by my Department and the Deputy will be interested to know that additional returns in respect of the motor syndicates are now being submitted. The 1985 Blue Book, to be published shortly, will contain this additional information. I would emphasise that the returns submitted to my Department by Lloyds in respect of its Irish business are sufficient for the proper supervision of the business concerned.
Finally, in relation to the availability of liability insurance. members of the Irish Insurance Federation have about 90 per cent of the total non-life insurance market. Under an arrangement with my Department, the federation have agreed to examine cases where there are difficulties in obtaining liability cover from federation members. However, no guarantee is given that cover will be provided. Lloyds and some other insurers are not members of the IIF and do not participate in the federation's referral arrangement. However, these insurers do review cases at my Department's request where their policyholders have difficulties in renewing cover. Lloyds does insure about 12½ per cent of the Irish liability market.
As the insurance supervisory Authority, my primary responsibility is to ensure that companies meet their legal solvency and reserving requirements and ultimately I cannot compel any insurer to quote in respect of any risk much less at a particular premium. However, I am most concerned to find solutions to the problems in the liability insurance market and I expect all insurers operating in the market to contribute to that effort.
Under what arrangement do Lloyds get their global authorisation to operate in the liability area in this country? When was the arrangement made with them?
The arrangement was made with them in 1976 under statutory instrument 115 which changed from licensing of syndicates on an individual basis to licensing Lloyds as a single entity. This carried with it considerable advantages. Most particularly it effectively made Lloyds into a branch office establishment and it brought attendant advantages such as the maintenance and localisation of technical reserves which are considerable.
How can the Minister say he has sufficient supervisory control over the Lloyds' syndicates operating here when they only make returns under four headings — premiums, commissions, claims paid and claims outstanding — as against the 21 headings under which other insurers have to make returns? How can the Minister determine, for instance, whether they have an underwriting loss or profit on their business?
As I outlined in my earlier answer, it would not be practical for returns as required by other insurance companies to be required of each of Lloyds' syndicates. As I pointed out, they range from very tiny sizes to some considerably larger. That is why they are not required to have the detailed returns required of other insurers. However, I am quite satisfied as to the solvency requirements and the protection in particular of the policy holders who would be dealing with them.
Finally, would the Minister agree that the Lloyds' syndicates operating here can come and go at will and in fact do, and that the situation is not the same for the Irish insurers who, by and large, take on all risks? But Lloyds' syndicate can, if they dislike a particular risk, decide not to take it. This leaves many people unable to get liability cover. Is the Minister aware that because of some failure of the Lloyds' syndicates in the UK, legislation was introduced there to bring about a better control? Will the Minister still confirm that he is satisfied that all the Lloyds' syndicates are honouring their commitments in the liability area for this country?
First, on the question of the Lloyds' syndicates coming and going, as I outlined in my earlier reply, an agreement has been hammered out between Lloyds and my Department regarding the establishment and disestablishment of the syndicates and they include such requirements as the transfer of policy holders to another syndicate or insurance company. They include issues such as prior notice given to the Minister, among other things. On the question of refusal of certain types of liability, there is a formal arrangement with the Federation of Insurers, of which Lloyds are not a member, but that is not a compulsory arrangement and any insurance company can, ultimately, turn down a policy. We cannot force them to take risks. We do not have negotiations with Lloyds in regard to this.
But it is not working. Why should the federation take up the bad risks that Lloyds are trying to dump on them?
I must move on to the next question.
If the Deputy wishes to take up individual items where the agreement has not worked, I will be quite happy to look at that and contact him.
That is not the case. I have already disclosed details of these cases to the Minister's office. Lloyds are not prepared to honour their commitment. They should not be given the facilities they are being given when they are not honouring their commitments.
Deputy Flynn cannot go on asking questions informally.
The Minister is getting off lightly on that. He is protecting Lloyds for some reason.
If the Deputy wishes to provide further information, I will have it investigated.