A Cheann Comhairle, perhaps it would be helpful if the Minister of State gave the House a brief clarification of the amendments. I was only able today to obtain a copy of the Bill as passed by the House. The Minister of State was most helpful in this regard but perhaps he could outline the amendments as we go through them to simplify the process.
Insurance Bill, 1999: From the Seanad.
The Dáil went into Committee to consider amendments from the Seanad.
I will respond to each amendment at the request of Deputy Naughten or any other Member. This might help to provide the necessary information so we can reach agreement.
Section 7: Seanad amendment No. 1:
In page 17, lines 33 to 36 deleted and the following substituted:
"(v)particulars of any rating factor applicable and of any additional amount payable by reason of it;”.
In response to comments made on Committee Stage in the Seanad, I brought forward an amendment to avoid any suggestion that the mention of specific rating factors gave them official sanction. Accordingly, the Seanad adopted this amendment which achieves the objective of providing the consumer with relevant information without conferring any particular legitimacy on one rating factor over another. Consequently, with the agreement of the Seanad, I commend the amendment to the House.
I support this amendment. This is an important amendment and I will give two examples of how the change strengthens the Bill. The first concerns genetic testing which has become an issue. A recent decision by the British Parliament approved a genetic test for insurance purposes regarding the diagnosis of Huntington's disease.
There are pros and cons to this decision. It protects those who may be members of families prone to the disease as they would obtain insurance if they took the test. That may not happen if the suspicion exists that such people have Huntington's disease due to their parentage.
This is a fundamental issue and the British Parliament's decision to allow this practice could open the flood gates to genetic testing over the long term. In principle, this would discriminate against anyone with any form of genetic error, however mild, or who has a possibility of developing an illness in the long term. For example, in a few years someone could be genetically tested resulting in a diagnosis that he or she would only live to the age of 55. Such a person may not be able to obtain life assurance and that would be wrong. This is a fine line and I hope the Minister of State will note this issue to ensure that the rights of individuals are protected. This amendment can help to facilitate this objective, even though it will not make a decision one way or the other.
The second issue is car insurance for young people, which is close to the Minister of State's heart and one in which I have a personal interest. I am fully aware of this issue as I am paying through the nose for insurance. People are discriminated against on the grounds of age and not inexperience. The fundamental principle behind car insurance is that people are treated in accordance with the risk they pose. However, insurance companies do not consider people on the basis of the risk they pose but on the basis of their age.
The age group 17 to 24 includes the youngest people who will seek car insurance. If a 17 year old seeks insurance he or she will be quoted the same figure as a 23 year old. This takes no account of the fact that the 23 year old may have been driving for four years, have built up experience and have a clean record. However, such people are discriminated against because they are within this age bracket and because the insurance companies' decisions are taken solely on the basis of age. I am glad this amendment takes account of this situation.
The Minister of State might comment on the two points I have raised which are fundamental issues. I know he is examining the issue of car insurance and he might like to outline when he hopes to receive a report from the advisory board.
I too am concerned about genetic testing which I raised on the Adjournment some weeks ago. Following the British decision to allow genetic testing, there is concern that this could mean insurance companies could ask people to take a genetic test. Even if they do not ask people to take such a test, there is concern they could ask if one has taken a test in the past. This opens up a minefield in that if one has taken the test does one want to make the information available? Many people would feel this infringes their right to privacy. I agree that one's genetic make-up is a private issue and that it should not be available for insurance purposes.
A number of Deputies raised this issue and the answer has been that it does not affect people in Ireland. However, I am concerned that a number of insurance companies operating in Ireland have a base in the UK and, therefore, we should be concerned the practice could spill over into this country.
A number of geneticists working in this country, particularly in Trinity College, have published their concerns on how this issue will develop in the letters page of The Irish Times. They feel now is the time to introduce legislation to restrict such practices. I have discussed the matter with them a read a number of reports on the subject, and I too am concerned.
Genetic testing is a private issue. It is not allowed in the US and, to the best of my knowledge, the UK is the first European country to allow it. Now is the time to act to ensure such information is not made public and is not available to insurance companies.
It is obvious from the Deputies' contributions that they are aware that the Irish Insurance Federation is finalising a code of conduct for its members. I expect the code will be observed by any insurer active in the Irish market. The code, as drafted, would forbid insurers to require clients to undergo genetic testing. It would also prevent them from offering rates lower than the norm to clients who are willing to undergo genetic testing. This is an important safeguard and prevents the introduction of genetic testing by the backdoor. Thanks to this code we have time to consider all of the issues in relation to insurance and genetic testing and come to a well researched position.
The officials of the insurance division of the Department of Enterprise, Trade and Employment have begun a process of consultation initially with public bodies so that we may consider all of the relevant matters, including contributions from the scientific and health communities. I am conscious of the importance for public health of voluntary genetic testing in certain circumstances. I note the point that in the majority of cases environmental factors are of more significance than genetic inheritance for the purposes of longevity. Some European Union countries have legislated on this matter and I would be interested to learn what they have done and what effect their legislation has had to date.
With regard to the amendment, rating risk according to sex, place of residence and other criteria is familiar in non-life insurance. It is deployed most frequently, as Deputy Naughten said, in motor insurance. Women, by and large, are less expensive in terms of claim settlements. Drivers based in rural areas are exposed to less risk than those driving in Dublin or certain other parts of the country. The size of car, engine size and age are also other rating factors. That is an accepted norm in the insurance industry in terms of insurance cover. There is nothing wrong with using such factors. However, rating risk on grounds of age or sex will have to be backed up by actuarial data to comply with the Equal Status Act.
Deputy Naughten referred to the price of motor insurance. I and my officials have devoted a great deal of time to this matter during the past three years. I established the Motor Insurance Advisory Board in 1998, which is representative of every organisation, Department, State agency and interest in the motor insurance area. I expect it will conclude its work some time next year, perhaps towards the end of the year, but I am not sure, although the indications are it will need another year to conclude its report.
A total of 50% of all accidents involve 17 years olds to 35 years olds. Insurance companies impose a loading on motorists in certain age categories, motorists aged 17 to 19, 19 to 21, 21 to 23, 23 to 25, 25 to 30, 30 to 35 and motorists over that age are treated fairly equal, depending on other criteria.
We have a serious litigation situation as people are very litigation conscious. There are many insurance claims and many claims paid out are in excess of £1 million. It takes 1,500 premia to equate to £1 million of a liability payment, which is a vast amount of money. The litigation situation is creating a major difficulty in the insurance industry.
The insurance report for 1999, which I hope to publish during the next fortnight, will show that all the companies involved in the motor insurance industry providing motor cover have had an underwriting loss, which equated to approximately £16 million, an increase of 10% on the figure for the previous year. Worse than that, which makes it very difficult for me as Minister with responsibility for commerce, they had an investment loss which was 16% greater than the figure for the previous year. This is the first time they have had an investment loss, which compounds the problem pertaining to the necessary liquidity and reserves which I, as regulator in the insurance area, am obliged to ensure they have available to meet the liabilities that must be honoured in the event of the claims submitted. That is a serious situation for the industry. I cleared that report today and it should be available in the next few weeks. It is against that background that I have a responsibility to ensure that the companies provide cover and that they have the necessary reserves, liquidity and proper ratios to meet the claims submitted.
Given that this is a small country with an open economy in which the number of motor vehicles increased from 828,000 in 1996 to approximately 1.28 million today, it is difficult to resolve the issue of the high cost of motor insurance. I am hopeful that when the Motor Insurance Industry Advisory Board reports we will be able to proceed on the basis of some of its recommendations which, when implemented, will hopefully mitigate against and reduce the high cost of insurance as it is a major problem facing young motorists, in particular, and public representatives. I hope, collectively, those in the political and parliamentary systems can assist in introducing a new policy which will take a good deal of effort, education, imparting of information, a change of culture in terms of our attitude to road safety and careful motor management to ensure that motor premiums are reasonable.
Returning to the issue of genetic testing, the Minister of State said that the insurance industry will introduce a code of conduct, which I welcome. Can he give a commitment that we will not go down the road of the Insurance Ombudsman in relation to such a code of conduct? I am sure the Minister of State is aware of the history of the Insurance Ombudsman. I hope we will not witness a repeat of that. Voluntary codes of conduct are the best option if they can be introduced and enforced within the industry. The introduction of a voluntary code of conduct in line with establishing the Insurance Ombudsman on a statutory basis may be the avenue to go. I hope we will not see a repeat of the situation where the Insurance Ombudsman had to resign. I appreciate the Minister of State's officials are more up to speed on that matter than I am.
With regard to the issue of voluntary testing, if voluntary testing is offered and individuals do not proceed with it, they may be discriminated against in policy terms. For example, if a man has Huntington's disease and is offered a voluntary test by an insurance company but declines to take it, that could be construed by the insurance company to mean that he has already taken such a test and discovered he has Huntington's disease and he could be discriminated against vis-à-vis another person who has taken the test. Discussing this issue highlights the fact that this area is a can of worms as it is difficult to say this is where something starts and this is where something stops. I hope the Minister of State will be extremely careful in relation to that matter.
The Minister of State said he is examining the position on genetic testing in other European countries, or perhaps I misheard him. If that is the case, does he intend to introduce legislation to protect individuals, as sadly – I made a similar point during the debate on the Patents Bill a few weeks ago – this country lags very much behind in having in place a proper legislative framework to cover many ethical issues. I hope that the Minister of State who has responsibility for science and technology will examine this area. Irrespective of whether we are dealing with genetic engineering, cloning or in vitro fertilisation, we have dragged our heels in introducting legislation in those areas. Is it the Minister of State's intention to introduce legislation to protect people in relation to the new advances in genetic testing for particular diseases?
The Leas-Cheann Comhairle, as a medical doctor, would be more qualified to speak on this than I am. As Minister of State with responsibility for science I suggest that this genetic area has not evolved far enough for us to make a decision as to what we should do. Ethics, research and health are all involved in this wide area. Deputies will know the Government established an interdepartmental committee on this area and that report has now been published and is available as a fine document. We much give consideration to that also, although the debate is in its embryonic stage; we are about 25% of the way through this debate. To answer Deputy Naughten's question, we will examine the legislation of those countries which have passed legislation concerning genetic testing. The fact that the IIF has brought forward a voluntary code gives us time to decide on appropriate action or if action is required.
I do not see a situation whereby we have to involve the Ombudsman. That is a matter for the industry and for consumers as to whether they want to go down that route regarding a particular matter. However, the code, as it is evolving in discussions with our officials, is very clear and forbids the industry from forcing someone to take a genetic test to get insurance cover. It also forbids the industry from giving special concessions to those who voluntarily undertake genetic testing. It respects the cross-community system and all consumers are being treated equally. I am confident about the strong commitment in the voluntary code. The industry which is self-regulatory has a strong record of adhering to its rules and regulations. While we regulate the industry overall, the industry must regulate its management systems, attitudes, criteria and actuarial considerations. So far the discussions are very positive and I am confident at the end of the day that the protection of the consumer is paramount and that the industry accepts that.
Seanad amendment agreed to.
Amendments Nos. 2 and 16 are related and are to be taken together by agreement.
Section 19: Seanad amendment No. 2:
In page 25, lines 51 and 52 deleted and the following substituted:
".–Section 17 of the Act of 1995 is hereby amended by the substitution of the following subsection for subsection (2):
‘(2) The supervisory authority shall arrange for–
(a)the register or registers maintained by it pursuant to subsection (1), or a copy or copies thereof, to be made available at the same place at all reasonable times for inspection by members of the public on payment of such fee as it may specify, and
(b)the publication, in electronic form or such other form as it considers appropriate, of the register or registers aforesaid.'.”.
This proposal was discussed on Committee Stage in the Seanad and these amendments provide that registers maintained by the supervisory authority and the product producers be held in electronic form, taking into account what we have already referred to, that information in future can and may be held in electronic form.
The first amendment provides that the supervisory authority shall maintain the register or registers in electronic form or in another form if it considers that appropriate. I understand the supervisory authority intends to publish the register on the Central Bank's website. Amendment No. 16 provides that the product producer shall arrange for its lists of appointed intermediaries to be held in electronic form or other form as it considers appropriate. Product producers must furnish the information to the supervisory authority, which may maintain the registers in electronic form.
Paragraph (c) is an amendment which was introduced on Committee Stage in the Dáil and for the sake of consistency it is repeated here.
We are talking about information that has been requested by the Central Bank or regulatory authority which will be held in electronic form. Are we talking about personal information about particular clients? Can the Minister of State clarify this?
We are not talking about personal information about clients. We are talking about information pertaining to intermediaries and the information being provided by the Central Bank shall be available to the intermediaries in electronic form.
Seanad amendment agreed to.
Section 21: Seanad amendment No. 3:
In page 26, line 10, ", tied insurance agent" deleted.
Section 25 of the 1995 Act defines an investment product intermediary. Those so defined are required to go through a formal process of authorisation. This amendment seeks to make such a process of authorisation unnecessary in the case of two types of tied agent. The first category comprises tied insurance agents, for whom an undertaking takes full and unconditional responsibility. Since the authorised undertaking is prepared to take that responsibility, the consumer can then deal confidently with intermediaries.
The second category covers credit institutions when dealing as tied agents. Since those insti tutions are already subject to an authorisation process, a second one would be redundant. Consequently, instead of having duplication and unnecessary bureaucracy, we have introduced this amendment to clarify the situation.
Seanad amendment agreed to.
Amendments Nos. 4, 5 and 6 are related and amendments Nos. 5 and 6 are cognate and are to be taken together.
Section 22: Seanad amendment No. 4:
In page 26, line 37, "or herself" deleted.
These are technical amendments and take account of the interpretation Act. The Insurance Act, 1989, and the Insurance Intermediaries Act, 1995, follow the former convention of being expressed in the masculine gender. To maintain consistency with these Acts in this Bill, references to the feminine gender applied in error in the drafting of the Bill are being deleted to ensure absolute consistency in the Act when passed.
How were those applied in error?
That is the positive outcome of a modern, liberalised society.
Seanad amendment agreed to.
Seanad amendment No. 5:
In page 26, line 39, "or she" deleted.
Seanad amendment agreed to.
Seanad amendment No. 6:
In page 26, line 44, "or she" deleted.
Seanad amendment agreed to.
Seanad amendment No. 7:
In page 27, line 38, "to" deleted and "of" substituted.
This is a drafting amendment.
This is a purely technical amendment to correct a typographical error.
Seanad amendment agreed to.
Amendments Nos. 8 and 9 are related and are to be taken together by agreement.
Seanad amendment No. 8:
In page 28, lines 15 to 17, "whether or not accompanied by a sum of money" deleted and "accompanied by a payment of money" substituted.
The original drafting of this section reflects the language of the Insurance Act, 1989. The intention of this Bill is somewhat different and here the intention is to establish absolute clarity, not least for the benefit of the client, that receipts must issue when, and only when, there has been a payment of some kind. Accordingly, the amendment to lines 15 to 17 makes it clear that receipts are to be issued where payment has been made.
Subsection (5), now to be deleted, provided for circumstances in the past where an intermediary did not have to issue a receipt where a policy of insurance was being issued in return for a payment. However, to provide absolute clarity to clients and consistency, the Seanad accepted my amendment so a receipt is required in all instances where a payment is made. We will come to this later in the Bill also and we will see this is necessary for sustainability.
Seanad amendment agreed to.
Seanad amendment No. 9:
In page 28, lines 31 to 34 to be deleted.
Seanad amendment agreed to.
Amendment No. 10 is consequential on amendment No. 11 and they are to be taken together by agreement.
Section 23: Seanad amendment No. 10:
In page 29, line 33, "or" deleted.
The deletion of "or" is necessary to facilitate the amendment, which allows intermediaries to handle cash. The issue of cash handling by certain intermediaries has been the subject of much discussion and debate in recent years. I promised on Report Stage in the Dáil to give further consideration to the matter in the light of the points made during that debate. Accordingly, I brought forward this amendment to provide for both life assurance intermediaries and non-life insurance intermediaries to be permitted to handle cash provided that circumstances in section 25(g) applied. That section provides that a premium paid to an intermediary shall be treated as having been paid to an undertaking when it is in respect of a renewal invited by the undertaking or a new proposal accepted by the undertaking. Thus, when an intermediary handles cash in these circumstances, the insurer is taking responsibility for the handling of that cash. The provision as now drafted permits intermediaries to handle cash without having to demonstrate capital adequacy while safeguarding the interests of consumers. In the case of tied agents the consumer is safeguarded because the insurer is responsible for any act or omission of its tied insurance agent in respect of any matter relating to a contract of insurance offered or issued by the undertaking with which the tied agency agreement relates. This has been welcomed broadly by the intermediaries and is something which both Houses were anxious to achieve. We gave it a great deal of soul searching and time and effort, we had a great deal of consultation and now we think it is to the satisfaction of everybody.
I welcome this amendment and thank the Minister for bringing it forward in the Seanad. I will not speak on it at length because we spoke ad nauseum about this both on Committee and Report Stages. This will resolve some of the issues about which we spoke. It will protect the consumer, the person who buys the product and will ensure that the policy is renewed. I know the Minister has taken note of the other issues which I mentioned and this strengthens the legislation. I thank the Minister and his officials for taking the time to go through this because it took much convincing but in fairness to them, they were prepared to listen and look at it again. I fully support the amendment and thank them for that.
Seanad amendment agreed to.
Seanad amendment No.11 was already discussed with amendment No. 10.
Seanad amendment No. 11:
In page 29, lines 35 to 39 deleted and the following substituted:
"‘(III) taking cash from a client in circumstances to which section 25G applies when acting as an insurance intermediary, or
(IV) taking cash from a client in circumstances to which section 25E applies when acting as a tied insurance agent.'.".
Seanad amendment agreed to.
Amendment No. 12 is a drafting amendment.
Seanad amendment No. 12:
In page 30, line 1, after "an authorised investment", "business" inserted.
The inclusion of business is a technical amendment. We propose to insert a new word here which was agreed by the Seanad that corrects a textual oversight in the original text of the Bill.
Seanad amendment agreed to.
Seanad amendment No. 13:
In page 30 lines 33 to 37 deleted and the following substituted:
"by the substitution of the following for subsection (3):
"Nothing in this section shall prevent a Restricted Activity Investment Product Intermediary from complying with the requirements of regulations made under section 43D to implement subsections 43E(1)(a)(iii) and (iv) of the Insurance Act, 1989.”
and
(f2>d)by inserting the following subsection:
"(4) Subsections 2 and 2A of this section shall apply without prejudice to any of the powers of a supervisory authority in relation to this Act.".".
On Committee Stage in the Seanad, concerns were expressed about the freedom of restricted activity investment product intermediaries to offer advice to their clients. This amendment seeks to make clear that when an intermediary has had a discussion with a client in the context of the anti-churning provisions of the Insurance Act and involving any existing life policies held by that client, the Investment Intermediaries Act does not prevent that discussion. The extent to which an intermediary gives advice is determined by their own status. Investment product intermediaries authorised under section 10 of the 1995 Act have to fulfil three conditions. They must demonstrate that they are competent to offer wide ranging advice – a little like politicians – they must demonstrate they have adequate capital to run their business – not like politicians, we do not have the capital mostly – and they must submit to a strict supervisory regime involving quarterly reporting. The purpose of this is to ensure that such intermediaries are solvent and in a position to meet their obligations to their clients. This regime permits the consumer to seek wide-ranging advice, confident that their investment is secure. Any intermediary can fulfil these conditions and fulfilling these conditions may seek this status and is then free to offer wide-ranging advice. Restricted activities activity intermediaries by contrast do not have to fulfil these conditions. Nevertheless, they may offer advice on the products of the product producers with whom they hold appointments. This amendment permits them now to discuss with their clients any insurance policies that their client may already hold. While this amendment does not meet all the requirements of restricted activity investment product intermediaries, it goes a long way to meet their concerns without compromising the interests of consumers. It gives them the right to give independent advice and I am confident, therefore, that this amendment is acceptable to the House.
I support the amendment. We tried to find a balance here to protect the consumer and allow for the flexibility of advice. Again, it is important that we protect the consumer, especially in relation to the issue of churning which the Minister mentioned, whereby many innocent bystanders take out a policy, then there is a new improved policy available and they are told it is the best thing since sliced bread and of course it is only for the practice of churning. It is important we get the balance and we have it within this Bill. I support the amendment.
I thank the Deputy.
Seanad amendment agreed to.
Amendment No. 14 is a drafting amendment.
Seanad amendment No. 14:
Section 24 : In page 30, line 39, "deleting" deleted and " the deletion of" substituted.
Seanad amendment agreed to.
Seanad amendment No. 15:
Section 27: In page 32, lines 41 to 43 deleted, and the following substituted:
"(c)the value of the instrument or payment received from the person furnishing it and the date on which it was received;".
This is a drafting amendment in order to provide consistency with the terminology in the 1995 Act.
Seanad amendment agreed to.
Seanad amendment No. 16 was already discussed with amendment No. 2.
Seanad amendment No. 16:
Section 28 : In page 33, lines 16 to 25 deleted and the following substituted:
–Section 31 of the Act of 1995 is hereby amended–
(f2>a)in subsection (2), by the insertion, after 'normal working hours' of 'and the product producer concerned shall arrange for its publication in electronic form or such other form as it considers appropriate',
(f2>b)in subsection (4), by the insertion, after 'product producers', of 'and such a register may be in electronic form or such other form as he or she considers appropriate', and
(f2>c)in subsection (6) (inserted by section 61 of the Investor Compensation Act, 1998)–
(i)in paragraph (f2>a), by the substitution for 'newspapers circulating in the State' of 'national newspapers', and
(ii)in paragraph (f2>b), by the substitution for 'newspapers circulating in the State' of 'national newspapers within 28 days of having informed the investment product intermediary of the discontinuance'.".
Seanad amendment agreed to.
Seanad amendment No. 17:
Section 29: In page 33, line 28, after "This Part", "(other than section 30)" inserted.
This matter had been raised in the Dáil and later in the Seanad. I re-examined the matter in the light of the debate and brought forward this amendment to the Seanad. The original provision of this Bill excluded travel agents and tour operators from the scope of Part 4 of the 1995 Act because they are already subject to a regime of authorisation and bonding under the Transport Act of 1982. I have now decided to provide that they will be subject to the requirement to issue receipts when transacting insurance business. Accordingly, I commend this amendment to the House.
I thank the Minister for his amendment. I had hoped that he would have balanced the matter in relation to commissions so there would be a balance across the system in relation to commissions for insurance, especially travel insurance, which both insurance brokers and the travel agents issue. It is a pity that was not included but I accept the amendment before us. I am sure we will get a another bite of the cherry at some stage in the future.
I appreciate Deputy Naughten's agreement. We gave this a great deal of thought and consideration. The difficulty is that our Department does not control the travel agents or the travel industry. Consequently, by and large, their business is travel and looking after people's travel requirements. Insurance is ancillary to that. The best I could do was separate the two by insuring there is an absolute de facto receipt for the insurance cover made available to each consumer. That will assist transparency for the consumer and provide a guarantee also that the cover is available.
I accept the point the Minister made. It was an awkward one because it involved two Departments. It could be noted for the future and I am sure there will be a few people in Ballinasloe that will not be too hurt over the amendment anyway.
Seanad amendment agreed to.
Seanad amendment No. 18:
Section 33 : In page 34, line 4, "25A(2), 25C," deleted.
This is a technical amendment to correct an oversight when an amendment was brought forward on Report Stage. As sections 25A(2) and 25C, have been deleted, the reference to them in section 33 is not necessary. Consequently, in order to correct this we have tabled this amendment.
Seanad amendment agreed to.
Seanad amendments reported.
I thank the Minister for his flexibility in relation to this Bill, amendments that have been put forward and the proposals he brought back again from the Seanad following a commitment he gave on Report Stage. I thank the officials involved because some of the issues involved were very complex and I thank them for their persistence in resolving those issues.
I too thank everybody involved with the Bill. We published the Bill a year ago. It has been in discussion and debate over the past year. I thank the many organisations, the industry itself, the Dáil and the Seanad and particularly the officials in my Department who worked very hard to ensure that we would find a balance within the Bill that provides the disclosure, sustainability and transparency that consumers are entitled to and that the insurance industry would benefit from in the years ahead.