I should like to ask the Minister for an explanation of some of the matters that appear here. This is the section that makes provision for payment to the liquidator of the company of certain sums including costs or expenses, if any, necessarily and reasonably incurred. Would the Minister be able to tell us what costs and expenses are specifically referred to there?
Insurance Bill, 1964: Committee and Final Stages.
Sections 1 and 2 agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
Higher up in subsection (1) the Seanad will see that provision is made that there may be paid out of the fund to the liquidator of an insolvent insurer any sum which is due to a person under a policy issued by the insurer. There was some comment on that phraseology in the Dáil yesterday, and I undertook to inquire whether that sum would include, for example, a decree against an insured person for costs and expenses of the plaintiff together with the costs of defending the insured person. I am assured that that is the case. Lower down in the section the words "together with the costs and expenses aforesaid (if any) incurred by him" appear. Those costs and expenses do not in fact refer to the costs and expenses of the action, but the costs and expenses of the policy holder in procuring payment out of the compensation fund. It is not anticipated that such costs and expenses will be in any way significant, if they arise at all.
It is clear beyond doubt that the section covers costs and expenses which a successful claimant might recover against an insurer, but does it refer to the costs and expenses of an insurer incurred by him in defending proceedings brought against him by a third party?
Yes. I thought I said that.
I am glad to hear that.
Question put and agreed to.
Sections 4 to 6, inclusive, agreed to.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill".
I have a note here. I had not time to go into it very closely. I do not understand the section very clearly. Perhaps the Minister would briefly tell us what it is about. I think it refers to another Act.
Under the 1936 Act, Irish companies established before the Act were entitled to do certain classes of insurance if they so desired. Similarly with British companies which were already established. The purpose of this section is to freeze the present position. Almost 30 years have elapsed since the Act in question was passed. Some of the companies have not seen fit to take full advantage of the 1936 Act. The intention now is to freeze the position and to confine these companies to the classes of business which they are now doing.
Perhaps the House might have confused my reference to registration or licensing. It has nothing to do with this section. Personally, I am wholeheartedly in agreement with what the Minister is doing in this section. I think the Minister was rather unkind to me when he said that I have some sort of personal axe to grind on this matter. I have none whatever. I hold no brief other than my desire to see that this industry is properly run.
The Minister will not convince me or many people if he feels that the important advice a client needs when he is transacting particularly a life assurance contract might be left in the hands of people who have no permanent or vested interest in that transaction. To suggest that somebody such as a widow should be allowed to do that, almost for the sake of charity, is to my mind reducing the whole concept of commerce to something hardly worth contemplating.
We shall be having other talks with the Department on this matter. I shall not hold up the House now but there is a case for it. It is necessary in America, Canada, Belgium, Sweden, Australia and in practicably the whole of Europe outside the British Commonwealth itself. With the possible exclusion of Britain, we are the only country that continues to allow this particular system to operate. It has nothing to do with this section. I am in favour of this section. The Minister is perfectly right in taking power at this stage rigidly to control the grant of further insurance licences in this country. There are too many of them there already.
Question put and agreed to.
Section 8 agreed to.
SECTION 9.
Question proposed: "That section 9 stand part of the Bill."
As I understand it, if an insurance company engaged in, shall we say, a motor business here desires to continue, it is obliged to deposit £100,000 with the accountant of the High Court. That applies to every insurance company operating here. This section deals with Lloyd's syndicates. There are various syndicates of Lloyd's operating under different titles separate and distinct from each other. As I see it, all of these groups are covered by a deposit of £100,000. Is that correct? If it is correct, I shall have something else to say.
The purpose of the section is to apply the same obligations to Lloyd's syndicates as are now being imposed by section 8, that is, the deposit of £100,000 in respect of a class of insurance business. As I have said already, motor business requires a deposit of only £15,000. Other classes of business require differing amounts. Sections 8 and 9 require the deposit of £100,000 irrespective of what class of insurance business is being done.
I think Lloyd's are in a different category from most other insurance concerns. There are a lot of English insurance companies here giving quite good employment. They have offices here and transact business in the normal way, Lloyd's, on the contrary, do not employ any staff here. They have no offices, properly so called. I think they should be dealt with in a different way from other companies. I should be inclined to require a separate deposit from each syndicate of Lloyd's operating here.
Is the Minister quite satisfied that we shall not have a repetition, as a result of the drafting of this section, of what happened to the Equitable Insurance Company, Limited? Does it mean that at no time they may have less than £100,000? Does this section fully safeguard the future position? Suppose they have liabilities of £150,000. How is the Minister to know that they would not have greater liabilities than the deposit of £100,000 and where, then, is the policy holder safeguarded? Should it be on the basis that at least all the time they will be able to keep deposited the amount that would be required to meet all the liabilities which they might incur?
That would be an impossible obligation on an insurance company. Nobody can determine in advance what a liability is likely to be. In a motor accident, a man might be injured and the claim might be worth £10 or £10,000. Nobody can determine in advance of the claim being made and prove what the liability is likely to be.
Apart from the obligation to deposit £100,000, there are also obligations that a new company registering must be an Irish company and must be a company with a share capital of £200,000 of which £100,000 is paid up. Therefore, there is also that safeguard. Over and above all that, there will be this fund which is now being created. It is not intended to have this fund built up to astronomical heights. Initially, it will be kept to about the sum that would be required to pay off the Equitable liabilities. If and when the occasion arises — which I expect will be never — that we shall have to come to the assistance of policy holders in respect of another insolvent company then the legislation is there to enable the fund to be built up in the same way as this fund is being built up.
With regard to Lloyd's, I am sure they would argue that, with their particular set-up, there should be no deposit at all. The Senator, I am sure, is aware of the requirements of membership of one of the Lloyd syndicates. I believe they are very rigid. One must establish not only one's solvency but one's financial background before one becomes a member of Lloyd's Syndicate. They also have some internal rescue arrangements of their own. However, we do control the number of these syndicates that may operate here and the size of the business they may do.
Will the Minister not agree that he should avail of this opportunity to make this particular group — I want to make it perfectly clear I am not speaking about British companies generally but about Lloyd's — establish an office in the city of Dublin? I think I am correct in saying they have not an established office in the city of Dublin or anywhere in the Republic of Ireland. They operate through representatives here. I think I am also correct in saying that Lloyd's policy contains an arbitration clause which obliges an insuring person who wants to go to arbitration, to travel to the city of London. That is most undesirable. Very many people enter into these insurance contracts, without fully realising their rights and obligations. If a person has reason to complain about his rights under a Lloyd's policy I think it is provided that the arbitration takes place in London.
Again, I say they have not any office here and they do not employ any substantial staff. It would be a good idea to compel them to invest here. I do not know how Lloyd's invest here. I know other British companies invest substantial sums of money here but I do not know what Lloyd's invest. I hardly think they invest very much. This would be a good opportunity to compel them to make as many deposits as they have syndicates.
Question put and agreed to.
Sections 10 and 11 agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."
I should like to refer to what the Minister said on Second Stage in connection with this and the following section. I understood him to say that it is here at the request of the Minister for Finance, who considers it necessary. I am open to correction but I also heard him use the word "urgent". I want to repeat again that something is being done in this Bill which is causing a lot of concern to many people. If it were serving any practical purpose I would be less severe in my criticism but it is not doing so.
I am suspicious of this. I do not like it there and I do not want it. I want to suggest to the Minister that he could reassure me and a lot of other people by agreeing to a reasonable amendment of this particular section. Senator Fitzpatrick has already said we would be far better off without the section in the Bill at all. The Minister is, if I may say so, acting unreasonably. While I do not want to be unreasonable to the Minister or this House, I am conscious of the position the Minister is putting me in. I do not want to be accused by somebody of holding up relief to the unfortunate people who suffered because of the failure of the Equitable Insurance Company. As I say, that is the Minister's fault. I do not like the use of the word "responsibility". I only use this after careful thought.
The approach of the Minister and his Department to the whole question of the inclusion of these two sections is most unreasonable. It would be much better to leave out these two sections of the Bill. If any change were being emphasised in this section of the Bill in the capital structure of the Irish Life I should be the first to welcome it. I would even welcome it inside this Bill if it were done in that way and for that reason. It is there only because of the fact that the Minister for Finance wants here to confirm his right to dispose of his shares in that company.
He already tells us he has the right to dispose of the shares, whenever he needs to exercise that right. Here we are asked to regard it in these words although the Bill has nothing whatever to do with that company. Surely that is unreasonable. I would strongly put it to the Minister that he could make much better use of the time of his Department and this company in avoiding legislation of this kind. I should be satisfied if the Minister would agree to amend this section. Would he delete two words from line 17 in section 12, "and sell"? They are superfluous and unnecessary.
I should like to confirm what I said on the Second Stage. The word "thoughtless" has been used here a number of times throughout this debate. Sections 12 and 13 have been thoughtlessly included in this Bill. All the other sections of the Bill, sections 1 to 11, inclusive, and, indeed, sections 14, 15 and 16 are there for the specific purpose of cleaning up a mess created by the failure of the Equitable Insurance Company. It is hoped as the Minister said, when this mess has been effectively cleaned up, that this Bill will never be required again. It is a great pity that the Bill was availed of to deal with the Irish Life Assurance Company, especially as the provisions of the Bill dealing with the Irish Life Assurance Company have no relevance whatever to the remaining sections of the Bill. The Minister would have been much better disposed if he had introduced a small Bill, called the Irish Life Assurance Company Bill, 1964. The impression has got abroad that there is some sort of connection between the two.
I cannot state strongly enough that there is no connection, and I do not think the fears of Senators about a connection between the Irish Life Assurance Company and the Equitable Assurance Company are real fears. I expressed myself as strongly as I could in the Dáil that the Irish Life Assurance Company were as solvent as it is possible to find an assurance company in the world — a company going from strength to strength. We should be all the more proud of this in view of their fine record of investment in Irish industry.
As I have already explained, under the Insurance (Amendment) Act, 1938, which set up the Irish Life Company, the Minister for Finance had power to sell certain shares. He had no power to purchase shares. This section will give him power to purchase and the reason is obvious. There is no intention of forcing anybody compulsorily to sell shares but the Minister for Finance will have power to subscribe to new shares in any new issue.
Under the present structure of the company, the Minister is the major shareholder and it is only right that he should be empowered to subscribe if the company seek new capital for expansion. In the event of the Minister buying new shares, there might be some doubt about his legal power to sell these new shares. I am informed that the power to sell in the existing legislation, which gave him power to sell shares, may perhaps limit his powers to the shares he already possesses, the shares he acquired on the passing of the 1938 Act.
Therefore, it is essential that the words "and sell" be included in this section as well. In the event of the Minister for Finance acquiring new shares, it should be beyond doubt that he would have power to sell those as well as those he gained possession of under the 1938 Act.
If that were the position, I should be quite happy, but is is not the position — not quite, at any rate. I am afraid it becomes necessary now to go back over the ground already covered. We must bear in mind that there are certain powers in the 1938 Act. Again, I wish to point out that if the requirements of the Minister for Finance were as simple as the Minister for Industry and Commerce has told us, surely the proper thing to do would be to amend the old Act. That is where all the trouble is coming from. I shall go a step further. The insertion here, and its retention, of the power to sell these shares is looked on with suspicion at the present time. I believe the present capital structure of the company is unsatisfactory and needs reorganisation but not along the lines the Minister has just suggested — to dump their shares on the market for purchase by the highest bidder.
I suggested there might be a new flotation — an accretion of capital.
May I make this point on the section, and I think it is as good an opportunity as any to make it? The Minister will hold with me that this type of capital structure is, in fact, totally unsuitable to a life assurance company of the strength and prospects of this company. Total paid-up share capital at the moment is, I think, £90,000. It certainly does not exceed £100,000. As I pointed out earlier, the company's assets exceed £40 million. Their liabilities will naturally be in some proportion to those assets.
The liabilities of the company must be very heavy and certainly £90,000 or £100,000 offers no protection whatever to the policy holders. The only function that £90,000 or £100,000 has at the moment is that it confers on the holders of that capital something like 15 per cent to 20 per cent of the surplus thrown up by the company. What would that mean if the Minister for Finance should get the bright idea of putting these shares out for auction? That is what worries me. We think it would be a most foolish thing to do. In the interests of the Irish taxpayers — the taxpayers have an interest to the extent of £1¼ million in the future of this company—I should like the Minister to be more specific in his assurance to me.
I should like him to tell us categorically that the Minister for Finance has no designs on making the shares of the company available to the general public at any cost. I do not think that would be a right thing to do. If the Minister had the future of the company and of the country at heart he would seriously consider mutualisation. That is a step he should contemplate and which I seriously advocate. These two sections have been pushed into the Bill, pushed before the Dáil and brought here today, and now the Minister insists on their retention. I want an assurance from the Minister and if it is forthcoming I shall be quite happy. I am not satisfied the Minister has disposed satisfactorily of the suspicions I have mentioned.
Without entering into the merits of what should be done about the Irish Life Assurance Company, it is very bad parliamentary practice, very bad drafting, to put these two sections into the Bill. The first words used by the Minister in his introductory remarks this afternoon were that the purpose of the Bill is to provide relief for the policy holders of the Equitable Insurance Company Limited.
If that is the object, why is some other insurance company brought in? It has been suggested that the business of putting the two names together is a bad thing for the entirely good and solvent company. I do not pretend to know how an insurance company should be run but if there are two opinions as to what the Minister for Finance should do about the Irish Life Assurance Company, this is not the place or the time. This Bill should have been drafted to provide for the Equitable policy holders and to make a general plan for such occurrences in the future.
The Minister was quite lucid about that and quite right about it, but I take it that what happened was that the Bill was drafted and circulated and the Minister for Finance wanted this done about the Irish Life Assurance Company. That starts a debate which is highly irrelevant for the purposes of the Bill as to what ought to be done about the Irish Life Assurance Company. As well as that, the fact that the debate takes place on this Bill is harmful, as Senator Crowley and others have suggested, to the Irish Life Assurance Company. It would be much better if, when you wanted to find out, if you were a lawyer or, indeed, an ordinary person, what happens when an insurance company goes bankrupt you could refer to this Bill when it becomes an Act; but that you have to refer to this Bill when it becomes an Act not only to do that but also to find out what the powers of the Minister for Finance are about the purchase and sale of the shares of the Irish Life Assurance Company — that is surely a very bad way of transacting business.
That is only part of a scheme I have often referred to where a Department wants to have everything done if possible at the same time. These two things are quite irrelevant. I know that nobody can rule them out of order. The Ceann Comhairle gets this Bill and he cannot do anything about it. The title of the Bill is there, it is called the Insurance Bill, 1964, and the Minister for Finance can bring in practically any other purposes that he likes. It would, however, be much better for everybody, much easier and much more relevant, if the business of the Irish Life Assurance Company was kept out of this and if, when we had to discuss its business, we got a particular opportunity. We could have this Bill at great speed, indeed, and, as far as I am concerned, I am quite willing to go the whole way with the Minister. So, I think, are Senators Fitzpatrick and Crowley on the question of the Equitable Insurance Company. Is not that correct?
Correct.
There is a very reasonable proposition, but as far as the matter of sections 12 and 13 is concerned, if that is something that ought to be discussed, then we should not be asked to pass it here in these circumstances. There is plenty of time for it. The company is perfectly solvent. The Minister has plenty of powers, and if he wants to get more he can come to the Dáil and Seanad with a Bill dealing with those powers and anything else. What we have here are two subjects which have no connection with one another, though I know they can be drafted into one Bill. I think they should not have been drafted into one Bill. The argument that if we hold up this Bill we prevent the policy holders of the Equitable Company from getting benefits is, of course, an unfair argument. We should not have been confronted with this problem of the Irish Life Assurance Company at all. It has nothing whatever to do with the purpose of the Bill and it should not be done rapidly. It should be done slowly. It would be much better if these two sections were taken out and put somewhere else and discussed adequately at the proper time.
I do not know that I can hold with Senator Hayes that it is bad parliamentary practice to include these two sections. As he knows, the Bill is entitled the Insurance Bill, 1964 and its final sub-section says: "The Insurance Acts, 1909 to 1961, and this Act shall be construed together as one Act and may be cited together as the Insurance Acts, 1909 to 1964." If there were no mention of the Irish Life Assurance Company in this Bill you would have the same final subsection; and if we had a separate Bill dealing with the two sections put in a Bill which we might call the Irish Life Assurance Company Bill, then we would have another Insurance Act which would be cited together with all the other Insurance Acts. All these Acts, including the Insurance Act of 1938 which set up the Irish Life, are construed as one. I suggest that Senator Hayes's observation that this is bad parliamentary practice does not stand.
It is bad parliamentary practice. It is common parliamentary practice and nobody can stop it, but a practice can be a bad one even if nobody has power to stop it.
There is no question here of the merits of the Irish Life Assurance Company.
I know that.
Therefore, it does not involve a wide or lengthy debate. I want to assure Senator Crowley that the inclusion of these two sections does not in any way involve a change of policy by the Minister for Finance in relation to the Irish Life Assurance Company.
I have already pointed out that the fact that both the Minister for Finance and now the Minister for Industry and Commerce tell us first that there is no prospect of the Minister buying any shares here and, secondly, that he has no intention of selling, makes one ask why then must we be put into this situation on this day. The Minister tells me that the Minister for Finance deems it necessary. There are other amendments to the existing insurance Acts necessary and, in fact, overdue. I have from the Minister's Department at least one assurance on certain sections of the Insurance Act proper that they are due to be overhauled. They told me that three or four years back, and that they would be overhauled on the introduction of a new insurance Bill. These are matters which would be of benefit and interest to the public at large. If it is one argument of the Minister that we are dealing with an Insurance Act and that, therefore, it is necessary to stick these two sections in, why was it not necessary to bring the Insurance Acts as such up to date? The Minister knows what I am alluding to. There are various sections of the industrial assurance which need overhauling and revision in an up-to-date Act. That was dealt with through his Department a good many years ago. The point was regarded at the time as not warranting the expense of special legislation and we had an assurance from the Minister's Department that it would be dealt with when a new Act was before the Houses of the Oireachtas. These matters are forgotten now and these two sections are introduced in this Bill and are wholly irrelevant to its purpose. The Minister has not been very specific about it. I am in the unsatisfactory position that if I hold up the Bill and insist that it should be held over for proper debate by amendment or otherwise, then I can be accused of delaying the payments to the Equitable Insurance Company claimants. That is not a satisfactory position for me or any other member of the House, and I think that the Minister is just being unreasonable on it.
The Senator is aware that the Dáil is rising tonight and that there are commitments which prevent the Dáil meeting on this occasion in view of the fact that the building contractors are in.
With all due respect, we were faced with that situation here for a good many years past, requiring us to rise in the second or third week of July.
No, you were not. There is a big building job coming on which the Senator is well aware of, and he knows that a commitment has been made by the Dáil and the Government to get out and, on this occasion, the Dáil could not be brought together again.
It is like the old story of the wolf and the lamb. If it was not the lamb it was the lamb's father. The truth is that this is bad parliamentary practice. The Minister can do what he likes and the Bill can go through. He can draft a Bill any way he pleases and get it passed, but in this particular instance all he should have done was to remedy the urgent problem, which is doing something about the policyholders of the Equitable Insurance Company. I do not think that the Minister is guilty in any way. The Minister gets these two sections from the Minister for Finance and puts them in. Why would he not? If I were Minister for Industry and Commerce I would probably do the same thing, but the Department of Finance should not have asked that they should be put in. This is a system of devising legislation which should not be agreed to and continued, and which is bad in itself.
I should make this point, that I do not think this is peculiar to any particular Government. It is a very bad scheme. This is an urgent Bill and we all want to pass it.
Then pass it.
This is all very clever. The Dáil is going to adjourn tonight, therefore to pass an amendment would prevent the Minister doing justice to a number of policy holders of the Equitable Insurance Company, and this argument will get through an amendment about the Irish Life Assurance Company which nobody understands properly.
The Minister would get over this if he separated the issues raised by Senator Crowley and left that portion of the Bill over. It would mean redrafting the Bill.
We could leave it over to December.
That would mean the whole Bill and we are not saying that.
That is the only way we can do it.
That, of course, is the difficulty. Everybody is trying to be helpful, but an important point has been made. It is not possible to amend the Bill really because we could not put something in or take something out. That of course would be amending. But if you keep the question of the other insurance companies apart, that may be termed an amendment but it is not an easy type of amendment. An amendment means changing something. This is a matter of whether we can leave something over. There is no emergency about the points raised by Senator Crowley. There is urgency in regard to the Equitable Insurance Company and everybody appreciates that, but there is no urgency in regard to the Irish Life to say that we need legislation immediately on the lines drafted in the Bill.
The Senator is making a mountain out of a molehill.
Did we say we would put these two sections to a vote?
There is not much point in that either.
Question put and agreed to.
Sections 13 to 16, inclusive, agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.
Business suspended at 5.45 p.m. and resumed at 7 p.m.