Could the Minister elaborate on the classes of insurance referred to?
Insurance Bill, 1981: Committee and Final Stages.
Question proposed: "That section 1 stand part of the Bill."
Does the Senator mean that he wants an elaboration on the kinds of insurance implied by Council Directive 79/267?
Yes, if possible.
I understand that the traditional understanding of life insurance under our law is derived from the 1936 Insurance Act. This, however, will be superseded by this council directive which defines life business somewhat more widely. I have one example in mind, permanent health insurance, which is not part of the understanding of life insurance in our existing law but is part of it in the terms of this council directive, and the intention is to adapt or amend the understanding of our own law in such a way as to clear this up and allow the Irish Life Company or a subsidiary that may hereafter be formed, although that is not now in contemplation, to get into this kind of business, to do the kind of business not in the terms of the 1936 Act but in terms of the EEC directive.
When replying to points on the Second Stage the Minister confirmed my presumption that the basic reason why, in our law and in the EEC directive, a separation is prescribed between life assurance and other insurance business was that nobody wanted to have life assurance funds, and particularly life assurance policies, in any way harmed by losses that might arise on general business. He went on to say that the point does not really arise in this particular case because what we are doing here is to "remove the barrier as far as it concerns the acquisition by this largely State-owned company of a subsidiary engaged in non-life business." I do not follow the Minister's point. Does he mean that because this is a largely State-owned life business the danger of loss to life policy holders is not present? That leads me to ask him what would happen in the unlikely event of losses being incurred by the subsidiary? Would the parent company have to bear those losses? Or is the subsidiary, as it were, cocooned and would have to meet the losses, if any, on its own without recourse to the parent?
I certainly understood when replying to the Second Stage debate that the second of the two alternatives the Senators mentioned was the case, that the parent company and the subsidiary would be cocooned against one another. I tried to make it plain that this, so far as the instant case is concerned bearing on the Irish Life Company, was exceptional. So far as any subsidiaries themselves are concerned the ordinary principle of the 1936 Act will continue to apply.
On section 1(2) (b), is there a fear that Irish Life would engage in taking over small companies? Is there a possibility of this in the future?
I do not quite know why the Senator says "fear". I have inquired about this in the specific case of the company we are talking about and I am assured — and I have no reason to suspect the genuineness of the assurance — that there is absolutely no intention at the moment of doing such a thing. What the company are mainly concerned with is making it possible by the passage of this Bill to alter their memorandum in such a way that they can validly acquire a company doing non-life business. There is no present intention to move any further than that. That does not exclude the possibility that the company may subsequently form such an intention and in order to make room for that possibility and not have to come back to the Seanad and the other House to get fresh legislation, these plural alternative phrases have been inserted. There is no intention at the moment, or even in so far as I know any prospect of an intention, to do so.
Question put and agreed to.
Section 2 agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill".
Could I have a comment from the Minister on the reference to securing repayment by a person on foot of a contract of a sum of money?
The 1978 Insurance (Amendment) Act allows licensed banks to undertake certain types of guarantee on suretyship business which were previously regarded as insurance business. Some doubts have arisen as to whether within the specific terminology of the 1978 Act licensed banks are able to guarantee loans from the European Investment Bank to industrial development projects in this country. The EIB require such bank guarantees for their loans and it was the intention when the 1978 Act was introduced to facilitate, inter alia, the giving of such bank guarantees. The position under the 1978 Act as regards European Investment Bank loans is open to interpretation. The difficulty which has called forth this section arises from the use of the word “sole” in section 2(1)(a)(ii)(c) of the 1978 Act in the phrase “the sole obligation of the person under the contract”. In the case of EIB loans it is common for an obligation which is quite subsidiary to be part of the understanding. The person borrowing the money here is not only required to repay the loan but also to undertake other conditions such as completing the project on time as per schedule. Under the existing law since it would not be a sole obligation it would not fall under the benefit of the scheme. The proposal is to replace the word “sole” with the word “primary”. Clearly the repayment is the primary obligation but there are subsidiary or ancillary obligations and we are anxious to make sure that no problem can arise in respect of the EIB loans through the fact that there are these subsidiary or ancillary obligations. They are secondary to the principle which remains the repayment of the money outstanding.
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
I would make a general comment on section 4. Irish Life have come a long way from the time of the penny policy when they assured sums as low as £8 or £10, which were important. Nowadays they are talking in terms of premiums as high as £1,000 and more. My hope is and I am sure it is the hope of the Minister, that they will enter this general field with the same fair and enthusiasm as they have shown over the past number of years in the life field.
I do not know if this is the appropriate moment to say this but I share the Senator's hope and I would hope for more than that. This Bill is before the House in the context of a world radically different from the world of 1936 or 1938. It is a world dominated as far as we are concerned by the European Communities and by the right to the free passage not only of goods but also of services between countries. The Irish insurance companies already are feeling the effect of this right being taken up and vigorously exercised by foreign insurance companies, not only from Britain. There has begun to appear activity on the side of continental insurance companies. I made it quite clear in an entirely informal contact with Irish Life that the Government would be very anxious that any freedom of movement for services such as the provision of insurance should not be one way.
It would be a very unfortunate attitude and completely out of keeping with the aggressive and progressive spirit with which this company has grown over the last 40 years if we were to regard ourselves as merely the victims of this freedom of movement. I hope that Irish companies, despite all the difficulties which they may have such as a small base, linguistic problems and an unfamiliar setting and so forth, may with the same vigour take up the opportunities in this enormous market which the European Communities situation now offers them. We may find, gradually at first but subsequently in greater measure, large slices of continental insurance business as well as British insurance business being held by Irish companies here. Income for this country in the form of insurance premiums is the very same in terms of our balance of payments and of bringing wealth into the country as earnings through exports or tourism. Certainly the Government to which I belong — and I am certain any alternative Government we may ever see here — will be very anxious to give whatever help they can to the Irish insurance business as a whole in pushing its services, offering its facilities and promoting them in this enormous market of over 200 million people to which we now have access.
That would have been more appropriate to the Fifth Stage.
I agree, but as the Senator mentioned this in connection with section 4, I thought I had better answer it before it disappeared.
Question put and agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.