This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 82, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration", the Minister may explain the purport of the amendment made by the Dáil and this is looked upon as the report of the Dáil amendment to the Seanad. The only matter, therefore, that may be discussed is the amendment made by the Dáil. For the convenience of Senators I have arranged for the printing and circulation to them of that amendment.
Insurance Bill, 1981 [Seanad Bill amended by the Dáil]: Report and Final Stages.
I would like to apologise to the House for being a few minutes late. I am limping a little and I was slower getting across from my office than I had expected.
The reason for this amendment is as follows. In the Dáil yesterday, Deputy O'Malley expressly pointed out — although, in fact, we had adverted to this possibility ourselves — that in its original form section 1 (2) (b) obviously made it possible for the permanent company namely, Irish Life, to acquire not only the Church and General Insurance Company, which is what the immediate occasion of this Bill has been, but also, apparently, any other company at some later stage, even though no such intention exists at the moment, in the non-life field. The specific apprehension which he expressed, the basis of which I share with him, is that at some future date a Government here would be pressured by political motives or public opinion into forcing Irish Life to take over some large insurance company in the motor busienss. His apprehension was that in this way the State might find itself saddled, via the Irish Life Assurance Company, with another very large loss-making operation, because motor insurance by itself is in general not an attractive proposition, although it is hard to persuade the public of that. Virtually every company year after year make losses on their underwriting business in the motor field.
In order to meet the point raised by the Deputy I moved an amendment at very short notice which had the effect of taking out the words in (b) "a subsidiary company or subsidiary companies". It was that plural dimension "subsidiary companies" which upset the Opposition spokesman and I proposed, and the amendment was accepted, to replace those words with the words: "a company formed and registered in the State", or "a company or companies formed and registered outside the State". The point is that the singular formulation in the first half of that phrase clearly indicates, by contrast with the alternative singular and plural formulation in the second part of the phrase, that only one acquisition of a company in the non-life field within the State is here contemplated. That permission will have been exhausted by the time the Church and General are acquired, or by the time that the dominant interest in the company has been effectively acquired by Irish Life. They will not, thereafter, have any right and it will not be possible under this legislation for any Government to force them to acquire a company such as a motor insurance company or any other such company in the non-life field.
No objection was expressed in the Dáil to the acquisition by that company of companies outside the State. I hope, in fact, as I said when last in the House, that we are only seeing the beginning of an aggressive period of history on the part of the Irish insurance industry abroad. There is no objection to that; no such objection was voiced. There is no objection either to Irish Life expanding in the life field, but the life field is covered, not by (b) but by (a) of that subsection. Therefore, in a nutshell, the purpose of this amendment is to rule out, so far as it can be done, the possibility that Irish Life might, in addition to Church and General, subsequently acquire a company in the non-life field specifically related to the apprehension that it might be obliged by political pressure to take on motor business.
I appreciate and understand fully the explanation given by the Minister for making this amendment. I agree with it, but it re-created in my mind some of the uneasiness I expressed earlier as to whether a parent life company is responsible for a loss-making subsidiary. The Minister stated earlier that he accepted that a subsidiary's activities were cocooned. If that is the case, then there is not so much reason for having this amendment, because while there might be pressure to take over a loss-making business, that loss-making subsidiary, if it were cocooned, could never affect the fortunes of the life company. I wonder if the Minister would clarify that matter further.
The point about the cocooning is that both the parent company and the subsidiary, in any kind of situation, are legally distinct entities and the obligations of one do not rest on the other. Of course, the parent company may feel obliged to bale out, for reasons other than legal reasons, its loss-making infant. The point which is really being aimed at here is not to insulate Irish Life against the legal danger that if they were to take over a loss-making motor operation they themselves as a company would be stuck with the results. The purpose is to prevent, at one remove, the State from being saddled with this unless of course in the wisdom of the Oireachtas at some future time, legislation is enacted which would confer that power on Irish Life. At the moment the intention is to prevent it from exercising such a power.