I remind Senators that a Senator may speak only once on a Report Stage amendment although the proposer may reply to the discussion on the amendment. Also on Report Stage each amendment must be seconded.
Insurance Bill, 1999: Report and Final Stages.
I move amendment No. 1:
In page 13, lines 27 and 28, to delete ", subject to section 108 of the Insurance Act, 1936, be provided in the English language" and substitute "be provided in both official languages of the State".
Is there a seconder for the amendment?
This amendment was adequately explained on Committee Stage.
The amendment lapses as it has not been seconded.
Amendment, by leave, withdrawn.
I move amendment No. 2:
In page 14, between lines 26 and 27, insert the following:
"43DD.–Regulations under section 43D shall prohibit an insurer from seeking, obtaining, using or retaining information relating to genetic testing of an insured or proposed insured.".
I went into this matter in great detail on Committee Stage. It is causing great concern within the medical profession and I thank the Minister of State's officials for conversations I have had with them on the subject. However, the problem has not been resolved.
While environmental factors are extremely important in the development of disease, we are realising more and more that a genetic predisposition can be important in some cases. Problems can arise if an insurance company tries to make people disclose their genetic information, as has happened in England. Some states in the United States have outlawed this, as have some countries in the European Union. It may be worthwhile for a particular person to have genetic screening to see if he has a predisposition to a certain condition. That person may be able to take action which would ameliorate the effects of the predisposition or do something about environmental factors which would be important in the development of the condition. Such a person may be able to undergo frequent screening which would help him to detect the condition early. If such a person is fearful that because he has had screening his chances of getting life cover would be diminished, he would not be encouraged to undertake the screening. This possibility is giving serious concern.
The last time I spoke on this matter the Minister of State said he had noted the letters in The Irish Times from Dr. David McConnell and co-workers in the Trinity College department of genetics and from Professor Andrew Greene and his co-workers in Our Lady's Hospital for Sick Children in Crumlin. There are concerns in other departments of molecular medicine about genetic screening being used by insurance companies in a way which would not be beneficial to people for whom genetic screening might be a good thing.
There has since been another letter in The Irish Times in which members of the Huntington's Association of Ireland express their anxiety that young people in a family with a predisposition to this genetic condition may feel themselves forced into being tested and would face 20 years of misery before they develop the condition. Hunt ington's disease is a serious condition for which there is no treatment.
We may also find children being screened. This would be very serious because they cannot give informed consent. The ethics of this situation are very doubtful because there may be something in a child's medical records which he or she may not wish to know about.
I ask the Minister of State to consider accepting this amendment. I know his heart is in the right place on this matter but I am sure he will go on to higher things and when he is in charge of the Department of Finance I will still be here, grappling with the Insurance Bill. I am quite sure the Minister of State would take immediate action if he saw something amiss but others may be slower about doing so. We have all expressed our confidence in the Minister of State but we must look to the future.
I ask him to consider accepting this amendment.
I second this amendment. This is the most important Report Stage amendment. The case for it was put strongly on Committee Stage. Insurance is important for people's lives. If a mechanism can be used by the insurance industry to deter or prevent people from having a policy or to limit the application of a policy, I am sure it will be used fully and widely.
It would be a shame if genetic testing was required for an applicant to get insurance cover. There has been an outcry in the letters pages of newspapers, particularly of The Irish Times, from professionals in this area in universities and hospitals. It is feared that genetic testing might be abused and exploited against people looking for insurance.
Constant progress is being made in science and medicine. It may be possible in the future to deal with diseases transmitted through a defective gene for many generations. It has been possible in the past to deal with genes. The best example of this is cancer. Cancer was a fatal disease but the majority of cancers can now be treated and people can live full lives as a result of the treatment they receive. Tuberculosis is another example. It was a killer in the past but it has now been eradicated. Many other diseases have also been eradicated by penicillin. Huge advances have been made in medicine and constant progress is being made. It would be unfair if genetic testing was regarded as a prohibition or a deterrent for insurance purposes.
I saw a fascinating programme last week on Iceland where many people have a limited genetic background because of the way the country developed and its small population. It highlighted the fact that a faulty gene, which came from a common ancestor a number of centuries ago, had given rise to certain cancers, particularly among female descendants. Because the gene was traced back to its origin, it is now possible to deal with it and to prevent the cancer being transmitted to future generations. By focusing on this, huge progress will be made in improving genetic defects.
As Senator Henry said, our genes depend on our diet and on the environment. Our state of health is part of our total experience. Our diet and environmental conditions have more impact on our health than our genes. People might not go for medical testing or they might delay it if this is the perception. There are many reasons we should be careful not to create a genetic underclass by identifying genetic testing as something that could be used by the insurance industry against a person seeking insurance. I urge the Minister of State to consider this amendment which is appropriate to this legislation.
I thank the Senators for their positive contributions and the sincerity and commitment they have displayed in their contribution on this important amendment. This amendment provides that insurers be inhibited from "seeking, obtaining, using or retaining information relating to genetic testing of an insured or proposed insured". This proposal was discussed on Committee Stage in the Seanad and it was debated here on Adjournment debates and in the other House on at least two, if not three, occasions. I also answered questions on the issue in the other House an hour ago. I fully understand the concerns which have prompted the Senators to table this amendment. I have considered the matter further since our last discussion in this House. However, it would be premature to legislate on this matter until a more thorough examination of the issue has been completed.
Senators are probably aware that the Irish Insurance Federation is finalising a code of conduct for its members. I expect the code will be observed by any insurers 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. The ethos and principle of insurance is based on pooling the risks. We do not want and will not allow a situation to prevail whereby disadvantage would be imposed on some and advantage created for others. This is an important safeguard which prevents the introduction of genetic testing by the back door. Thanks to this code, we now have time to consider all the issues in relation to insurance and genetic testing and come to a well researched position.
My officials have begun a process of consultation initially with public bodies so that we may consider all the relevant matters, including contributions from the scientific and health communities. I am conscious of the importance of funding health and 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.
I was interested in what Senator Henry said about the field in which she is a professional and what Senator Costello said about our many friends in Iceland. There is a great similarity and bond between the Icelanders and the Irelanders. I understand some European countries have already legislated on this matter and I would be interested to see what they have done and what effect their legislation has had so far.
As regards the code of practice being pursued by the Irish Insurance Federation, the Irish Council for Science, Technology and Innovation has set up a special group on genetic testing. We have asked the federation to consult with this group and our officials. Those consultations are in progress and when they are concluded, a final draft code will be available. It will then become operable and public.
Senators will understand that this week we have published the report of the interdepartmental group on modern biotechnology. I have organised for copies to be made available to the various spokespersons and people with a keen interest in it and any other body which wants a copy. Senators will also understand that within the national development plan we have allocated, on the basis of the technology foresight report, £560 million for ICT and biotechnology.
While I have sympathy with the amendment, I will oppose it for the purposes of this legislation. My advice is that this is not a good time to make conclusive determination on where we stand on biotechnology and genetic testing as it is an evolving process. My priority as Minister of State is to ensure that the consumers and citizens have access to competitive insurance cover from a cadre of insurance underwriters. My second priority is to ensure that such cover is a transparent and positive instrument which is available to the consumer and that they know what is being offered to them. As regards genetic testing and biotechnology, my advice to the House is that it would be foolish and short-sighted to make a determination until we have all the information and the reports and until Europe has taken an initiative in this area.
I thank the Senators for their thought provoking contributions. I will bear them in mind when I consider the matter in the light of the outcome of the consultation process. I regret I am not able to accept this amendment as of now.
Coming from a profession which is self-regulated, I understand the enthusiasm among insurance companies to regulate themselves and to have their own code of conduct. We, in the medical profession, have to work within the law as do the insurance companies.
The Minister of State and his officials have given very good explanations as to why they cannot accept this amendment at the moment, that is, that they have to look at other European legislation to see how well it is working. I have a terror of a very facile approach being taken by the insurance companies to this issue. As the Minister of State knows, because he has taken a great interest in the biotechnology area, it is a very complicated area which, as Senator Costello said, is changing almost by the hour. It is not just one gene that causes the thing, it is the interplay between various genes that causes a problem. It really is a very complicated area.
I have such a concern about the insurance companies which very much like to set their own rules. Some years ago I supported the previous Insurance Ombudsman when I felt she was being pressed to take actions which were not in the best interest of insured people. That office is run by the insurance companies and it is important to emphasise that again. Whatever independence the office of the Insurance Ombudsman has, it is not financial. The office is beholden to the insurance companies for its existence.
If it were not for this Minister of State, I would press this amendment. I hope he is not transferred to higher places too fast before he gets the chance to really get after—
I am flattered by the Senator's positive optimism for my future.
I hope the Minister of State and his officials deal with this as quickly as possible because I do not think we can leave this to the insurance companies. I know we will hear about codes of conduct but I do not think that will do. We really have to include this in legislation. I am relying on the Minister of State to act immediately if he sees moves to introduce some type of testing. I will certainly act if I see anything. It is one of the most serious issues, as the Minister of State will know from the contacts he has had with the scientific community and the medical profession. They are extremely anxious that people might even refuse to go to Breast Check or something like that because it could be a bad thing to go for a test. We could find ourselves in such a situation and I do not want to see that happening. We put such an effort into getting Breast Check up and running and if people think something has to do with their genes, they may not attend.
I am relying on the Minister of State and he will hear from me if I do not hear from him first. I hope he can manage to find enough information within the next six months. We do not have to solve the whole situation for the world. All we have to do is make sure we do not leave people in Ireland in a vulnerable situation before very powerful financial interests.
Amendment, by leave, withdrawn.
Amendments Nos. 4 and 5 are related to amendment No. 3 and they may be discussed together by agreement.
Government amendment No. 3:
In page 17, to delete lines 33 to 36 and substitute the following:
"(v) particulars of any rating factor applicable and of any additional amount payable by reason of it,;”.
During the Committee Stage debate, Senators commented that the drafting of this section could be read as sanctioning rating in accordance with the factors which had been identified, including sex and place of residence. Although this was not the intention, I agree that the drafting could have been read in that way. Accordingly, I tabled amendment No. 3 which achieves the objective of providing the consumer with relevant information without conferring any particular legitimacy on one rating factor over another. I thank Senators sincerely for bringing this matter to my attention. The proposed amendment No. 3 is a significant improvement and I trust that on that basis we will be able to agree to it. I am sure the House will co-operate in ensuring that it will not be necessary to have further discussion now.
I understand the three amendments are being taken together.
The Senator may speak on the three amendments.
I thank the Minister of State for responding to our concerns in amendment No. 3, which obviates the need for my amendments Nos. 4 and 5. I have always thought it inappropriate to specify areas where additional amounts are payable by reason of sex, age and medical status and that it was much better to present it in a generic form. That is what the Minister of State is doing here.
I was worried that "medical status" would open the door to genetic testing and, of course, that is still the concern in regard to any rating factor applicable. The insurance industry will largely determine what is and what is not applicable. As Senator Henry said, with self-regulation and a code of conduct devised by the body itself without outside supervision, it is always difficult to ensure it deals with the matter in a substantial fashion. We would want to keep a close eye on how this operates. I know that, in practice, areas such as sex and medical status operate. There are other areas, such as sexual orientation and place of residence, where there is serious concern about the manner in which loading and discrimination can take place very easily.
What the Minister of State has offered is a reasonable compromise on what we are looking for, but I am concerned that there is still plenty of room for the industry to be discriminatory. Eliminating the specific reference to specific factors would seem to indicate that these are appropriate factors for extra loading. That is a very valuable point and we will have to keep an eye on the industry to see that it adheres to its own code of practice in a substantial medical fashion.
Amendment agreed to.
Amendments Nos. 4 and 5 not moved.
I move amendment No. 6
In page 25, line 36, after "appeal to" to insert "a nominee appointed by the Minister and".
The Minister of State and myself had a great discussion about this point on Committee Stage and we had to respectfully disagree. This is not a permanent office but would come into play as cases arise. It would bring the legislation into line with the Insurance Intermediaries Act, 1995. I know the Minister of State said that concerned a different Department. I heard him say loud and clear on a recent broadcast how seriously this Government, and please God all Governments, take their collective Cabinet responsibility and that legislation should be in line and so on.
We agreed that there is common sense, not to mention the cost factor, in having it this way. I remind the Minister of State not only of my own contribution but of the very eloquent contribution on Committee Stage of his colleague, Senator Mooney, and of Senator Quinn on this point. For those reasons, I strongly believe that a broker who feels aggrieved should have the opportunity, rather than going to the High Court, of having the Minister appoint a nominee as an arbitrator to rule. This would be efficient and practical. The court should be a last resort and as a similar provision is contained in other legislation, I do not understand why, in the interests of good sense, it cannot be included in the Bill.
I second the amendment. This matter was discussed on Committee Stage and the amendment makes a great deal of sense. The point behind it is to try to avoid the outrageous costs that occasionally arise as a result of the rules and conditions of the courts. The amendment would ensure simplification of the system through an appointee of the Minister considering issues.
The case was solidly made on Committee Stage and I hope the Minister is willing to accept the amendment. However, if he is not willing to accept it, I am interested to know the reason. There may be valid reasons if that is the case, but it appears logical that rows should not have to end up in the courts on every occasion. The courts should be a last resort and I urge the Minister to consider accepting the amendment.
The purpose of the amendment is to provide intermediaries with an avenue of appeal as an alternative to the court against conditions or requirements imposed by the supervisory authority. Section 17 of the Bill provides for a transitional period in respect of insurance intermediaries. Thus, they are deemed authorised under the 1995 Act pending the granting of an authorisation by the supervisory authority. In other words, once they apply, they are deemed to be authorised and if they fulfil the criteria, they get full authorisation. Section 17 also provides that the disciplines that apply to fully authorised intermediaries should also apply to those intermediaries benefiting from the transitional period. The law is soft in terms of access so they are given equal opportunities to those who are authorised. In parallel with that, we expect them to meet the requirements of the supervisory authority.
The purpose of these disciplines is to protect clients and bona fide intermediaries. The genuine intermediary must be protected as must the citizen – the client. Thus, the Central Bank may impose conditions necessary to protect the clients and issue certain directions. As is normal, section 17 provides the safeguard that an intermediary that is the subject of an imposition or direction always has the right of appeal to the High Court. This provision applies equally to fully authorised intermediaries.
It is not intended to introduce an additional avenue of appeal. The High Court is deemed sufficient to protect the interests of intermediaries. The overriding concern of the supervisory authority is to be able to act as quickly as possible to protect the client, the investment and the liquidity when it becomes aware that an intermediary is no longer complying with the law so that the losses suffered by clients may be minimised.
This involves a minority of cases. The vast majority of people in the insurance industry are genuine. As in every profession, 99.9% of the people are perfect but the other 0.1% makes life difficult. This ratio is reflected in all professions and activities. The position with regard to the supervisory authority is that there would be engagement, interaction, communication, dialogue and response opportunities and that time – up to three months or more – would be allowed. During that period, unless a major scam is involved, it should be possible to resolve most of the issues.
If a supervisory authority to deal with these professional people is to be established, it would be foolish to also create another layer in terms of an appeals officer or similar structure. The court will only come into play as a last resort. It would be unfair to impose this extra burden on the Exchequer and to create another bureaucratic layer of pressure on intermediaries. There must be transparency involving the regulatory authority, the industry, which includes underwriters and intermediaries, and consumers. On that basis, there is no point creating any other structure or appeals mechanism. Therefore, I regret I cannot accept the amendment. I thought deeply about the matter and there were consultations yesterday evening. We thought about it overnight and there were further meetings this morning. However, we decided it would be unwise and I regret I cannot accept the amendment.
I do not understand the Minister's logic, given that there is a similar provision in the Investment Intermediaries Act. The amendment would not create a separate office although the Minister suggested otherwise. As he stated, this involves a body of professional people and it is anticipated that there will be few cases. However, where they arise, it makes sense to provide for arbitration where the Minister may, from time to time, provide a nominee. This would be on a casual basis as required. This is why I appeal to the Minister to accept the amendment.
My wonderful officials come to my aid when I am on the rack. Senator Coghlan almost had me on the ropes. He is a wily Kerryman and he put me into a spin. I hit the ropes but I have come back with powerful information from the Investment Intermediaries Act, 1995. Section 60 states that a professional body on whom a notice has been served under section 56(3) of the Act or an approved professional body on whom a notice has been served under section 59 of the Act may within 21 days of receipt of the notice appeal to the Minister and the Minister shall consider any such appeal and may uphold or reject it.
This is the only ground of appeal in the Investment Intermediaries Act, 1995. It does not deal with individual intermediaries. It only deals with a professional body. I have similar powers pertaining to other professional organisations. Regrettably, these do not only involve national bodies but international bodies which want to be recognised in Ireland. I must deal with those and it is not an easy decision to make. Decisions made in the past were not popular but we must live with that.
The only right of appeal under that Act is where a professional body is refused recognition. It has the right to appeal to the Minister for Finance and make a case if it is refused recognition. This does not apply to individuals. The Bill is consistent in that it relates only to a collective group and not to an individual. I stand over my recent utterances about collective responsibility in good legislation.
May I respond?
Senator Coghlan has exercised his right of reply.
Would the Chair be slightly indulgent and allow me to ask about a situation where it is routed through the professional body?
I cannot create a precedent.
That would not be possible.
Amendment put and declared lost.
Government amendments Nos. 7 and 10 are related and may be discussed together. Is that agreed? Agreed.
Government amendment No. 7:
In page 25, to delete lines 52 and 53 and substitute the following:
"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.'.”.
On Committee Stage, Senator Quinn tabled amendments which provided that registers maintained by the supervisory authority and the product producers would be held in electronic form. My officials examined the proposals and there was consultation as a result of that examination. We have decided that, as we are rapidly moving into an electronic era, Senator Quinn's proposals should be accepted.
Amendment No. 7 provides that the supervisory authority shall maintain the register or registers in electronic form or in another form if it considers it appropriate. I understand the supervisory authority intends to publish the registers on the Central Bank's website. Amendment No. 10 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 and it may maintain the registers in electronic form. Paragraph (c) is an amendment which was introduced at Committee Stage in the Dáil. For the sake of consistency it is repeated here. It is based on the recommendations that were made by Senator Quinn and supported by other Members. Accordingly, I commend amend ments Nos. 7 and 10 and I hope this is to the satisfaction of the House.
I thank the Minister for his speedy and accurate response to my proposal. I have a couple of queries about it. I am not quite sure I understand the need for the proposed subsection 2(b) in amendment No. 7 which refers to “the publication, in electronic form or such other form as it considers appropriate”.
I am very impressed that the Minister has moved the register to the Central Bank website which seems to be a perfect situation. It is easy to obtain it there. Why do we need the phrase "or such other form as it considers appropriate"? I am slightly concerned that at some future stage the phrase might not be interpreted in the way intended. Is it not possible to leave it as "the publication, in electronic form"? The same phrase crops up in amendment No. 10 in paragraphs (a) and (b). Perhaps there is a sensible reason for using this phrase.
I know the intention here, and from what the Minister has said it is exactly what I sought. I appreciate what he has done. Is it dangerous to use the phrase "such other form as it considers appropriate"? I am concerned that in the future someone may consider this to mean in paper form rather than electronic form. I hope this legislation is strong enough to maintain what was intended.
Amendment No. 10 refers in paragraph (f2>b) to "the insertion, after ‘product producers', of ‘and such a register may be in electronic form or such other form . . .'". I am not happy with the use of the word "may". I would prefer if the word "shall" was used instead. I am not thinking of the Minister's intention here. According to what he told me, it will be achieved immediately. The word "may" rather than "shall" and the phrase "as it considers appropriate" may be interpreted differently by someone in the future. Perhaps the Minister could explain this legislation.
The points made by Senator Quinn are very good. The phrase "in electronic form, or such other form" seems to leave it open for electronic form not to be used. Perhaps the Minister could clarify the position.
I am sure by now the Minister will have realised that Senator Quinn and I are at the forefront of information technology. Could he tell Departments that we will keep asking for things to put in electronic form? We have raised this issue on numerous Bills. Senator Quinn was the first to bring it to my attention. It is a pity that it must be raised on every Bill. Perhaps the Departments could be informed that they are likely to receive these amendments unless that happens.
There was a request to extend the present methods by which the register is made available to include electronic form. The Minister has given an option by providing that it may be either in electronic form or such other form as is considered appropriate. That was not the intention of the discussion that resulted from Senator Quinn's amendment on Committee Stage. This gives rise to confusion. Perhaps the wording could be improved somewhat. The phrase "the publication in electronic form" should cover all immediate eventualities. The Minister could introduce an amendment in the future when science has progressed further. The language gives rise to confusion.
The purpose of these proposed amendments is to make sure there is balance, fairness and equity in the system. We are putting an onus on the regulatory authority to publish in electronic form. An insurance intermediary, a citizen, a client or a consumer might look for information, and if the electronic system broke down, we would have protected the supervisory authority from being mandated to provide information in a particular form. To ensure there is no escape clause in providing information I have stated that they must do so in all forms as appropriate. In other words, it is appropriate to have a paper based system and an electronic paperless system. As time evolves there may be other forms of communication available.
We must take account of consumers or citizens who do not have access to electronic systems, either e-mail or the worldwide web. They could be disadvantaged if we only used an electronic form. We must ensure that there can be no latent inherent barriers or disadvantages placed in the way of making information available to them.
We could not impose the word "shall" in relation to product producers mentioned in my second amendment because some of them, initially, would be very small players in the market. If we told them that they had to do this and they could only do that, we would be placing an impediment on their entering the market. Obviously they will test the market with their product. If it begins to grow they will spend money on promoting and distributing it and getting information. We want to give the maximum incentive to product producers to enter the marketplace. It would be unfair to tell them they can only communicate electronically when it is vital for them to avail of every mechanism to promote their products to the maximum advantage through their intermediary to the wider consumer across the web and the system. It is also vital to them to communicate by paper.
I gather I am not allowed to speak again.
The Senator is not allowed to speak a second time. This is Report Stage and Senators may speak only once.
Amendment agreed to.
I move amendment No. 8:
In page 26, between lines 41 and 42, to insert the following:
"(2)A life insurance broker may act in a free and independent manner in providing the level of service which is expected of him/her in impartially responding to any consultation with his/her client.".
This amendment allows these people, and the Minister agrees that they are a fine body of people, to carry on as they have done hitherto in providing an impartial and best advice service to their clients. This is what is expected of them. It would be ridiculous to place restrictions on them and ensure that they cannot continue to conduct their business in that fashion.
We have talked a lot about providing a level playing pitch. We all agree that it is vital to have it, yet this Bill will favour the big player in the marketplace. It is vitally important that we make such a provision and that we do nothing to infringe the independence of the independent broker.
It would be a negation to do what the Minister proposes in the Bill. These people maintain the highest standards in their professional conduct. No other profession, accountants, solicitors or anyone else would accept such a provision. They are not facing such a proposal and there is no one calling on them to do so. There are fewer defaulters in the insurance business than in other professions and by saying that I do not want to slight accountants or solicitors.
An important right is being restricted. Why does the Minister want to limit such an excellent body of professionals? They have done a good job over the years. I cannot understand why this restriction is being imposed. This a traditional right. No Government would impose such a restriction on anybody else. These are serious minded people doing an excellent job who are bonded and indemnified. Everything is in place to cover their clients. I cannot understand this proposal. I accept the Minister of State is a fair minded man, which I have always said, but I am at a loss to understand this.
I second the amendment with quite a deal of concern about the implications if it is not accepted. The amendment is very clear. It states "in impartially responding to any consultation with his/her client".
I was given the example of someone seeking advice from a broker who tells him or her that the best thing would be to put his or her money in the post office. Perhaps I am mistaken and the Minister of State may correct me, but it appears that under the Bill an insurance broker could not give that sort of advice unless he was an agent for the post office. That seems out of kilter with everything the Minister of State is trying to achieve in this Bill. I have difficulty understand ing how we could impose that. If that is the implication of this, the Minister of State must rethink it and accept this amendment. I gather that as the Bill stands at the moment without this amendment, a broker would be unable to give that sort of advice to a client unless he was the agent for the post office, for example. Perhaps I am mistaken and have misunderstood this.
However, the amendment would be a solution to this. It states:
A life insurance broker may act in a free and independent manner in providing the level of service which is expected of him/her in impartially responding to any consultation with his/her client.
I think that would give a life insurance broker the freedom to give impartial advice in responding to a request from a client, even if he is not an agent.
Senator Quinn has put it very well. We were all very concerned on Committee Stage that this was protecting larger brokers and that those who were just starting off and had only a few agencies would be greatly disadvantaged. I know the aim is to protect the people who go to a broker. However, their freedom of action will be severely curtailed if this amendment is not accepted.
I support this important amendment. We are talking here about the traditional advice that has been given by life insurance brokers. This is now being limited by restrictions on the type of general financial advice that might be given. I am not sure how that protects the consumer, unless there are some statistics to show the consumer is disadvantaged by the traditional concept and that this new principle of restrictive advice by the life insurance broker should be introduced.
How does the Minister of State intend to police this? How will the insurance police operate if a client asks during a consultation for general financial advice and for the broker's general opinion on the Irish Permanent, AIB, the post office and so on? How will this restriction be policed in brokers' offices or over the telephone?
I understand why Senator Coghlan tabled this amendment. The Minister of State and his officials have undertaken many detailed discussions with people in this area to try to ensure the thrust of the Bill, which is to ensure people are better served under this legislation than before, is complied with. The Government amendment No. 9a will address that issue.
The Minister of State has taken on board that when a person goes into an insurance broker's office and says he or she has a policy with a particular company, such as Ark Life, Irish Life or any of the other insurance companies, it is important for the broker to be in a position to ensure he does not ignore that fact and advise the person to turn over a policy and perhaps even create a churning effect. The legislation will ensure the person is given full information on the product he or she has and the cost of changing it.
We are trying to ensure the consumer has full information and that brokers will not be restricted in giving the advice required at that time. The Government amendment will go a long way down that route. I would have liked the amendment go a little further but I accept the advice of the officials in the Minister of State's Department.
Members are making a very strong case for a change. I am very easy to deal with and it is very easy to persuade me to change my mind. I always consider change. I like change but not just for the sake of it.
Does that mean the Minister of State is accepting the amendment?
The purpose of this amendment is to provide that a life insurance broker may act in a free and independent manner in providing the level of service which is expected of him or her in responding to any consultation with his or her client.
The extent to which an intermediary gives advice is determined by their status. Investment product intermediaries authorised under section 10 of the 1985 Act have to fulfil three conditions – they must demonstrate they are competent to offer wide ranging advice, that they have adequate capital to run their business and they must submit to a strict supervisory regime involving quarterly reporting. The purpose of this is to ensure 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 who can fulfil these conditions may seek this status and is then free to offer wide ranging advice.
Restricted activity intermediaries, by contrast, do not have to fulfil these conditions. Nevertheless, they may offer advice on the products of the product producers from whom they hold appointments and, having secured a sale, they may handle cash to the extent that the payment is guaranteed by the product producer.
I would compare brokers, advisers and intermediaries to politicians. We have to be—
Would the Minister of State want to restrict the advice they could give at their clinics?
I have never done that.
I did not think he would.
We are asked to answer many questions. Some people think that because we are legislators, we are lawyers. We have a major diffi culty persuading them we are not lawyers. Neither are we Supreme Court judges interpreting the law for them. However, sometimes we have to give our best guestimate of what we think is correct and best for the individual situation at any time. Brokers, advisers and agents are in a similar situation.
I promised to further consider this, which I have done. If the House is prepared to co-operate with me and withdraw this amendment, I hope to resolve the issue with amendment No. 9a, which we circulated this afternoon.
Could I see that amendment?
That document is being circulated. The additional amendment is mistakenly numbered amendment No. 11a on that document – it should be amendment No. 9a.
This amendment states:
"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
(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."
We are not discussing that amendment. We are discussing amendment No. 8 and we will deal with amendment No. 9a in due course. As it is a Government amendment I will move it and it will then be open to the House to discuss it.
I did not have amendment No. 9a before me. I appreciate the Minister of State's offer, but having quickly read the amendment it is rather limited and does not meet requirements. The hitherto independent broker will, in effect, lose his independence.
That will not happen following amendment No. 9a. I am unable to discuss it now, but I will shortly address the Senator's concerns to his satisfaction.
Given that amendments Nos. 8 and 9a are interlinked should they not be considered together?
If the House agrees we can discuss amendment No. 9a with amendment No. 8.
On a point of order, does that mean that those who have spoken on amendment No. 8 will not be able to speak on amendment No. 9a?
I will make an exception in the situation that has arisen and will be very flexible, as I always am. Perhaps the Minister of State will address amendment No. 9a as part of the discussion on the two amendments.
A Chathaoirligh, you are most reasonable. I appreciate your flexibility and the attitude of the House to discussing these amendments. Under amendment No. 8, Senator Costello raised the question of policing. As the supervisory authority, the Central Bank will police matters. It will no doubt from time to time check any intermediary acting outside his or her powers.
How effective will that be?
It will be tested under this legislation.
We are dealing with a reputable industry.
We are confident that as the supervisory authority, the Central Bank will be able to act on its remit, including situations where an intermediary is pursued by a client. I refused requests in this area in the other House.
Members there must have been acquiescent.
Not necessarily. As a result of a meeting I had last night with the Insurance Brokers Association and subsequent discussions with my officials – another early morning meeting and a later one today – we have decided to table amendment No. 9a, which reads:
In page 30, to delete lines 33 to 37 and substitute the following:
"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)(f2>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.".".
I have also considered the arguments made in this House on the issue of advice. 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 of any type held by that client, the Investment Intermediaries Act does not prevent that discussion from proceeding.
Although the amendment may not address every point raised on this issue, it will ameliorate the position by allowing restrictive activity investment product intermediaries to hold discussions in the context of the disclosure regulations without fear of being in breach of the 1995 Act. Clients can discuss their policies in the context of who has produced them, proposals can be made and, as a result of this amendment, advice can now be freely given without breaking the law. We have introduced this following due consultation to ensure that, under the law, independent advice will be constantly available. I thank the House for raising this issue. I hope this amendment will clarify the position and allay the concerns of independent brokers on the island of Ireland.
I am grateful to the Minister of State for this amendment. I may not fully understand it, but I believe he has gone a long way to meeting my concerns. I appreciate that.
The independence of the broker is basic and I do not want to do anything to limit that. The Minister of State is untying the broker's hands. He is not doing it as fully as I would wish, but in view of the pertinent point raised by Senator Costello regarding policing, I should be satisfied. I do not believe there would ever be intended infringement and I accept the Minister of State's word that in line with our views, he does not wish to limit the independence of the advice provided. On balance, I am happy with his proposal and I thank him for introducing this amendment.
While I had amendment No. 9a in my possession I had not noticed it. I apologise for that. It represents a valiant effort by the Minister of State to address our concerns. I am not sure it goes as far as everybody would like, but if that was always possible the Minister of State would be able to achieve much more. I have difficulty in understanding the detail of the second part of the amendment, but I take the Minister of State at his word. He has attempted to alleviate our concerns. I was concerned that the initial provision was over-restrictive. While the amendment means it continues to be restrictive it will be less severe. I thank the Minister of State for his consideration.
My reference to policing was not a slur on the insurance industry. I suggested it needed to be policed, but I found it difficult to envisage how it would apply to consultations between a broker and client and what kind of supervisory body or mechanisms would be in place. Given the involvement of the Central Bank, I do not believe the insurance industry has anything to worry about in terms of intrusive monitoring. Is the Minister of State proposing that in connection with life assurance there will be no restrictions on consultation and advice, but where information may be sought on other policies or financial categories of insurance, a life assurance broker is not entitled under law to become involved?
To meet the intention of amendment No. 9a we had to take into account the status of the individual broker. This entailed a consideration of the Investment Intermediaries Act, including the definitions involved and the parameters laid down, and the effect of disclosure regulations. We also had to try to achieve a solution to a perceived problem, whereby the restricted activity intermediary, or others, could be in breach of the law for giving advice outside the status they hold. Taking everything into account, we have framed this amendment in such a way that it allows the individual broker, agent or RAIPI to give advice in an independent manner, based on the fact that they can ask questions of the client as to what they currently hold in terms of products and investments. They can now give that advice in the free knowledge that they will not be breaking the law.
Amendment, by leave, withdrawn.
Government amendment No. 9:
In page 29, to delete the text inserted by Government amendment No. 35 at Committee Stage and substitute the following:
"‘(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.'.".
Amendment No. 9, which refers to the issue of cash handling by certain insurance intermediaries, has been the subject of much discussion and debate. On Committee Stage in the Seanad, I introduced an amendment which would permit non-life insurance intermediaries to handle cash without being subject to any restriction. The supervisory authority was concerned that, as drafted, the amendment permitted non-life intermediaries to handle cash without any limitation. This would afford no protection to non-life intermediary consumers. Having reflected on the matter, I am now proposing an amendment which will provide that both life assurance intermediaries and non-life insurance intermediaries will be permitted to handle cash, provided the circumstances in section 25G of the Bill apply.
Section 25G 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 handling it. The provision, as it will now be drafted, will permit 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 to which the tied agency agreement relates. I trust this will be to Members' satisfaction.
I welcome this amendment. We are dealing with a professional body of people who are bonded and have suitable indemnification in order to protect their clients. The insurance undertaking would not provide any broker with an agency unless he or she met the necessary requirements. It is logical that brokers should be able to handle sums of money on behalf of the insurance companies.
Amendment agreed to.
Government amendment No. 9a:
In page 30, to delete lines 33 to 37 and substitute the following:
"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
(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.".".
Amendment agreed to.
Government amendment No. 10:
In page 33, to delete lines 16 to 25 and substitute the following:
"Section 31 of the Act of 1995 is hereby amended–
(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',
(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
(c) in subsection (6) (inserted by section 61 of the Investor Compensation Act, 1998)–
(i)in paragraph (a), by the substitution for ‘newspapers circulating in the State' of ‘national newspapers', and
(ii) in paragraph (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'.”.
Amendment agreed to.
I move amendment No. 11:
In page 33, between lines 25 and 26, to insert the following:
"29.–Section 31 of the Act of 1995 is hereby amended by the insertion after subsection (6)(b) (inserted by section 61 of the Investor Compensation Act, 1998) of the following:
‘(c) Notwithstanding paragraphs (a) and (b) of this subsection, the supervisory authority may dispense with the requirement to ensure the publication of a notice of discontinuance where the investment product intermediary satisfies it that such publication may be detrimental to the orderly and good conduct of its business or may undermine the confidence of clients in the investment product intermediary or for any other reason.'.”.
This amendment relates to the discontinuance notice. I feel the provision in regard to notices in national newspapers will be misconstrued by our constituents. Thankfully, such notices have been few in number to date.
I am aware that in some rural areas, the publication of one's name in a newspaper can take on a certain importance. However, when insurance brokers begin to be affected by this legislation, notices could appear on a weekly basis where a broker drops an agency, decides to concentrate on a particular aspect of his or her business or decides to retire, as may well happen if this Bill impacts on his or her livelihood. The notice will be misconstrued in rural Ireland as relating to wrongdoing or inefficiency and will lose its impact.
This is a flawed provision. In the case of wrongdoing, where the Central Bank closes down a business, such notices are very important and we should not reduce their importance by putting notices in newspapers in regard to every discontinuance of an agency for genuine reasons. Therefore, I ask the Minister to provide a waiver to the Central Bank or regulator where there is no wrongdoing involved. I propose that notices should only be published in cases where brokers are suspended due to non-compliance with the supervisory authority's regulations.
I second the amendment.
The purpose of this amendment is to dispense, at the agreement of the supervisory authority, with the need to publish discontinuance notices. Following Committee Stage discussions, I have re-examined and reconsidered this issue and have, indeed, given it very extended consideration over the past 24 hours.
I understand the motive behind the amendment. Discontinuance of appointments may occur for perfectly ordinary reasons, yet notices may convey an incorrect impression of the intermediary. However, the 1995 Act requires the intermediary to publish the notice and only when he or she fails to do so is the product producer required to do so. Accordingly, the intermediaries themselves have control over the notice's content.
A further purpose of this requirement to publish is to inform consumers. The provision of such information is of overriding importance. I have considered the various opportunities which non-publication might create and it is my judgment that non-publication would expose many innocent people to scams perpetrated by people associated with the industry, although not members of the industry. I do not intend to elaborate on that as somebody might read my comments and put the ideas into operation. It would be very foolish to allow vulnerable people to become the victims of simple scams. I regret, therefore, that I cannot accept the amendment.
Amendment put and declared lost.
Bill reported with amendment and received for final consideration.
Question proposed: "That the Bill do now pass."
Since its publication, this Bill has been considerably strengthened. I compliment the Minister and his officials on the manner in which they managed the consultation process and took on board the advice and fears of the people who will be affected by the legislation. The Minister made full use of the committee procedure and of this House. He promised in the Dáil to address the concerns raised in this House and I compli ment him for doing that. I also thank my colleagues for their support in regard to the many issues addressed in the Bill.
I would like to be associated with Senator Cox's thanks to the Minister and his officials. I thank the Minister for the amendments he introduced and for his clarification on various points. I hope the legislation will operate successfully. I tabled five amendments on Committee Stage and three amendments today but only gained the Minister's amendment No. 9a, for which I am grateful.
That is not a bad ratio.
The Minister is a fine fellow who presents himself very well but he is a bit like Jack Lynch in that his teeth are the softest part of him. I cannot deny that he is excellent at his job and I thank him for the concessions he has made.
I thank the Minister and his officials for considering the views advanced in this House and for realising that we were trying to be constructive. We have unfinished business with the Minister; we must examine the issue of genetic testing about which Adjournment motions will be tabled within six months. I hope he will be in a position to introduce legislation in this area at that stage. Within six months there will be motions tabled on the Adjournment. I hope by then the Minister will be in a position to bring something forward in that area.
I wish to be associated with the compliments paid to the Minister and his staff. It is very good to have a Minister with the confidence to take on the points raised on all sides of the House, and in doing so I notice he reached a very good balance. He came up with an amendment to address the issues raised by Senators Coghlan and Quinn and he also addressed some of my concerns. Everybody on this side got some response from the Minister, even if we did not get the response we would have liked to all the amendments. We like to see the Minister responding and introducing his amendments in response to ours. I also thank him for the courtesy he has shown us in the debate.
I wish to add my congratulations to the Minister and his officials. I was particularly impressed by his grasp and knowledge of the brief. His words this afternoon clearly show that he allocated hours in the past 24 hours to consider this. In a number of cases he reintroduced amendments similar to those proposed on Committee Stage. I congratulate him and his officials.
I sincerely thank all the Senators for their interesting, positive and warm contributions on this very important Bill. As Members are aware, it will bring about major changes in the area of regulation of insurance intermediaries. When I was appointed Minister of State with responsibility for commerce in October 1997 I signalled I wanted to achieve this in partnership with the public, the Parliament and the industry and its component parts. The fact that we published the Bill just one year ago and that it is now passing Seanad Éireann and will return to the Dáil for final passage shows that within 12 months we had much detailed dialogue and discussion.
I believe there is now recognition in all quarters that the provisions of the Bill will benefit consumers, the industry and the nation. It will enhance consumer confidence by providing adequate and comprehensible information through the disclosure regime. Through disclosure and the new regime of authorisation and supervision for intermediaries, it will also improve the standing of the industry. Insurance consumers will be provided with sufficient information to enable them to make rational and informed choices about their insurance requirements and the resulting competition in the marketplace will encourage the promotion of better products at a lower cost. The provisions concerning reinsurance companies will enable us to protect Ireland's reputation as a well regulated centre for financial services.
I am aware that Senators have raised some very important issues which I have not been in a position to accept for one reason or another. In particular I would like to reiterate my interest in the issue of genetic testing. I will not forget the contributions made in the House today when I come to consider the matter in the light of the results of the examination we are currently conducting.
I am happy that, during consideration of this Bill in this House and in the Dáil, I have heard many useful arguments and suggestions, resulting in many improvements to the Bill. I am indebted to the Members of this House and the Members of Dáil Éireann for their valuable contributions. I have a very strong personal commitment to the primacy of Parliament. As I have said before, nobody has a monopoly of wisdom. Everybody has a contribution to make and collectively we share a responsibility to frame the best legislation possible. That is why I never like to rush legislation and wish to ensure we take on board the tremendous personal experience of Members of the Seanad and the Dáil, who represent the citizens and consumers of our country every day, as well as the concerns of the industry, and collectively produce the most appropriate legislation for a modern nation.
I would like to express my appreciation to the insurance industry for the constructive and co-operative manner in which they have approached the development of this Bill. As a group they have recognised the need for an improved regulatory regime as well as the various other short comings of their industry in so far as consumer information and protection is concerned. As a result of this co-ordinated approach, I am convinced that the legislation will enhance the standing of the industry in the eyes of the public and help to repair a reputation that has been tarnished by a small number of dubious operators in recent years. I am confident the standards and obligations imposed under the legislation will not constitute any hardship either for insurance undertakings or for intermediaries who are committed to the future success of their business and of the insurance industry in general.
I sincerely thank the Cathaoirleach, the Leas-Cathaoirleach, the Leader, the Opposition spokespersons, the many Senators who contributed to the Bill, the Clerk of the House and the staff. I also wish to thank the outstanding staff in my own office and the Department, particularly those in the insurance division, who have worked assiduously and in a dedicated and professional manner over the past three years to ensure the legislation gets the best possible consideration. I also thank the Attorney General, the Chief Parliamentary Counsel, the Chief State Solicitor and all of their staff for their personal and professional input. Mo mhíle bhuíochas díobh go léir.
Question put and agreed to.
Sitting suspended at 5.56 p.m. and resumed at 6 p.m.