I move the Second Reading of this Bill. It has been initiated by the General Council of County Councils, who have been unanimous in favour of the introduction of a measure on those lines, and to that extent it is not purely a departmental measure. It has been apparent for a considerable time that the system under which local authorities insure their property against fire risk in this country is extravagant, and in other respects not altogether satisfactory. It is not an easy matter to collect figures showing the risk ratio for property of local authorities, but such figures as can be got indicate pretty clearly that the risk ratio for the property of local authorities is very much lower than that of other property. Researches along those lines have been made by the General Council of County Councils, and they go to show that the risk ratio of the property of local authorities in Ireland only amounts to 7 per cent., whereas the normal rate for ordinary property is 55 per cent. I cannot stand absolutely for those figures, but I believe they are substantially correct. On the other hand, as regards the position of insurance companies, they are not altogether pleased with the existing arrangements either. Competition for the business of local authorities, owing to the fact that the risk ratio is so low and also to the fact that the securing of such business is a kind of advertisement for the company, is very keen between the different companies. The result is that so much money has to be expended in paying the salaries and travelling expenses of canvassers that it is a moot point whether this business is worth securing at all. Some authorities on insurance in this country are of the opinion that this business does not pay companies even at the very favourable premiums that exist at present.
Early in the present century a similar state of affairs existed in Great Britain, and local authorities in that country were also paying unnecessarily high premiums when the relatively small risk involved is taken into consideration and also the complete absence of moral hazard. In that country certain individuals very much interested in local government, realising the state of affairs that existed, determined to correct it by forming an association of municipal authorities which would arrive by experiment at the arithmetically correct premium and insure its members at that premium. As a result of their efforts the Municipal Mutual Insurance Company, Limited, was incorporated in 1903, as a company limited by guarantee and not having a capital divided into shares.
That company has been an unqualified success. Since its establishment premiums have been reduced in Great Britain and a reserve fund established from which loans are made to the local authorities in Great Britain at low rates of interest. The new system was applied to the employers' liability insurance in 1918. The General Council of County Councils has been for some years examining the position in Saorstát Eireann with a view to establishing here a body on the lines of the British company and with the same advantages for local authorities. Their efforts have been hampered by one difficulty which did not affect the British company. Since the inception of the latter the Assurance Companies Act, 1909, was passed requiring large deposits by companies not in operation when the Act was passed. The only exceptions made by that Act are in respect of associations the purpose of which is wholly or mainly the mutual assurance of their members. The Government has been advised that, as the law now stands, local authorities cannot become members of such an association, so that before such a company can be formed in Saorstát Eireann it would be necessary to make a very heavy deposit which it is not in a position to make. Accordingly, if we are to make it possible for a company with those advantages over local authorities to come into existence it is necessary to pass some such measure as this.
The main object of this Bill is to enable local authorities in Saorstát Eireann to become members of mutual assurance companies and to exempt such companies from making deposits in the same way as other mutual assurance associations are exempted. Restrictions are placed on the nature of a company to which the Act applies by Section 2 of the Bill, in order to secure that the bona fide objects of the company should be mutual assurance by local authorities and that private persons should not obtain personal advantages or profits from its operation. The local authorities are themselves to promote and direct the company through members or officers appointed by them for the purpose, and may pay subsistence and travelling allowance to their nominees. It is as well to point out that the Bill leaves it at the entire discretion of the local authorities to promote or belong to such a company. Unless they are satisfied with the advantages they gain and the security they enjoy they need not become or continue as members. Any company, therefore, formed under the Bill must stand or fall on its merits. The Bill enables companies of this kind to be formed but does not ask the Oireachtas to approve of any such company or make it difficult for a local authority to refuse to join.