Dáil Éireann díospóireacht -
Friday, 22 Jun 1928

Vol. 24 No. 9

LOCAL AUTHORITIES (MUTUAL ASSURANCE) BILL, 1928—SECOND STAGE.

General MULCAHY

It will be remembered that in 1926, arising out of the desire of the local bodies in the country expressed through the General Council of County Councils, an Act was introduced here which subsequently became the Local Authorities (Mutual Assurance) Act, 1926 and which enabled local bodies to be members of an insurance company of a particular kind for the purpose of dealing with their fire insurance and insurance arising out of employers' liability. In view of the fact that this was not the formation of an insurance company for ordinary profit and that only members of local bodies were to be members—only members of the local bodies who were themselves insurers in the company would be the company—arrangements were made that the deposit of £20,000 required under the Insurance Companies Act of 1909 would not be required. The purpose of the company was for the mutual insurance of its members as set out in Clause 2. A law case has arisen in which a decision has been given that the present company does not carry out mutual insurance within the terms of the Insurance Companies Act of 1909 and the present Bill purports to make clear the definition of mutual insurance for the purpose of this particular Act, and to legalise the position of the Irish Public Bodies Mutual Insurance Company from the time it was founded and for the future and to see that the intention of the original Act will be legally secured.

The public bodies are the biggest organised insurance class in the country. They have to insure a very big amount of property on which there is a very low rate and they should be in a position to get a more satisfactory rate of insurance than they were getting up to the time of the formation of this company. In spite of the fact that a large number of local bodies had commitments to continue their insurance for a period of years with the companies with which they were dealing before this company was formed, nevertheless up to the present fourteen county councils, eighteen boards of health, eleven mental hospital committees, twenty-three urban district councils and town commissioners, and a number of other miscellaneous public bodies are members of the company. They have been enabled through this company to reduce substantially the insurance rates they pay and we have had evidence that they have been effective in creating a situation by which other insurance companies have reduced the rate which they quote to other public bodies with a view to holding this very satisfactory type of insurance. As I say, the rates that public bodies pay for fire insurance should be much lower than they have been because of the valuable type of property insured and the low rate of loss that characterises that particular type of property. This company has been formed in order that the members may at the present moment pay a lower rate than they have been paying and to see that by degrees they arrive at building up their own company so that they will not have to re-insure and, as well, that they will arrive at a lower and more just rate of insurance than has been obtained up to the present from outside companies or that they are even able to give themselves under the present system when they have not sufficient experience to know what further reduction they can make in the rates and still adequately cover their insurance. A large amount of ratepayers' money is involved in this matter and it is the desire of the Government that as much as possible of that money should be saved to the ratepayers.

Mr. DE VALERA

In so far as the Bill has a purpose to indemnify the Irish Public Bodies Mutual Insurances Limited against the loss that they might suffer, or to regularise their position in respect to the Principal Act, we have no difficulty, but we think that this Bill ought to have a wider scope. We are very anxious about this whole question of insurance and we think that public bodies ought to be the centre of a big national scheme, and that here is the proper starting point. There are, of course, two ways in which the question of insurance could be tackled. First of all, it can be tackled in the sense in which it has been tackled here, namely that of pooling the policies like a central purchasing board, and making economies in that particular way. We ought to go much further than that. An effort has been made in the Principal Act and by the company to go somewhat farther, but we would like to be satisfied that they have gone in that direction as far as they could go. It is obvious that profit is being divided by the companies in this insurance business and we think that the profits that are made should be retained in the country. It is of course a question finally for detailed examination of the replaceable value of the property insured; of the amount that is ordinarily covered, the risk, and the rate of loss, at least the rate that comes back in covering these risks. A proportion of the premium paid comes back in the way of payment of claims. All that requires a good deal of detailed examination. Figures are necessary and we think that this particular position that arises now ought to be made the occasion by the Local Government Department for a complete examination into that whole question, to see, for example, if re-insurance is necessary at all in the early stages, aiming ultimately at bringing into a compulsory scheme the whole of the public bodies.

A remark just made by the Minister indicates a difficulty which might operate for a few years, the difficulty of previous contracts. If the Local Government Department were in favour of a general national scheme, there should be a warning issued at once that no further contracts should be entered into for a period of time; that is if they are not prepared to take action, or if the conditions are such that contracts have been entered into and that they are holding them up from a general scheme for a number of years. We would like to be satisfied that no larger proportion of the risk is being reinsured than is absolutely necessary. For example, we think that by another device re-insurance might possibly be saved altogether. I am not certain of that because, as I say, one requires to have detailed figures in order to be perfectly satisfied. But the idea of the State ultimately being a re-insurer might be considered. The assumption is that the re-insuring companies are not working at a loss, that there is a profit, and that the profit which is made outside the country ought to be preserved for the community as a whole.

I do not wish to go into the scheme fully, because I believe it would be more or less going outside the scope of this Bill, but I think that the occasion of the introduction of this Bill ought to be taken by the Local Government Department to consider the whole question of national insurance, and to see whether a big national scheme might not be evolved around this nucleus of mutual insurance of public bodies. The extent, for example, to which public bodies could be made really mutual could be considered. I do not think it is considered here. As far as I understand, it is here largely a pooling of the premiums in order to get better rates and to have less losses than before. I think that ought to be only the primary step and that the ultimate goal at which we ought to aim, and aim to reach as quickly as possible, ought to be one of complete mutuality, with possibly the State as a re-insurer to meet what might be called exceptional and altogether abnormal risks. You can, of course, from analysis of the figures of the past, from statistics generally, arrive roughly at an average for the risk, and to arrange to cover that risk I think would not be a very heavy strain on the rates, even in the case of complete mutuality. But to meet the case of very abnormal risks, which could not be met in the earlier stages, at any rate, by the reserve that would be built up—the whole question of being prepared to meet that by a State guarantee would be very valuable. For example, State property as far as I know is not insured as a rule—I do not know if it is insured at all.

A DEPUTY

No.

Mr. DE VALERA

Why is it that State property is not insured? The reason that suggests itself to me is that the State is prepared to keep for itself, so to speak, and for the community any profits that might arise and to meet any damage done by means of loans or otherwise, to treat it as an abnormal thing to be dealt with either by an increase in taxation for the particular period or by means of loan. As it would be abnormal, of course, the more natural way of dealing with it would be by means of loan. If the same idea were to be used in connection with local authorities, I think that we would have there not merely something of general advantage to the community with respect to public bodies, but a nucleus around which a larger scheme could be built. As I say, we do not wish to do more than indicate what our views on that matter are and to see whether this opportunity might not be taken by the Local Government Department to have that matter very carefully examined by experts and the whole question threshed out.

Mr. MORRISSEY

We support the Second Reading of the Bill because we believe the principle is a good one and because we supported strongly the original Act. I agree with most of what Deputy de Valera has said about this Bill and about insurance in general. I hope that no time will be lost by the Government in giving to the House proposals arising out of the Insurance Commission's Report. The essence of this scheme seems to me to be a general scheme for the public good and not for any private profit or interest. This was originally set going by the General Council of County Councils representing the public bodies in Ireland. I do not wish to say anything, at the moment, as to the attacks that were made on this company, when it was set up, by some of the other Irish companies except to say that it seems to me that if some of the other Irish companies showed as much energy and enthusiasm in trying to get the business that is now got by the foreign companies, as they did to try to get business that would normally come to this company and to take from this company some of the business that it did get, there would be less money in insurance going out of the country than does unfortunately go out of it at the moment. So far as the Labour Party is concerned it will give this measure every support.

Professor THRIFT

I would like to ask the Minister one or two questions, certainly not in opposition to the principle underlying this Bill. There are certain details that I think assurance might be given on that would lead to satisfaction. In the first place, I would ask whether in the event of any considerable fires taking place of the property of any of the insured he considers there would be adequate security with the company for the recovery of the loss due to the insured. Secondly, in reference to Section 3 of the Bill does he not think it is really very like saying that for the purpose of this Act black means white? It seems to be almost a contradiction in terms to have this definition of the term "mutual."

Mr. MOORE

I agree entirely with the last remark of Deputy Thrift. I think it is an extraordinary precedent to create, to attempt to put a meaning on words that the words themselves according to the ordinary use do not convey. Further I would like to know from the Minister whether other methods of meeting the same problem have been considered; whether it was ever put to the Local Authorities that it would be an advantage to them and to the country, as a whole, if this could not be made a matter of mutual contract. I think a threepenny rate on the valuation of the Twenty-Six Counties would realise about £141,000. If that guarantee could be obtained from the local bodies there would not be much reason for their paying premiums and going to the trouble of re-insuring. Of course, at the present time, practically, all the insurance money leaves the country whether directly or indirectly. There is a good deal to be said in favour of the State accepting such reinsurance. I think it has been pointed out from the Government Benches several times that there is practically no difference so far as the State is concerned between the position of the Local Authorities and the position of the central Government. One is part of the State and the other is the whole State. It is a curious thing that in this matter we should draw a line of demarcation, and treat a part of the State as if it was a private concern that the whole could take no responsibility for. Seeing the great expense it is to the country and eventually the big amount of money it means taken out of the country every year I think the Local Government Department might have attempted to solve the question on much more radical lines than they have done. However, the Minister may have a lot more to say. While not opposing this Bill we on this side of the House are not satisfied that it is sufficiently strong to meet the position that prevails with regard to local authorities.

Mr. BRISCOE

As has been indicated, as regards the principle of the Bill there is no objection from these benches, but I would like the Minister to make clear, in his reply, this point. In making this a Statutory Company, and in putting in a definition of the words "mutual insurance," which the Courts could not take out of the ordinary meaning of them, does it mean that the ratepayers of each of the public bodies who insure through this Mutual Society are in any way even contingent guarantors for liability in case of big loss? If that were so it would seem to be the wrong way of going about it. I am sure the Minister will make that clear. It is not clear. There has been a lot of discussion and nobody outside seems to know whether it is so or otherwise. I would also like to know if the Minister could indicate whether it would be possible to consider in the near future bringing about something on the lines suggested by Deputy Moore, that is to say, to bring all public bodies—compulsorily, if necessary—into a common insurance bond arrangement. If that were done there would be a great saving in the country. It is generally admitted that the sum paid under the Public Bodies fire losses amounted to only about 7 per cent. of the total premiums collected. That is an indication which shows that it would pay the Minister to do something to save the difference between that 7 per cent. and the 100 per cent. of premiums leaving the country. If it could be done it would be a step in the right direction towards the nationalisation of insurance generally.

Mr. FAHY

Like other Deputies on this side, I am in favour of saving the rates as far as possible. I am also in favour of mutually insuring public bodies. As regards this amending Bill, I think there are defects in it which ought to be remedied. I think there are dangers in it which may lead to the need for further legislation if they are not seen to. The drafting of this Bill strikes me as being extraordinary. Section 2 is wide enough to take the company out of all Acts covering insurance at present. Of course, the purpose of it, I presume, is to reverse Judge Davitt's decision.

AN CEANN COMHAIRLE

I do not like that phrase. The purpose of it is to alter the law for the purpose of future decisions.

Mr. FAHY

It amounts to the same thing.

AN CEANN COMHAIRLE

No; there is a very important distinction. We make laws; the judges interpret them. If the interpretation does not meet the intentions of the Oireachtas the Oireachtas can change the law.

Mr. FAHY

I think the wording of sub-section (2) is extraordinary. It says that the Irish Public Bodies Mutual Insurances Limited shall be deemed always to have been and shall continue to be a company to which the Principal Act applies and to be exempt from such of the provisions of the Assurance Companies Act, 1909, etc. I do not know that we can retrospectively deem a thing to be what it was not or that deeming a thing here to comply with the meaning of certain technical terms in insurance will make them have that signification. There is a reference here to the Companies Acts of 1908 and 1924. I would be thankful to the Minister if he would tell us what Act in 1924 is referred to. I have read a fair amount about insurance and the last Act that I know of was in 1917; that was the Companies Act referring to insurance. I do not know the exact meaning of sub-section (4) of Section 2:—"If the said Irish Public Bodies Mutual Insurances Limited at any time after the passing of this Act alters in any respect its Memorandum of Association it shall forthwith cease to be by virtue of this section a company to which the Principal Act applies and cease to be exempted by virtue of this section from the said provisions of the Assurance Companies Act, 1909..." There is no power, apparently, to alter a word there and would it be necessary, if the Government desire to give further powers to this company or make it strictly mutual, to bring in new legislation? I think sub-section (4) should have been drafted in some such terms as that, "no provision dealing with deposits should apply to the company." I think it would make it clearer and it would be safer wording so as to avoid further legislation or, perhaps, further litigation.

I do not know that these premiums from bodies insured would be sufficient to keep the companies going and I would advocate such insurance should be compulsory on the public bodies, but that it should be mutual. As suggested by Deputy de Valera, that is an important matter. We do not want, of course, to prevent an indemnity being given to the public bodies for what has been done, and for things that have happened which were not in accordance with the Act, or prejudice their position or the security they have if a conflagration takes place. But that might be effected by a temporary measure. Premiums to foreign insurance companies going out of this country are a great drain on the national resource and I suggest the whole matter should be examined carefully and deliberately now. There are a few Deputies here who are experts on insurance. I do not know if anybody would call himself an expert. I happen to know a little about it, but I do not consider myself an expert. There are a few Deputies, I think, who could pronounce themselves as experts.

Mr. G. BOLAND

Deputy Gorey, for instance.

Mr. GOREY

I am not a director and the Deputy who is speaking is.

Mr. FAHY

It is a very technical business and I think a Committee should be set up to examine into the whole question and report to the Dáil or the Minister for Local Government and have legislation drafted accordingly. There are many alternatives to the scheme as outlined in this Bill. Nationalisation of insurance would be one. Of course that is a very big problem which could not be tackled immediately. Another would be the strictly mutual assurance of public bodies, and in that case the State might be the re-insurer or make the rates liable. In the case of a big claim in the early years a loan ad hoc might be raised by the State if the reserve funds were not sufficient to meet it. I gave the matter some consideration, and I drafted an alternative scheme in the rough, and I do not know if I would be in order in putting it briefly before the House.

I suggest as an alternative that the Local Authorities (Mutual Assurance) Act, 1926, might be repealed. The Minister for Industry and Commerce could, of course, invoke the assistance of the existing law for the liquidation of that company. I have no animus against that company. Of course I am in a rather peculiar position. Somebody mentioned that I happened to be on the board of an Irish insurance company. The scheme I suggest would take away from the company with which I am connected the insurance of 93 public bodies, so I will be taken as being disinterested in the scheme that I am putting forward. Perhaps it would be in the interests of the country and the public bodies, and the rates that all these public bodies pay, that they should be mutually insured. A Bill might be introduced called the Local Authorities (Protection of Property) Bill, containing some such provisions as these:—It would be obligatory on all local authorities to insure under that scheme. The scheme might possibly include Government property. I would have worked it out in more detail had I been able to get the figures I asked for in a question on Wednesday—to find the replacement value of the premiums paid, and so on, of all the local authorities throughout the country.

A further suggestion is protection of property to be defined so as to cover the following risks:—Damage to property by fire from whatever cause arising—that is, an extension of the insurance definition which excludes riot, civil commotion, &c.; to include boiler explosions, gas engines, motors and other vehicles; driving accidents and third party liability; public liability, personal accidents to servants, authorities' and employers' liability, fidelity guarantee and livestock. For the first five years after the passing of the Act every authority to which the Act applied should strike a protection of property rate of 1d. in the £; one halfpenny rate might possibly do, but 1d. would certainly leave a good margin. The rateable value of the Dublin Corporation, for instance, is £1,207,895. I believe a rate of one farthing would cover premiums in Dublin. In Cork City a rate of .61 of a penny would cover the thing even at the existing rates. Provision might be made in the Act for the re-examination of compulsory levies at the end of the first five years in the light of the accumulated funds, the claims experienced over the period and the total value of the property risk. For the first year after the Act came into force levies on the authorities might be made as follows:—One-tenth of the total annual levy to be paid within the first month, two-tenths within three months, three-tenths within six months, and four-tenths in nine months. At the end of nine months there would be sufficient to meet the average risk of claims. For subsequent years the levy might be one-fourth on the 30th June and one-fourth on the 30th September, 31st December and 31st March, respectively.

The contributions from the local bodies would be paid into a central reserve fund under the control of the Local Government Department. It might be dealt with as follows:—Ten per cent. of the total annual levy would be placed in banks on deposit account in the name of the Minister for Local Government and Public Health. That amount would be sufficient to meet claims and management expenses ordinarily. The balance of the annual levy would be invested in Irish trustee securities in the name of the Accountant-General of the Supreme Court. The interest in invested funds plus any excess of the ten per cent. deposit which experience proves not to be required for claims and to provide the expenses of management would be reinvested in trustee securities. The central reserve fund would continue to accumulate until it equalled one and a half times the total property risk. When the reserve fund had reached that figure the Act would provide for the method of ascertaining what rate should be struck to meet the annual claims and expenses of management. It would only be necessary then to meet current expenditure until such time as the accumulated funds equalled twice the property risks. The interest on the fund should then be adequate for the service of the annual claims and expenses. The Act would provide for a valuation of the property of the local authorities, the fixing of insurance values, and the settlement of claims through the usual channel. There would then be the employment of valuers and claims' assessors, as at present employed by the insurance companies. It should be remembered that the total shown in insurance claims includes the fees of solicitors, doctors, etc. That is just a rough outline of this scheme, which might be an alternative to the present Act. It seems to me there are grave dangers even in the Amending Bill, which would leave many doors open for further litigation which would do no good to the public bodies nor to the company which has their present insurance.

General MULCAHY

The general question of insurance is, no doubt, very much in the minds of Deputies, as can be understood from their remarks here. Deputy Briscoe speaks of the nationalisation of insurance, and Deputy Fahy now gives us a different kind of scheme entirely under which the local authorities might work and into which the State property might be brought as a kind of helping out to the general scheme. There are other people who think that in the proper development of Irish insurance business the local authority's property might be held as a general help to the scheme. I do not want now to go into the whole question of insurance. It does not arise at present. The going out of big amounts of public money out of this country in insurance is a matter that must be taken very serious cognisance of by all interests in the country, and the matter has been engaging the attention of the, Executive Council for quite a long time. But what the Minister for Local Government here and the Department of Local Government have had to consider in this particular matter was that at the time when there was no proper examination of the provision with regard to insurance generally, certain purely Irish companies in which different public bodies had, over a long period, shown very great interest, in their desire to help Irish insurance, were being gradually bought out by outside companies. The time came when the local bodies themselves decided that they would organise either a mutual or co-operative insurance society of their own which would put them in the position of being independent of outside bodies in time and in the position of keeping their money in Ireland.

In this matter the Local Government Department is simply helping the local bodies and those on local bodies who had given a considerable amount of thought and taken a deep interest in insurance work generally. We introduced legislation that helped them to carry out the scheme they thought was the best scheme in the circumstances at the time to get ahead with. Now this scheme as is generally appreciated has brought about certain advantages and is on the road to bringing about more. The purpose of this particular Bill is to retain the company as it is in its present formation doing its present good work and not allowing any set back to be given to that company. If in a further examination of the general insurance position, or an examination of the local bodies and the insurance of their own property, any developments are shown, either by making it compulsory for local bodies to insure in any particular way or in this particular society or this particular society remodelled, the ground will have been kept more solid and the work of preparation will have been greater by reason of the fact that this body has been working and that by the legislation we are introducing here now we are solidifying and holding that ground and not allowing any set back in the present position of insurance which has the confidence of a large number of local bodies. There is nothing in the present Bill that prejudices in any way a more desirable development, because there are no shareholders other than the local bodies interested in the present company and naturally if a better scheme, a scheme that would be better for the ratepayers and better nationally, can be devised, the persons who were so interested in the matter nationally and from the point of view of the ratepayer, as to bring about the formation of the present company, will only be too pleased to co-operate and travel in any new direction that may be pointed out.

But as far as the Department of Local Government is concerned they do not want to suggest to the local bodies at the present time that they might change their business in any way, because we have not the knowledge of the general position with regard to insurance in the country and what might be done in a general way to improve the insurance situation nationally to warrant us doing that. But we have given every help we can to these local bodies who have ideas and who are interested in the matter, to do what they consider best at the present time. It is satisfactory to know that this company, having been formed in 1926, has earned the confidence of a large number of local bodies and that it has won general popular approval for the success that up to the present has attended its efforts. Deputy Thrift asked whether in the case of any considerable fire I consider that the present company would be adequate to cover the ratepayers. I certainly have the greatest possible confidence in the General Council of County Councils and in the local bodies that are members of this particular company to see that they carry out their work in such a way as will leave no risk to the ratepayers. I do not think there has been any substantial criticism at all of the way in which this body does its work. In so far as I am concerned in the matter I am not called upon to defend at the present stage, at any rate, the way in which this body was carrying out its work because for this body departmentally or otherwise I have no responsibility. But personally I have full confidence in the management of the business because of my confidence in the people who have initiated it and are working it. If there is any weakness in the situation, the names of the county councils and the other bodies who are involved in the matter would be sufficient to assure us that this weakness will be got over.

Deputy Thrift and others objected to the definition "mutual insurance" in this Bill. From the terms of the original Act it was quite plain that there was no mutual liability, except to the extent of £10, on any one body in case of losses by others. As far as I am informed, the expression "mutual insurance," as applied to the intention of the original Act, and what is expressed there, is an interpretation that has been accepted for years in the insurance world and, I understand, in the working of certain insurance companies in Britain, so that we have simply the question of a general acceptance which has come about, and has been fairly well established now in a legal way, being overthrown, and overthrown, no doubt, on solid legal grounds. I do not see that it will help to persuade anyone in a legal way that black is white when, for the purposes of the work that this body wants to do for local bodies, we put in this clause:

The expression "mutual insurance" where it occurs in the Principal Act shall mean insurance by a company in which all the holders of policies issued by such company and no other persons are members of such company whether any liability does or does not exist between such members, each to and with the others in respect of claims under such policies.

Professor THRIFT

Could you not paraphrase the last sentence by saying "whether it is mutual or not"?

General MULCAHY

You could call it co-operative insurance.

Mr. GOOD

Do not call it mutual.

General MULCAHY

We called it mutual in the original Act, and this Bill is brought in, in special circumstances, to legalise the position and to give effect to the intentions of the original Act.

Mr. GOOD

The object of mutual insurance, as we understand it in ordinary commercial circles, is that each insurer bears a portion of the liability in the event of a loss. Is that so with regard to this company? If it is not it is not mutual insurance.

General MULCAHY

The position with regard to this company is that individual members of it do not share liability for one another's losses——

Mr. GOOD

Then it is not mutual insurance.

General MULCAHY

——except to the extent of £10.

Mr. MOORE

Has the Minister taken into account the case mentioned by Professor Magennis on the Second Reading of the 1926 Act? Professor Magennis dealt with that point, and quoted two cases that had been tried, where it was proved that each insurer was liable to pay to the last penny of his assets for any loss that might occur which would not be met by reserve funds or otherwise.

General MULCAHY

I am sure that whatever Professor Magennis said at the time was taken into consideration. It might be that if some of the things he said had been taken more into consideration this particular difficulty would not have arisen. But the point we are concerned with is to give effect to the intention of the original Act, and for that purpose we are defining in this Bill——

Mr. FAHY

I wonder if the Minister would let me put a point to him. It is not for the purpose of interrupting. If there is a certain interpretation of the word "mutual" held by British companies, if this company does, as it will have to do, a considerable amount of re-insurance, and supposing 80 per cent. of a certain premium is re-insured with a British company, if a fire occurs and the British company holds that the word "mutual" had a wrong interpretation, that it is ultra vires, where would the public body stand? I wonder has the Minister taken into consideration that there is a possible danger of that?

Mr. MOORE

Is it the opinion of the legal advisers to the Government that no insuring authority will be liable for more than £10 in the event of the company failing to re-insure to the extent that might be necessary to meet any loss that might occur? Is it the opinion of the legal advisers that each insurer will not be liable for more than £10?

Mr. DE VALERA

The simplest way to deal with this matter is to get at the original Act and change the definition of the word used there. If you could get another word to express the meaning more accurately than mutual appears to do, why not tackle it at the source and make the change where it ought to be made?

General MULCAHY

Full consideration has been given to this matter, and if there are Deputies who think that this word ought not to be there, and that some other word ought to be there, such opinions as they have given expression to now can be considered by me between this and the Committee Stage. If Deputies have any amendments that they think would meet the matter in a more satisfactory way they will receive consideration. But it has appeared to my advisers quite sufficient for the purposes we are seeking here and involving no liability or danger——

Mr. GOOD

There is a real danger. Under the 1909 Act a deposit was necessary in order to give security to the policy holders. In a mutual company the security for the policy holders is the other policy holders. We are told that this is not a mutual company, so that there is not that security in this company. The 1909 Act provided that insurance companies trading, not as mutual companies but as ordinary companies, were to make a deposit of £20,000 to ensure that insurers would have their risks covered.

Mr. G. BOLAND

Twenty thousand pounds might not cover them.

Mr. FAHY

They would be sure that it was bona fide.

Mr. GOOD

Quite so. This is not mutual insurance. This company is going to do ordinary business, and it is for us to see that the ordinary person who insures is adequately protected. Can anyone say that this particular company adequately protects the insured when it has no capital with which to meet the liabilities? The whole object of this Bill——

AN CEANN COMHAIRLE

This is a Second Reading speech now.

MR. FLINN

Will the Minister let me make a suggestion? It is realised that if £20,000, £50,000 or £500,000 was put up as a deposit it would have to be provided by the Dáil. You are in this extraordinary position—I do not want to make a speech, but I want the Dáil to realise what is happening— you are insuring local authorities. You have twenty-four million pounds revenue, and you have five million pounds rate revenue. The twenty four million pounds revenue is relieving your five million pounds rate revenue. The two things are inter-connected definitely by the relief given from national taxation to local taxation. If the £20,000 is put up it must be put up first in some way as a charge on the rates, and eventually as a charge on the revenue. The Dáil will have to provide the money directly or indirectly.

AN CEANN COMHAIRLE

I think I will hear the Minister without further interruptions.

General MULCAHY

What I am wondering is what points are left for me to deal with.

Professor THRIFT

I will put a concrete case. Supposing there was damage to the extent of £60,000—and supposing that 80 per cent. of the figures were reinsured—that £48,000 is covered with foreign companies— where is the other £12,000 to come from? Could the Minister satisfy me on that point?

General MULCAHY

If the company has not funds of its own and has not re-insured sufficient to meet a fire loss, then the company goes bankrupt, or it has to deal with the matter by means of a loan on its credit and stability as a company that has a future.

Professor THRIFT

I only want to get it right about the re-insurance. I am not obstructing the Bill.

General MULCAHY

As far as putting matters right with the insurers is concerned, the insurers in this matter are the insured. They are responsible public bodies.

Professor THRIFT

Acting for the ratepayers.

General MULCAHY

Acting for the ratepayers, yes, acting to the fullest possible extent to the best of their lights in the interests of the ratepayers, bearing in mind the national situation generally, in which they desire not only to give the ratepayers direct relief by reducing the amount of money that they are spending on fire loss, an amount of money much greater than the fire loss ratio shows that they ought to be paying, but they are also endeavouring to avoid sending out of the country, to a certain extent now and to a larger extent in time, large amounts of money for insurance.

Professor THRIFT

Would it not be better straight away for the State to make itself responsible for a call in that case, and thus give added stability to the company?

General MULCAHY

As I say, you can travel further than this some day if you want to, but the position at the present moment is that the local bodies who are interested in this matter have adopted this scheme as their preliminary step, and no one who knows anything, either of the situation of the company or of the body responsible for setting it up—the General Council of County Councils—could seriously suggest that they mean to stop here. You may ask the General Council of County Councils, and you may ask the local bodies that formed this company to travel faster if you like, but I would request Deputies not to ask me at the present moment to travel faster.

Mr. GOOD

Is the Minister satisfied that insurers have security in this company in the event of a loss? That is really the whole point.

General MULCAHY

If we were not satisfied that this was a proper, a good and a useful work for the insurers we would not have assisted in the initiation of this company by the legislation of 1926, and we would not be assisting them by rectifying their position with this Bill.

Mr. GOOD

Could the Minister answer this question? In the event of a liability maturing is he satisfied that this company is capable of discharging it?

General MULCAHY

Certainly.

Mr. GOOD

Up to the £50,000 that Deputy Thrift has mentioned? Where is the money?

General MULCAHY

I am satisfied that this body is carrying out its work——

Mr. FLINN

Where is the money?

General MULCAHY

——in such a way as to meet any responsibilities that may come to it.

Mr. GOOD

But where is the money to discharge a liability? It has no capital.

General MULCAHY

This body is carrying out its work by retaining a certain amount of its insurances and by re-insuring the rest, and naturally it re-insures a very great bulk of its insurance at the present moment. In two, three, or five years' time the amount of re-insurances that it will be making will naturally be less and less, and the amount of money that it will have put into reserve will be greater.

Mr. GOOD

What reserve has it at the moment?

General MULCAHY

It published a balance sheet in 1927, after its first year of trading.

Mr. GOOD

But what reserve does that show?

General MULCAHY

I do not know what it is.

Mr. GOOD

I wish the Minister would examine it. I examined it, and I saw very little.

Mr. FLINN

Will the Minister accept as a principle that some satisfactory and feasible method of insuring contingent risks shall be contained in the Bill, and that Deputies will have an opportunity of putting up alternative proposals to enable those contingent risks to be provided for on the Committee Stage?

General MULCAHY

This Bill is here for carrying out the purposes that we have in mind. If anything has been left out of the Bill that Deputies consider should be in it, they will have an opportunity of bringing forward amendments and discussing them on the Committee Stage.

Mr. G. BOLAND

Will they be taken in a Party spirit?

General MULCAHY

You can discuss them in a Party spirit if you wish.

Mr. G. BOLAND

Professor Magennis made a suggestion that would have saved a good deal of trouble before, but I am afraid the reason he was not listened to was because he happened to be on the wrong side of the House.

Mr. FLINN

Will you accept the principle I have suggested?

General MULCAHY

To my mind this Bill is sufficient to deal with the matter satisfactorily, but if Deputy Flinn considers that anything ought to be put into it on the lines he suggests, let us see an amendment from him and let us have the merits of that amendment discussed on the Committee Stage.

Mr. FLINN

I take it that the Minister now says that amendments of this kind that are offered will not be resisted on the purely technical ground that he is only trying to deal with one little bit of the problem and that he does not mind what happens to the rest?

General MULCAHY

I would like to hear on the Committee Stage what the Deputy means by technical grounds.

Mr. FLINN

I am entirely friendly to this thing, and I think everybody on this side also is. We are not resisting this Bill, we are only trying to understand it and we are criticising it for the purpose of improving it. The point is this, that on the face of it there does not seem to be security for anything in the nature of a catastrophe risk, even a limited catastrophe. We suggest that in order that this may be part of a developing scheme of sound Irish insurance, the one portion which we are tackling should be actuarially sound from the beginning, and we suggest that the way to do that is for the State immediately to tackle re-insurances or, failing that, that there should be included in this Bill something to make it actuarially sound from the beginning. It could be made actuarially sound, because you are dealing with solvent insurances; you are dealing with insurances about which you have in your possession every single bit of information that you require. Will the Minister facilitate us in grafting on to this Bill a means that will make these risks actuarially sound? It might mean practically withdrawing the Bill.

General MULCAHY

Our interest in the matter is to see that the work is carried out satisfactorily in the interests of the ratepayers, to see that they are fully protected, and to see that they get the benefits of cheap insurance, and if any amendments are brought forward that will help better to secure these things they will get the fullest and the most sympathetic consideration.

Captain REDMOND

I suggest that it would be impossible for a private member to bring forward an amendment of this character to make the State liable with regard to State insurance.

AN CEANN COMHAIRLE

Absolutely.

General MULCAHY

But we have not heard any suggestion to the effect that the State should make itself liable in any way. It has been pointed out indirectly that if steps are taken here which throw a burden on the ratepayers, in fact that burden will come from State funds, because large amounts of money are contributed to the ratepayers out of State funds. I do not know that a Deputy would be out of order in introducing an amendment that threw a burden on State funds in that indirect way.

AN CEANN COMHAIRLE

No amendment could be introduced to this Bill which would mean putting a liability on State funds. There is no doubt at all about that. But whether an amendment could be put into the Bill to put a burden on the rates is a wholly different question, which I could not now decide. You cannot bring into this Bill in Committee any principle which would place a burden upon State funds. The Minister could not do it. In Committee on this Bill the Minister could not introduce a principle which would place a burden upon State funds. If a burden is to be placed on State funds that principle must be affirmed by the House on the Second Reading of the Bill, and even a member of the Executive Council could not, in Committee on a Bill, introduce a proposal that the State should bear certain liabilities, if there was not already something in the Bill dealing with State liability.

Mr. FLINN

Could the Minister, by consent, without taking any responsibility for it, put into the Bill an amendment on the Second Stage which would enable this matter to be dealt with?

AN CEANN COMHAIRLE

No.

Mr. FLINN

Will he withdraw the Bill then, so that it might be redrafted? We will help him.

General MULCAHY

If, on Committee, a case is made for withdrawing this Bill there will not be the slightest hesitation about withdrawing it.

Mr. GOOD

I want to be quite fair to the Minister, but my point is this, that I am not satisfied that the rights of insurers are being protected by this Bill. In other words, I do not think that there is adequate cover to meet liabilities. I am anxious that the Minister should look into that aspect of the question and satisfy himself on it before he proceeds further with this Bill.

Mr. DE VALERA

Several points occur in connection with this Bill. The immediate purpose of the Bill is to deal with the recent decision of the courts. That is a very limited and narrow objective.

General MULCAHY

But a very important one.

Mr. DE VALERA

A very important one, I admit, from the point of view that it affects the whole idea of cooperation in the matter of public bodies insurance. That is a problem that ought to be dealt with in a satisfactory way. I daresay it would be easy enough for us to deal with that particular aspect of it on the Committee Stage. But then other questions of a much broader character are immediately suggested by this Bill. There are, for instance, the questions put by Deputy Good with reference to the original Act. The effect of what the Deputy suggested would be to make the original Act sounder than it is. I think that anyone who considers the matter at all will be satisfied that the original Act, as it is, is very unsound, and therefore the question arises as to whether a much wider scope could not be given to this Bill. All that the Minister is proposing to do now is to deal with the question of the decision in the courts. I suggest, if that is going to be done at all, that the still broader questions should be considered. If the Executive Council have been considering the whole question of insurance generally and the amount of Irish money that is leaving the country, they ought surely to be in a position at this stage to deal with the facts and figures before them and to arrive at a decision. Speaking for the majority on these Benches, we would prefer to see the big question settled. If that big question is not going to be tackled, and if the proposal here be that we are only to deal with the position arising out of the decision given in the courts, then we are simply leaving still to stand the difficulties that have been indicated in the original Act.

I think that we ought to deal with this whole question in such a way that the objection which Deputy Thrift indicated would not lie in this. It seems to me to be a very simple matter. You would have to change the name of the Irish Public Bodies Mutual Insurance— I think that title would have to go—and give a name to this particular type of co-operation in insurance, and that this company should adopt that name. There may be some difficulties and disadvantages in that course. I can see immediately one or two, but I would say that they are relatively minor compared with the disadvantages and dangers that there will be in appearing to give a definition through this Act to mutuality in insurance. This may be quoted in some way outside the Principal Act to which it refers, but it seems to me to be a very complicated way. It also seems to me to be a very dangerous way for dealing with what in our opinion here appears to be a comparatively simple matter. I am afraid that the legal advisers have taken a very narrow view of this. They are only concerned with a narrow legal technicality of making the thing fit in, without having clear to their minds at all the large consequences that will flow from it as has been indicated by Deputy Thrift, and by I think some Deputies on these benches.

I would suggest that as far as we are concerned the difficulty is this: We will have to vote either for or against the Second Reading of this Bill. The question will then be, after we have voted, what is the principle that we have voted for? As far as I am concerned I am not going to vote for the Second Reading simply from the point of view of getting the opportunity in Committee to deal with the technical difficulties and the narrow question of the decision of the courts in another manner. Whether we will be able to do that in Committee is a question which I am in difficulties about. I do not know to what extent we will be bound by the Second Reading of this Bill. I think it would be much safer, and I would prefer it myself, if this Bill were withdrawn and all the matters that have been suggested here were taken into consideration. There is no question of danger of the company suffering. I think every member of the House is fairly well satisfied that the difficulty that arose was one that arose through inadvertence, and that there was no deliberate attempt to do damage or fraud or anything of that kind. As far as we are concerned we would be prepared to do all that we could to settle the situation as far as the company is concerned, but I suggest that the Minister should reconsider this matter before we are asked to vote for something which may tie our hands afterwards.

AN CEANN COMHAIRLE

As there is a wide interest taken in this matter, perhaps the discussion of the question could go on for some time longer, and that the Private Members' business would not be taken at twelve o'clock.

Mr. DE VALERA

I am quite satisfied.

General MULCAHY

In some of the speeches that have been made I have been asked to deal with a very much wider subject than is intended by this Bill. Deputy Fahy has put up one scheme before us while other Deputies have spoken on certain aspects of the Bill. I would like to consider these points and see how far along the lines indicated development might take place. I think, however, that if an examination of a scheme such as Deputy Fahy has suggested is to take place it cannot very well be done now. At the moment we are dealing with an immediate difficulty from the point of view of a company that is entitled to carry on business. The business of that company is prejudiced by the decision that was given recently in the courts, and what we are proposing to do is to rectify that position in a simple way. It is on such lines that I would desire a Bill to deal with that matter. We propose dealing with the matter on simple lines like that. Deputies will have the opportunity of introducing further things into this Bill on the Committee Stage. If, on the Committee Stage, they are not satisfied as regards what they want to get into the Bill then it will be quite open to them to oppose the Bill on that Stage and also on the Report Stage, and thereby relieve themselves of any responsibility by defeating the Bill if necessary. I would suggest, after the discussion that has taken place, that the Bill be given a Second Reading so that opportunity may be given on the Committee Stage for the purpose of dealing with amendments.

Mr. DE VALERA

On that understanding I take the responsibility of saying that we will not oppose the Second Reading—that the questions introduced by Deputy Good, Deputy Fahy and other speakers dealing with the broader question will have immediate attention. I will say that the questions raised by Deputy Good and Deputy Flinn are the more immediate ones, as they affect the Principal Act. The others are wider and could wait.

General MULCAHY

I will see if anything can be introduced that will make this insurance company more secure than it is.

Mr. MOORE

In connection with Deputy Good's question, I think it would be as reasonable to ask the Minister to inquire into the position of other insurance companies with whom local bodies are dealing. The Minister has stated definitely that no insurer will be liable for more than £10 in the event of a loss occurring either through want of reserves or through re-insurance. I have already mentioned that on the Second Reading debate on the Principal Act that statement was contradicted by Professor Magennis, who gave two very definite cases that had been decided in England to refute that. When we come to the Committee Stage we will want to know what is the position, on the advice of the law advisers of this country. It seems to me we cannot get on in the Committee Stage unless we have that. It would be important when we reach the Committee Stage to know the total value of property that may be insured under this Act.

Mr. GOOD

I want the larger question looked into by the Minister, if he would be good enough to do so. I am not satisfied, as I have said before, that there is security here to meet the liability. In this matter we should not allow any company to carry on under this Act if we are not satisfied it has securities to meet its liabilities. That is the principal point I am concerned about in the interests of insurance. I want that point inquired into carefully by the Minister before the next stage.

AN CEANN COMHAIRLE

The question is that the Bill be read a Second Time. With regard to the situation that has arisen on the Bill, the Second Stage is a time when questions larger than those on the Bill may be raised. That is why I allowed Deputy de Valera to discuss the question of nationalisation of insurance and Deputy Fahy to put up a scheme quite different to that in the amending Bill or in the Principal Act. If the Bill is narrow, then the questions which would arise in Committee must also necessarily be narrow and the scope for amending will, of course, be as narrow as the scope of the Bill itself. I do not want any misapprehensions. If the House generally wants, as it appears to, a discussion on a question of this kind, there will be no difficulty in finding an opportunity for such a discussion, but I am not clear that the opportunity will come on the Committee Stage of this Bill, and still less so on the Fourth and Fifth Stage.

Mr. FLINN

That is the difficulty we have now to consider. We are anxious to co-operate and help, and even if things are not technically in order, the Minister may be prepared to accept an amendment at this stage so to widen the principle sufficiently as to allow us to be able to discuss the matter.

AN CEANN COMHAIRLE

An amendment cannot be introduced at this stage. It is a question for consultation and agreement. That is why I gave a certain liberty. On the Committee Stage of the Bill there are certain restrictions that cannot be violated.

Question put and agreed to.

Committee Stage ordered for Tuesday, July 3rd, 1928.