Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Friday, 29 Nov 1935

Vol. 59 No. 11

Insurance Bill, 1935—Second Stage.

There is a reasoned amendment to this measure on the Order Paper. The Bill and the amendment will be debated concurrently. The mover of the original motion—the Minister—will conclude. Deputies may speak once only. The question put will be: "That the words proposed to be deleted stand."

Will there be only one division?

If challenged, there would be a division on the main question, but I take it that, if the question "that the words stand part" be carried, the House will agree that the question that the Bill be now read a Second Time has also been affirmed.

I move that the Bill be read a Second Time. The Bill is entitled "an Act to make further and better provision in relation to assurance business and persons carrying on that business or any branch thereof, to make provision for the formation and registration of a company having for its principal object the reinsurance of insurance business and to make provision for other matters connected with the matters aforesaid." The purposes of the Bill are two-fold—firstly, to provide for the better regulation of insurance business, and to secure more protection for the insuring public; secondly, to assist Saorstát companies —companies owned, controlled and operated by nationals of the Saorstát —to attain a position in which they can command the utmost confidence of the insuring public and to secure that, in due course, the greater part, if not all, of the assurance business arising in the Saorstát will be placed with such companies. The conduct of insurance business in the Saorstát is regulated at present by the Assurance Companies Act, 1909, which applies to all companies carrying on any of the following classes of business—life, industrial, fire, accident, employers' liability, mechanically propelled vehicle insurance and bond investment. The keynote of that Act may be said to be "freedom with publicity." It does not provide for close supervision of the activities of the companies. Every company is allowed to follow its own course, provided it lodges the prescribed deposits with the accountant of the courts of justice and submits to the Department of Industry and Commerce certain statements and annual accounts in statutory form. Throughout the world, the trend is towards more effective regulation of this important and steadily expanding business and, in other countries generally, State supervision and control have developed to a greater extent than in this country. The measure of control provided by the Assurance Companies Act of 1909 is in several respects inadequate to safeguard the interests of policy holders and improved regulation is more particularly needed by reason of the introduction of compulsory third party risk insurance. During the past 20 years, insurance business has developed to a greater extent than in any previous period, but insurance facilities are not available here to anything like the extent which they are used in other countries, and competent authorities are agreed that the business is capable of very much greater expansion. Life assurance is, perhaps, the most important of all forms of thrift, providing, as it does, for the accumulation of savings, combined with security; and, in view of the improving standard of living in the wage-earning classes and the increasing population, it is at the present time more essential than ever that thoroughly sound and economical systems for life assurance and industrial assurance should be available. The responsibilities devolving upon offices undertaking the business of life assurances are very onerous, and the State cannot afford to be indifferent as to the manner in which they are fulfilled. The offices, in the management of which the policy holder has no voice, collect premiums from their policy holders at fixed intervals upon a contract to discharge an agreed financial obligation which may not, and usually does not, arise for a very long interval after the date of the contract. An office must accumulate large funds relatively to its annual premium income, and the policy holder suffers grievously if these funds are mismanaged or misapplied.

The obligation placed by the Road Traffic Act of 1933 on all owners and drivers of motor cars to insure against the risk of claims which might arise against them as a result of accidents caused by their cars, and the necessity under the Workmen's Compensation Acts to provide adequately for compensation to workers and their dependents in cases where accidents sustained in the course of employment cause injury or death, likewise make it now of greater importance than ever that the companies undertaking insurance against these risks should be conducted on lines that leave no doubt as to their resources being sufficient to meet every liability. It is proposed in the Bill that the classes of insurance business to which the Act of 1909 applies shall in future be carried on only by companies licensed for the purpose; and companies authorised to do life assurance or industrial assurance, or both these classes of business, shall not be permitted to undertake bond investment, fire, accident, employers' liability, or mechanically-propelled vehicle insurance. Other classes of insurance business to which the Act of 1909 does not apply, such as marine, plate glass, burglary, live stock, boiler and gas engine insurances, are not affected by the Bill. Licences will be granted to existing assurance companies on application; but except temporarily, pending arrangements for the transfer of business, a company will not be licensed to carry on both life and non-life business.

It might be well at this stage to state the reasons for that division of business. The contracts involved in life assurance and industrial assurance, being of a long period character as contrasted with general insurance contracts intended to cover a short period of risk only, make it desirable in the opinion of the Government to separate the life and industrial branches from the other branches of insurance business. It is proper that policy holders in the life and industrial insurance branches should be afforded the full security of the separate funds formed by the assets which their premiums have created, and should be protected from the possibility of such funds being applied, directly or indirectly, to make good the losses and cover the expenses incurred in other classes of insurance. It is a desirable reform which should not be delayed merely because of the temporary inconvenience which may be caused to companies now doing both classes of business. It has been suggested that the same purpose could be served by the effective separation of interests by a company doing both classes of business. Such a method is, I believe, impracticable, or, if practicable, would involve a very elaborate and intricate set of provisions. The British Departmental Committee, which reported in 1927, known as the Clauson Committee, in putting forward such a set of provisions in the draft Bill prepared by it, do not claim that they would provide a complete solution of the difficulty. They said—I am quoting from their report:—

"The Committee cannot hope that in such an intricate and difficult subject matter their work would prove to be flawless.'

In the case of new companies, licences under the Bill will be granted only to companies incorporated in the Saorstát. Such companies will be required to comply with certain conditions as to ownership and control, and to have an issued capital of not less than £200,000 and a minimum paid-up capital of £100,000.

There are certain fundamental points in regard to which amendment and extension of the laws dealing with insurance are desirable. To secure the interests of policy-holders in the several separate classes of insurance, by giving them a special interest in the funds created for the purpose of that class of insurance with which they, as policy holders, are concerned, the Act of 1909 requires separate assurance funds to be kept for certain classes of insurances, but it does not, however, require the separation of investments. To make the seperation of funds really effective, it is proposed in the Bill to require also that the assets representing the separate funds shall be kept separate from the other assets. Moreover, it is intended to prohibit the practice of borrowing on the security of the assets representing life assurance funds.

In lieu of the deposits, required by the Act of 1909 to be made with the accountant of the Courts of Justice, it is proposed that separate deposits shall be made as follows: £20,000 for life assurance, £20,000 for industrial insurance, and £20,000 for general insurance business other than mechanically-propelled vehicle insurance. The amount of deposit for mechanically remain, as at present, £15,000. The obligation with regard to these deposits will apply equally to existing companies and new companies, credit being allowed, of course, for any deposits already made. Exemption from the obligations to make deposits is to continue for certain mutual associations doing fire and employers' liability insurances, but such associations will in other respects be required to comply with the provisions of the Act of 1909 and of the Bill. There appears no reason why such companies transacting employers' liability business should continue to be exempted from the responsibilities imposed on other insurance bodies with regard to the furnishing of accounts and statements relating to their financial position.

Assurance companies will be required to furnish to the Minister more detailed information concerning their transactions and affairs than is contained in the accounts and returns they make at present. It is believed that the preparation of the additional particulars will not impose any undue strain upon the offices. By having the returns rendered in greater detail, the financial position of the companies can be more clearly disclosed and supervised. Thus better protection can be afforded to the insuring public. The publication of statements and certified balance sheets, while presenting to any person skilled in the examination of accounts a fairly accurate indication of the company's affairs, does not afford to the general public a sufficient means of estimating the value of the security offered by an assurance company. The information contained in such published accounts may convey very little to the holder of an industrial assurance policy.

Though fortunately not occurring in this country, there have been in neighbouring countries, within the last few years, some serious failures of companies transacting third party insurance, resulting in grave hardship to their policy holders. From the examples afforded by such failures, it becomes clear that more effective measures should now be taken to protect the insuring public, and, accordingly, it is proposed that the Minister should be given a right to require any company to give him such information and explanation as will enable him to judge whether there are reasonable grounds for believing that the company is insolvent, and be empowered to intervene, if necessary, and take steps with a view to having insolvent companies wound up. The powers intended to be conferred on the Minister in this matter are chiefly such as will enable him to set in motion machinery which may lead to a hearing by the court, and it will rest with the court to make an Order for the winding-up of the company, if it sees fit to do so.

The premium rates upon which the strongest and best-managed companies operate usually determine the ruling insurance rates. There are, besides, certain agreements and undertakings as to rates to which most of the offices are parties. These rates are generally sufficiently high to enable the stronger companies to make substantial profits. In case it should become necessary to intervene in the fixing of rates, with the object of preventing the exploitation of the insuring public, it is proposed that the Minister should be empowered, if, after consultation with the companies concerned, he should think proper to do so, to fix the rates of premium to be charged for any class of insurances to which the Bill applies other than life assurance and industrial assurance.

Industrial assurance is governed by the Collecting Societies and Industrial Assurance Companies Act, 1896, and Section 36 of the Assurance Companies Act, 1909. There are at present no collecting societies registered in the Saorstát, and here the business is carried on only by officers complying with the requirements of the Act of 1909. Industrial assurance was, in the beginning, little more than insurance to provide for funeral expenses. Its successful growth has been largely due to the adoption of a system of collecting premiums at the home of working-class people, whose circumstances render it difficult to save money from week to week out of their wages to pay premiums at quarterly or longer intervals. As a rapidly-expanding enterprise, catering for the needs of the wage-earning classes, the business is essentially one that requires to be regulated and restricted by legislation. While the provisions of the Bill affecting this particular class of assurance are comprehensive and far-reaching, they do not involve any very drastic changes in the practice of the companies transacting such business. In general, the system and method of industrial assurance business, as conducted in this country, are already largely in conformity with what are now proposed to be made matters of a statutory obligation.

An important feature, however, is the establishment of the principle of State supervision. The laws at present in force give the Minister no authority to intervene in disputes between industrial assurance companies and their policy holders. Such disputes can at present be determined only in the courts and the cost of proceedings makes it difficult for the policy holders to contest disputed claims. It is now proposed that the Minister should be empowered to determine disputes.

The Bill extends the permitted degrees of relationship between persons effecting industrial assurance policies and persons whose lives may be assured under such policies. It proposes to validate certain classes of policies and to provide for the conversion of lapsing policies, under certain specified conditions, into free paid-up policies for reduced amounts.

The public controversy which has grown up around the Bill has been concerned exclusively with the effect of the measure on the future of Irish insurance companies and their staffs, so much so, that the primary purpose of the measure—the protection of the public doing business with insurance companies—whether Irish or foreign— has been somewhat obscured. It is for that reason that I have devoted my remarks in the first instance to that aspect of the Bill. The Government, however, is vitally concerned to ensure that the growth of strong, stable and properly-conducted Irish offices will be fostered. It has given the matter very careful and prolonged consideration and has arrived at the conclusion that the present Bill is the best means to that end, taking all factors into account. Another type of measure is, of course, possible and was, in fact, at one stage contemplated by me—a measure to confine insurance business, or classes of insurance business, to qualified Irish offices only— and I propose to tell the Dáil in detail why such a measure was not considered advisable under present circumstances.

It is necessary, however, in the first instance, to answer the criticisms which come only from certain limited quarters, the criticisms of those who contend, in the words of the Irish Times, that we should leave well enough alone; that insurance business, by its nature, must be carried on internationally, if it is to be carried on to the best advantage; that there are no countries in the world, outside Russia, in which British offices do not operate; and that we should confine our legislation to the protecting of the public, leaving Irish companies to get what business they can on their merits, without the State attempting to influence the volume of that business in any way, although the British Government itself, in its industrial assurance legislation, confines that business in the interests of its own citizens to British offices. The accumulation of large reserves by assurance offices has a significance to which the State cannot remain indifferent. A considerable proportion of the liquid wealth of this country is now subscribed to assurance offices in the form of annual premiums, and remains at the disposal of such offices for investment by them in whatever manner the managements of the offices in their discretion may think fit.

Assurance offices can become the wealthiest of corporations. They have the advantage that they can calculate with great precision the rate at which their liabilities fall due. Unlike the banks, they do not undertake to pay out their liabilities upon call or short notice, and hence they are in a position to invest their funds in long-date securities. Through their investment policy, they have power to exert a very potent influence upon the financial stability and credit of the country. It is, therefore, desirable that the State should assist in securing that there should be established and maintained native offices, equipped with the necessary resources to undertake a large share of this important business, and that the whole business of insurance should be regulated by legislation to ensure conditions favouring orderly development along sound lines.

In considering the manner in which State assistance to that end can best be afforded, it is perhaps desirable to deal separately with each branch of insurance business with which the Bill deals, regarding life assurance, ordinary and industrial, in one branch, and fire and accident business in the other. In reviewing the position in respect of life assurance business, I think I can state first, as an important factor in the situation, that the great majority of the Irish people would prefer to place their life assurance business with Irish offices, subject to the condition that they can do so on the same terms and with the same degree of security as they can get from most of the external offices operating here. I may say that the efficacy of the proposals in the Bill rests on the soundness of that assumption. If the Irish public are at present placing their life assurance business for the most part with external offices, it is due primarily, if not solely, to the non-fulfilment of the condition I have referred to. If my assumption is correct, then the task of reversing the existing condition and establishing new conditions in which the bulk of the Irish life assurance business will come to Irish offices is a matter of building up an Irish life assurance company or companies so strong and well managed and so secured against the possibility of failure, that no member of the public will have any hesitation in investing in its policies.

Let it be clear that these remarks of mine are not made in any spirit of criticism of the persons responsible for the direction and management of the existing native institutions. I have personally a great admiration for many of those Irishmen who have directed their energies to the business of insurance, and for their persistence in advancing the idea of national as against external enterprise in that field. They have built up for the Irish offices a combined premium income for life and industrial business in the neighbourhood of £600,000 and, considering the handicaps under which they have laboured, that is a very noteworthy achievement. The unequal terms on which they have to compete with external offices derive from several sources, the most obvious one being the matter of money and the great disparity between their limited funds and the vast resources available to their competitors. Another factor is that, owing to their comparative recent formation, the Saorstát offices are still contending with many of the special difficulties which attend all insurance organisations in the early stages of their development. Then there is the high ratio of administrative costs consequent upon the relatively small volume of business transacted by each separate company. Furthermore, there is the fact that the Irish companies commenced operations in the period of high post-war costs. The older companies were built up at a time when costs of all kinds were very much lower than when the Irish companies were started.

It is perhaps desirable to raise and answer forthwith the question, whether we should, under present conditions, legislate to transfer compulsorily all life assurance business to the Saorstát companies either by prohibiting external companies from doing such business here or by instituting a system of taxation which would have the same effect. I say at once that no Government could undertake the risks associated with such a course. It might easily result in heavy losses to many of our people and produce a very serious financial crisis. If this Bill produces the effects that it is hoped and intended it shall produce, then it may well be practicable for some future Government to act in that wise. But, it is the Government's considered opinion that, in existing conditions, other and less drastic means must be found to foster the growth of Saorstát life assurance companies.

The Bill proposes to facilitate the merger of existing Irish life companies into amalgamated units with a view to effecting economies in their administration and in providing improved security for their policy holders. As such amalgamation may be found to require financial support in the form of additional capital, it is proposed that, if amalgamation is effected in accordance with provisions set out in the Bill, the Minister for Finance may take shares in an amalgamated company.

In view of statements which have appeared in the Press, it is necessary to emphasise that there are no powers being conferred to require compulsory amalgamation. There are, however, compulsory powers under Part IV of the Bill, the existence of which may force companies, otherwise unwilling, to come into an amalgamation scheme. But these powers, it is to be noted, relate to the winding-up of insolvent companies. The remarks of those who have expressed their views in the newspapers on the amalgamation provisions of the measure should be read in the light of these two facts. It will not, I am sure, be seriously contended in this House that the Government should tranquilly allow an insolvent company to write new life assurance business. If there are insolvent Irish life offices or, for that matter, insolvent foreign offices operating here, some action in relation to them must be taken.

At this stage, I wish to state another primary consideration which operated with the Government in the drafting of this Bill, and that is the obvious desirability, if it can be done, of ensuring the policy holders of the Saorstát life offices against loss. The great majority, if not all, of these policy holders placed their business with Saorstát offices for patriotic reasons, at any rate, during the early stages of their operations. It was the widespread public enthusiasm for the idea of national self-sufficiency which enabled these companies to be launched. They traded on that enthusiasm, and I mean no disparagement by that remark. Having regard to those circumstances, and in the light of present conditions, the Government considers that it is justified in taking special measures to protect those policy holders and to ensure for them that their policies will be sound investments, if necessary by the transfer of the liability on them from the company which issued them to a new and stronger company emerging from an amalgamation scheme. If there are now, or should at any time exist, insolvent Irish life assurance companies, the situation which they create must be dealt with, and it seems to me that there are only three practicable alternative courses: (1) to wind them up, distributing the available assets proportionately amongst their creditors; (2) to introduce a special measure compulsorily to write down their liabilities on their policies in accordance with their assets; and (3) the course adopted in the Bill. Of these alternative courses, that adopted by the Government is far preferable to any of the others.

It has been suggested that amalgamation may result in the wholesale dismissal of staffs of the amalgamating companies, but this suggestion is entirely without foundation. I do not think that the provisions of this Bill will result in any number of persons losing employment and it is my intention that persons who are dependent for their livelihoods on insurance employment and who are affected by the measure will be fairly dealt with. If, however, it should at any time come to a choice between the continued employment of the staff of any company and the protection of the policy holders of that company against loss, there will be only one choice possible.

The Government hopes that as a result of the operation of Parts III and IV of the Bill, there will emerge a strong Irish life assurance company or companies backed by the State to whatever extent may be necessary, and able to command on merit the bulk of the business originating in the Saorstát. It recommends these provisions to the Dáil, confident that these hopes will be justified.

It is perhaps desirable to emphasise, even at the expense of repetition, that, in case discussion on this Bill here may create doubts in the minds of policy holders of existing Saorstát companies as to the security of their investments, that Part III of the Bill is designed to secure for them that they will receive from a company established as a result of the operation of its provisions, policies for the same amounts as those which they now hold, if the company which issued them is involved in an amalgamation scheme, whether that company is or is not actuarially solvent at the present time.

In respect of general insurance business, different considerations apply. At first sight it would seem a comparatively less difficult matter to give Saorstát companies a monopoly of general insurance business arising in the Saorstát, than in the case of life business, and, from a purely legislative point of view, such is undoubtedly the case. Again, however, it is a question whether the gains to be secured are proportionate to the risks involved and whether the desired aim cannot be achieved in a manner which avoids the risks. The aim is to secure that to the maximum extent practicable Irish insurance business will be done by national companies, but there are strong objections on grounds of public interest to attempting to secure this aim immediately by the exclusion of external companies from this field. It is the duty of the Government to ensure, when promoting insurance legislation, that, no matter what changes are produced by such legislation, there will be adequate insurance facilities for those desiring them. If the strong external companies now doing this business in the Saorstát are excluded from that field, it cannot be said that the resources of the existing Saorstát offices are sufficient to guarantee that such adequate facilities will be available. Whether new companies would be formed and what their results would be, only the future could tell, while the problem would be an immediate one. The results of the adoption of such a course might well prove very damaging not merely to national interests in general and to Irish insurers but also to the Saorstát insurance companies themselves.

Take the example of fire insurance. The total fire premium income contributed by the Saorstát to companies doing that business here is, roughly, about £1,000,000. If we assume that the premiums amount on the average to 5/- per cent. of the sums assured, the total risk covered must be about £400,000,000. If that business is confined to companies whose business is limited to the Saorstát, a bad experience in any year would certainly cause them serve financial distress, and if they had not had ample time in which to build up large reserves, might possibly make them insolvent. A catastrophe, the risk of which is always associated with fire business—the burning down of a large part of the commercial or industrial quarters of one of our cities—even if the companies had quite substantial reserves and reinsurance, would almost certainly cause a crash. Apart from the catastrophe risk, the same considerations apply to other classes of general insurance business.

Again, it can be said that these conditions may change considerably, if the present Bill operates in the manner hoped for and intended, and a future Government might well be able to legislate for the exclusion of external companies from these classes of insurance business. In fact, the purpose behind the present proposals is to assist the Saorstát companies to build up their reserves, and to put them in a position in which they could, with greater justification than they can now show, ask the Saorstát Government to legislate to confine these classes of business to them.

The proposals of the Government for fostering the growth and development of Saorstát offices in respect of the classes of insurance business, other than life, with which this Bill deals centre around Part VI of the measure which contains provisions for the establishment, with State assistance, of a reinsurance company to be called the Reinsurance Company of Ireland, Ltd.

It is proposed that every licensed company, Saorstát or foreign, shall enter into reinsurance treaties with the Reinsurance Company ceding a proportion of its Irish reinsurance business. The terms of the Treaty and the proportion of the business to be ceded will be agreed by the board of the company. The company will at its own option cede risks reinsured with it giving preference to the Saorstát companies wherever practicable. As all treaties at present granted are reciprocal, it will be seen that the external companies will be giving up a portion of their business by ceding to the Reinsurance Company unless the Company enters into reciprocal treaties. In this way a certain amount of the Irish business and the profit attaching thereto will pass into Irish hands. This method will provide proper insurance facilities in general and for compulsory insurance in particular, and the business ceded to the Saorstát companies will help them to establish themselves. When this stage is reached the advantage of a Saorstát company over an external company in securing Saorstát business will, it is believed, enable them to obtain a proper share of that business, and expedite the arrival of the day on which the limitation of the business to Saorstát companies will be practicable.

I do not think it is necessary at this stage of the discussion on the Bill to go into greater detail in explaining its provisions. I have stated the main purposes of the Bill and the manner in which it proposes those purposes shall be accomplished. The Bill is the product of prolonged consideration by the Government, and I am satisfied that it is sound in principle and as reasonably sound in detail as it was possible to make it. Nobody can accuse the Government of being unduly hesitant about affording protection and assistance to Saorstát commercial and industrial enterprises and it approached the consideration of the question of insurance with a keen desire to promote the development of strong Irish assurance companies capable of attracting and retaining the bulk of the assurance business of the Saorstát. This Bill is the result.

The amendment in the name of Deputy McGilligan which is to be moved to the Second Reading is one which the Government cannot accept. It is possible that the tabling of the amendment was a matter of parliamentary tactics rather than the submission of a reasonable alternative to the proposed legislation dealing with insurance business at the present time. The examination of the problems relating to insurance in Ireland has proceeded for a long time. Since the report of the Inter-Departmental Committee of 1923 to the Government the law which operated in Great Britain and here with regard to insurance has been frequently amended in Great Britain, but no legislative changes have been effected here. These legislative changes are long overdue. Committees of one kind or another have examined aspects of this problem both under the previous Government and the present Government, and it is considered that no useful result could come from the setting up of a select committee such as is proposed; whereas the activities of that committee and the inquiries which it would undertake might have very serious consequences indeed. The Bill which is before the House represents the conclusions of the Government as to how best the problems associated with insurance in the Saorstát can be dealt with and it is considered unlikely that any more satisfactory set of proposals would emerge as a result of the deliberations of such a select committee as is proposed.

On behalf of Deputy McGilligan, I move:

To delete all words after the word "That" and substitute the words "the Dáil declines to give a Second Reading to the Insurance Bill, 1935, until a select committee with power to send for persons, papers, and records be appointed to inquire into the whole question of insurance and to report what changes, if any, in the law are necessary and desirable."

I may say that we are of opinion that the time is not inappropriate to take whatever legislative steps may be necessary in order to consolidate the position of Irish insurance; but we believe, in order that that may effectively be done, so complex a problem as the general question of insurance in this country requires close examination and the persons called upon to deal with it from a legislative point of view should be afforded the opportunity of hearing the evidence of experts and interested parties in order that the pitfalls of so complex a problem should be manifest, that the interests which are likely to be affected should be fully understood, that the position of policy holders versus insurance companies should be thoroughly grasped by those whose duty it will be to legislate and, lastly, that while showing every solicitude for the legitimate interests of policy holders, the legitimate interests of those who have spent their lives in building up the insurance business of this country should not be ruthlessly sacrificed.

The Bill seems to us to contain amalgamation proposals which are going to bear most unfairly on the employees of the insurance companies and it is right for Deputies to remember that while the managers and directors of insurance play a very great part in building up an industry of this kind, it is the men out in the fields who build up the books and command the confidence of the public with whom they are in touch, who do the spade work, and have done the spade work in building up the existing insurance machine that we have in this country. As we see it, the amalgamation proposals contained in this Bill must inevitably result in a considerable number of those employees being dispensed with, and while the Minister declares to-day in his introductory remarks that he is resolved that these employees will be fairly dealt with, he does not elaborate that. What does he mean? Does he mean to give an undertaking that he will see that any employee who loses employment is adequately compensated at the expense of the Central Exchequer?

Deputies must realise this, that we are dealing here with an entirely different problem from that which was involved when we were considering national health insurance. There is no fund available to the Irish insurance offices out of which displaced employees could be fairly compensated. It was possible to arrange for compensation terms for the redundant employees of the approved societies under the National Health Insurance Act and to charge that on the funds of the Unified Society. No such funds are available to the Irish insurance companies on which to charge compensation arising from the displacement of employees. I think the Minister might have dealt more frankly with the House and told us what he meant when he said he was determined they would be fairly dealt with. Not only have you to consider the problem of the employees who will be deprived of employment, but you have to consider the position of the insurance agent who bought a book for a valuable consideration. Let us suppose that under an agreement such as is envisaged in this Bill he is no longer permitted to carry out the work of collecting premiums. Who is going to compensate him for the actual money which he paid for the book which is now the source of this income? We believe the proposals in the Bill are calculated to operate inequitably in that direction and we cannot see that an arrangement can be arrived at to avoid that without full and careful inquiry.

These amalgamation proposals seem to us, on the facts laid before us, to be premature. People are prone to compare the solvency, the strength and the wealth of British, German, and French companies with that of the Irish companies, unfavourably to the Irish companies. I will ask Deputies to remember that some of the wealthiest insurance companies in the world to-day consisted of one man sitting in a room paying the claims out of the premiums as they came in just 50 years ago, and insurance companies of so humble a commencement as that 50 or 60 years ago are to-day some of the greatest financial institutions in the world. Our insurance companies have only had ten or fifteen years wherein to consolidate their position. I venture to say the vast majority of Irish insurance companies compare very favourably in their financial standing with the greatest financial institutions in the world if they were examined at the same period of their development.

It is necessary for Deputies to remember that no insurance company, from the very nature of its business, can start off with a flourish. It has to build itself up slowly; it is of the very essence of the business that that should happen. It is necessary and good that the position of an insurance company should be slowly and solidly consolidated. That is what is happening in the case of the Irish insurance companies, and without close investigation we feel that amalgamation proposals of the drastic character envisaged in the Bill are premature and are of a panicky nature for which there is no necessity. We believe that patience and possibly a little paternalism by the Government, a readiness on the part of the Government to stand over Irish insurance companies during the initial period of their development, would be quite adequate and would render unnecessary drastic amalgamation proposals such as are suggested in this measure.

The last thing I have to say with regard to amalgamation is that we consider the method whereby the Minister proposes to provide additional finance to amalgamated companies is thoroughly unsound. The Minister, when introducing this Bill, said that where there is an amalgamation and an apparent temporary deficit the Government are prepared to advance certain moneys in exchange for ordinary shares. That means that if the Government are going to get ordinary shares in exchange for the money they advance, they are going to become in some cases a controlling partner in the enterprise.

I have the greatest respect for the integrity and ability of the Civil Service in this country; but I have a healthy distrust and horror of the bureaucratic passion for interference. Irish insurance men have built up the Irish insurance in this country. If the Government deems it their duty to intervene, by way of legislative supervision, this House should not allow the Government, not only to supervise the insurance business, but, effectively, to control it as well. From the facts as laid before us it appears clear that the way in which the money should be advanced would be by debentures, so that the Government would be assured of whatever advance they made in a reasonable time. At the same time an attempt should be made to build up the business of the future in the hands, and effective control, of the business men who understood and promoted it, and who, unless I am much mistaken, have no desire to hand it over to civil servants no matter how competent or conscientious.

Now we come to the whole essence of the proposals, that is the effort to separate the life business on the one hand, and the fire and accident on the other. I am not clear as to the exact meaning of the Minister's intention as to marine and boiler insurance, but I do not think that much of that business is done by Irish companies. It was not clear as to whether he would allow fire and boiler insurance to be carried on by life insurance companies. If he proposes to put life insurance in one company, and to put the other branches of insurance in other companies I submit that that is a most inequitable proposal and for this reason: You are going to prevent any Irish company from doing two classes of business, whereas you are leaving the external companies free to do them.

The same applies to the external companies.

Yes, but the Minister knows that for a long time most of the English companies could do life business through parent companies and employ subsidiaries to do fire, accident and marine business. They are at present doing that, and there is nothing to prevent them going on doing it under this Bill. So that the effect of this legislation is that you are going to prevent any Irish company doing a dual class of business but, in effect, you allow external companies, in England, in Germany and in France, engaged in this business, to do fire and accident and life business as well. It appears to us that that is a most unsatisfactory arrangement, and one that should not commend itself to Oireachtas Eireann. It is to avoid such incidents as that that we feel this Bill should be submitted to committee with power to send for persons and papers so that difficulties of that kind might be overcome, and a more reasonable method evolved.

Furthermore, it appears to me that where you have, at the present time, one company doing fire and accident and life, to divide that into two involves very greatly increased expenditure. Where you have one office for life and fire, at the present time, if you compel that office to divide up into two head offices certain steps will be necessary. It may be, that after investigation of that aspect of the problem, a case might be made to show that the increased expenditure would not be so great, and it is to ascertain facts of that kind that we think a committee would be necessary.

Another fact that emerges upon which it would be extremely difficult to get information except in the way we suggest, is that Irish companies, under this Bill, seem to be called upon to make far more elaborate returns to the Department of Industry and Commerce than any external company. External companies are required to make no further returns than are required by the insurance or governing authority of their own company. Whatever satisfies Great Britain for British companies, or whatever satisfies Germany for German companies, will satisfy the Department of Industry and Commerce for those companies here. But Irish companies must furnish a very exhaustive and expensive series of returns which are going to involve them in considerable expense, and to put them under heavy obligations which their competitors, in the same business, do not seem to have. It appears to us that is an unreasonable proposal and, while we are satisfied that the Irish companies are prepared to make any return the Government feels necessary, we feel that external companies should be prepared to make identical returns in respect of their Saorstát business. Unless that is so it means that there is a differentiation between the external companies and the Irish companies which is unfair and inequitable to Irish companies.

Now we come to the reinsurance proposals. On the face of them these proposals are impracticable and must, inevitably, break down. In our opinion they would jeopardise the existence of any fire and accident company established in this country. As I understand it, when a fire and accident company accepts a risk of any kind, the situation is this: they have already negotiated a treaty, either with another group of companies or with Lloyds. The terms of the treaty are that the fire and accident company will retain, for their own account, say 20 per cent. of any risk they underwrite, and the remaining 80 per cent. of the risk will be divided up amongst the other companies under the treaty. If I go to an insurance company to-morrow morning, and ask them to cover a risk for £100,000, and they give me a cover note, at the moment the cover note is given to me, and my risk is covered, the treaty between them and the other companies comes into operation, and the risk becomes the liability of the companies associated by treaty with them. If my premises were destroyed the following morning, although the other companies had never heard of the risk incurred, they would be liable for £80,000 of that risk, and the parent company with whom I transacted the insurance business would only be liable for £20,000 because their overriding treaty operated all the time to relieve them of the agreed percentage of every risk. Now the reinsurance proposal here is that every such proposal must be offered to the Irish company, and on the face of the Bill it appears that if the reinsurance corporation of Ireland, which it is proposed to set up, pauses say for a week to examine the merits of a reinsurance proposal, the company which effects the insurance has to carry the entire risk while the reinsurance corporation is examining it. A company that could safely carry £20,000's worth of the risk, and would ordinarily relay to its associates 80 per cent. of a £100,000 risk, may find itself in the position now that it accepts a £100,000 risk on Monday; it asks the reinsurance corporation of Ireland to take 80 per cent of that risk off its hands; the reinsurance corporation says: "We must examine this proposal;" the building insured burns down on Tuesday, and the company that made the first insurance is obliged to find £100,000 to discharge the risk.

That is one point, and it seems to me to be one of the utmost possible gravity, but there is another problem involved in this position. Suppose the reinsurance corporation says to an Irish company: "You have offered us this morning five risks. We will take four of them but the fifth we do not care for." That insurance company has to go out and try to reinsure that risk on the insurance market of the world, and it cannot do it. It cannot start that search for reinsurance until the reinsurance corporation of Ireland has rejected the risk. It goes to Lloyds and asks: "Who is ready to reinsure my risk in respect of this fifth contract of insurance?" Lloyds say to themselves: "Well, if the reinsurance corporation of Ireland have refused it there must be something groggy," and the company has got to take what terms it can get to relieve itself of the risk in respect of that fifth contract of insurance, if the reinsurance corporation of Ireland declines to carry it. Surely, proposals of that kind cannot commend themselves to the House. Surely so delicate a problem as that of reinsurance deserves close investigation, with experts, by those of us who are concerned to legislate in a matter of such complexity as this. Nobody will pretend that in a democratic country you could expect every member of the Oireachtas to familiarise himself with every detail of a highly technical measure such as the Insurance Bill is, but our suggestion is that when confronted with a Bill of this character the proper thing to do is to invite Deputies of all sides of the House to choose from their members certain individuals who are prepared to study a problem of this character, and to let there be a joint recommendation from them all, advised by experts, and strengthened by having heard all the interests concerned, so that the House will feel that whatever recommendations come forward in respect of matters such as this reinsurance proposal are the best that could have been got even if the experts and interested parties had been allowed to come to the bar of the House and make their case to each individual Deputy.

Now I want to refer to a new principle which is introduced into insurance in this country by this Bill, and that is the principle that the Minister is to be substituted for the courts of law in disputes arising between insured parties and insurance companies. I warn this House that if you permit the development of a tendency which is manifesting itself in this country to sweep the courts of law to one side and to constitute the Minister—who is by the very nature of his office a politician, in the midst of political tumult—the judge and jury and final Court of Appeal in litigation between one citizen and another of this State, the greatest possible evils will accrue. The Minister says that he proposes to adopt this new procedure in order to save expense. If the Minister considers that the expenses of the law courts are excessive, or are operating to keep poor people out of them, then he ought to insist on his colleagues introducing such legislation as may be necessary to bring down the costs of the law courts. It is a monstrous thing to say that the rich man in this country shall have the right to go into the law courts, and have the benefit of the judges and Bar in settling his claims upon his neighbour, whereas the poor man must do with the rough and ready justice that is dispensed in Government buildings. There must be equality before the law for all classes of the community if there is to be good law. If a poor man has an industrial policy he is just as much entitled to justice in respect of that policy as the gentleman who has insured his life for £100,000. He is just as much entitled to go into the highest courts of this country, and to have his case heard with as much attention and as much care as that of the man who insures his life for £100,000. It may seem to Deputies at first that the Minister in his benevolence is going to spare the poor litigant expenses, but no greater evil could be set up in this country. If the law is too expensive for the poor, then reduce the cost of the law; but it is bad, it is unsound, and it is unjust that the man who has plenty of money should have the courts of law available to him, whereas the man who is scraping and saving in order to carry on a small industrial policy on his life or the life of his relatives should be denied the justice of the courts, and told that he will have to do with the decision of the Minister, which shall be final and from which there is no appeal. That is not justice and ought not to be allowed to go on.

On those several grounds which I have outlined, I submit that an ample case has been made for a more exhaustive examination of the whole problem than appears to have been made. The Minister said that he did not think this was the appropriate stage to go into greater detail. If this is not the appropriate stage to go into the greatest detail, I do not know when he proposes to do it, unless he has developed the same disease that his leader has got, and that is that he will never say anything when anyone can answer him. We are all familiar with the fact that the President, when introducing a Bill in respect of his Department, gets up, mumbles for five minutes, and then sits down. Then the chief whip of the Government Party is rushing around to know if we will provide an hour and a half for the President to wind up the debate, because, like a woman, he wants the last word. I hope that is not contagious, and that the Minister for Industry and Commerce is not developing this feminine quality of thirsting for the last word. He skipped lightly over the power he proposes to take to fix premiums. How he justifies that we have not heard. Apparently, he did not think it suitable to elaborate on that question. The proposals in the Bill are certainly of a character that do not recommend themselves to us. They are also a problem which would do with investigation. Frankly, I do not feel competent to give this Bill the consideration it deserves unless and until I have heard the views of those people who are actively engaged in the industry; unless I had an opportunity of hearing the views of those whose interests are going to be involved; unless I had an opportunity of hearing the insurance actuaries, who are familiar with all the technicalities of the quinquennial valuations, the basis upon which those valuations can be made, and their relative importance as an indication of a company's solvency. I do not believe there are a dozen Deputies in this House who, without the procedure which we ask for, are capable of giving a Bill of this character the consideration and discussion which it deserves. We are going to do something in respect to the business of this country that may involve its very existence. We are going to do something that may imperil, for hundreds of men and women in this country, their means of livelihood. We are going to do something that may decide for all time, certainly for our time, whether Irish insurance is going to be a prosperous business or not. We should not embark on that task if we are not fully competent to do so.

In conclusion, I want to say one last word which the Minister I am sure will endorse. When legislation of this character comes before the House it may give rise to questions in the minds of a lot of people up and down the country as to what is behind all this. Has some crisis arisen in insurance business in Ireland that requires drastic and dramatic treatment? I think the Minister will endorse me when I say that while it is necessary that the Government should modernise insurance conditions in this country and bring them more or less into line with those obtaining in every other country, there is no real ground for any anxiety on the part of anyone as to the immediate solvency and soundness of the insurance industry as a whole in this country and that once the Government has put its hand to regularising the position, there will emerge, we hope, from our deliberations such arrangements as will result in an insurance industry in this country which will be as solid and as solvent as the insurance industry of any country in the world. I would press most strongly on the Minister that he should reconsider what he said about the amendment we have put down. We have put it down with a desire to help, with a desire to turn out a good body of legislation in connection with insurance. We honestly do not believe that this House is competent to do that, unless and until it has the information and the assistance with which the committee that we adumbrate is in a position to provide it.

I suppose as regards the general principles that underlie this Bill we should all be in agreement. I take it that nobody would object to the statement of the Minister that insurance companies operating in Ireland should be perfectly solvent and above suspicion. I think we would all agree with the Minister that if he requires additional powers to supervise insurance companies operating in this country those should be given. But when one comes to the details of how that object is to be arrived at I am afraid there will be a considerable divergence of opinion. The Minister seems to think that if we pass legislation everything will be all right. I should like to urge upon the Minister that supervision is more necessary than breaking up insurance companies into compartments. The Minister is quite right when he says that the funds of a life insurance company should not be allowed to be used in other directions, but there is no doubt that many insurance companies, and other businesses too, find that operating with Irish costs at English standards of business is a very difficult matter. I am afraid that this idea of dividing life and industrial insurance from other forms of insurance is only going to increase the cost of running an insurance company. There can be no doubt that there is economy in having one board of directors, one manager and various other reforms, but I think that if an insurance company is going to the bad, it will go to the bad in spite of being a separate company.

The Minister has mentioned that there were three courses open to the Government in dealing with an insurance company that is insolvent and that he adopted the one that appeared most feasible, namely, to amalgamate it with another insurance company, and if the amalgamated company be short of capital, the Government or the Minister for Finance will advance shares. That is not a course that would commend itself either to the business or the investing public at large. Take the case of two traders, side by side, and say that one of them had obviously become bankrupt, while his next-door neighbour was in a prosperous condition. What is the remedy proposed? That some fairy-godmother should come along and say, "Now, you two people ought to amalgamate and I shall provide you with additional capital to run the business." There are two objectionable features in that. There must, obviously, be some fundamental error or errors in the manner in which the trader who had become bankrupt had carried on his business. Yet he is going to be put on equal terms with his next-door neighbour and additional capital is going to be provided. That looks rather like watering the existing assets which in the case of one party were not what they were represented to be. That is the position suggested by amalgamating a solvent and an insolvent insurance company, providing additional watered capital and regarding the amalgamated company as a solvent company. I have very grave doubts as to whether the insolvent element brought into the new company will not make the whole body insolvent. That is an aspect of trading that I should like the Minister to consider very carefully before that part of the Bill becomes law. I move the adjournment of the debate.

Debate adjourned to Wednesday, December 4th, 1935.