Dáil Éireann díospóireacht -
Wednesday, 3 Jun 1936

Vol. 62 No. 11

Insurance Bill, 1935—Recommittal (Resumed).

Question again proposed: "That Section 11 stand part of the Bill."

Mr. Dillon

Two questions were raised on this section last evening, neither of which was cleared up. One concerned the basis of calculation. The Minister was not in a position to tell us what the exact amount of the fee would be. The other question arose in connection with sub-section 5 which refers to information supplied by insurance companies. The sub-section says:—

If any person, in an application for an assurance licence or in furnishing any information in pursuance of a requisition of the Minister under this section makes any statement which is false or misleading in any material respect, such a person shall be guilty of an offence...

I think qualifying words are required there. If some person makes a statement in answer to prescribed questions which is misleading he may have had no criminal intent at all. The form of words adopted is to the effect that a person who made a false statement did so with the intention of misleading and committed an offence. Perhaps the Minister would give some information on the point.

Mr. Lemass

I think it would be impossible to determine what were the motives of the persons who when making the application furnished statements which were misleading. The provisions of the sub-section are in the usual form. If a person making an application makes a statement in support of it which is misleading in a material respect, that person commits an offence under the sub-section.

Mr. Dillon

Has the Minister reached any conclusion as to the probable amount of the fee?

Mr. Lemass

I cannot say what the amount of the fee will be, but it will be the amount required to recoup the expenses that arise in the determination of the matter.

Mr. Dillon

The Minister has in fact no idea of what the fee will be.

Mr. Lemass

The matter is being considered.

Mr. Costello

Arising out of the point made by Deputy Dillon on sub-section (5), surely the word "knowingly" ought to be inserted before the words "false or misleading." A statement might be false in the event of something subsequently transpiring, but when made may not in fact have been false to the knowledge of the person concerned. As the section stands it puts the matter in the abstract. If a thing is false in fact or is misleading in fact, whether or not the person who made the statement knew it to be false, or intended to mislead, he is liable to a criminal prosecution. This certainly creates a new offence, leaving out the mens rea necessary in the criminal court. I think the Minister should insert some such word as “knowingly” before the word “false.” The other point on sub-section (2) returns to a matter that was discussed yesterday on some of the amendments.

The House has negatived the idea that the Minister should lay the regulations that he proposes to make on the Table of the House. I should like to know from the Minister the general nature of the particulars which may be required. The House will not have any method of ascertaining the information until the regulations are made, and even then Deputies will not know unless they are interested. The Minister should give some information of the kind of particulars he will require.

Mr. Lemass

The particulars will be such as will enable the Minister to determine whether he should grant an application for a licence or not. Any Deputy studying the relevant sections of the Bill will see that the Minister must have information before he can determine such applications. In Section 12 (3) certain provisions are set out to which a company applying under that section must conform. Obviously a company applying must state whether in fact it conforms to these conditions or not. The same will apply to other provisions of the Bill. The information sought will be information to enable the various matters that necessarily arise to be examined in accordance with the provisions of the Bill. Decisions will be made in the light of the information supplied, and it is on the nature of the information required that the provisions of sub-section (5) are framed. In respect to these matters it is difficult to conceive how a statement misleading in a material respect could be made in error. It is possible that some such statement might be made for the purpose of deceiving, and therefore the proposal in the sub-section makes it an offence to give information which in a material respect is misleading or false.

Mr. Costello

Irrespective of the knowledge or the intention of the person making it?

Mr. Lemass

In a matter of this kind, where a person makes an application for a licence to carry on insurance business, surely the application shall convey accurate information?

Mr. Costello

A person might do so bona fide and some of the information given might subsequently turn out to be false.

Mr. Lemass

Is not that an important consideration? Supposing a company makes an application, gives information or replies to a question in a form which led the Minister to believe that the company was entitled to a licence, and he decided to issue the licence, and if subsequently it was discovered that the information was false and that a licence should not have been issued, the person concerned should be subject to some penalty.

Mr. Costello

Is there not power to revoke the licence in that case if it was done "knowingly" or "negligently"? The Minister has power to revoke a licence and to deal with matters of that kind. The sub-section creates a criminal offence, irrespective of the knowledge or intent of the person who made the statement.

Mr. Dillon

This question has arisen on several Bills and in each case the section has been amended by the insertion of the words "knowingly" or "wilfully" or "with intent to defraud."

Mr. Lemass

Not that I am aware of.

Mr. Dillon

If the Minister refers to precedents he will find that in many cases sections were so amended. Sub-section (2) says that applications shall be in the prescribed form. Are we to understand that the Minister reserves to himself the right to prescribe a separate form of application for each insurance company? If the Minister was under the obligation of laying every prescribed document on the Table of this House any person applying for a licence could compare his application form with it. That principle is not going to be followed in connection with the regulations made under this Bill, and so one insurance company may have a questionnaire addressed to it of a comparatively simple kind, while another company may have a questionnaire of quite another character addressed to it. I do not think that is right. The Minister should inform us whether that is his intention, and whether the class of examination referred to in the sub-section confers that power upon him. I think it does.

Mr. Lemass

It is quite obvious different questions will be addressed to different classes of insurance companies. The information we would require from a Saorstát company would be of an entirely different character from the information we would require from a foreign company. It is quite clear from the provisions of the Bill that the queries will be according to the class into which the company goes.

Mr. Dillon

So that we have a situation arising in which the Minister will be able to place any applicant for a licence under this Bill under a requisition of an indefinite character which may go on for ever, and this House is never informed, at any stage of the proceedings, what rights the Minister has under sub-section (2). If a citizen of the State feels that the rights conferred on the Minister under sub-section (2) are oppressive, there is no means of raising it in this House. There is no means of pinning the Minister down to any definite form of application in connection with his power here. At this stage of the Bill details of this character may sound trivial. I imagine when we were discussing the Conditions of Employment Bill, representations of this kind would have been heard with impatience by the House, but I think that if Deputies would ask people who have come within the scope of the Conditions of Employment Bill since it came into force, they would tell them that there are many minor points that they, had they been in this House, would have raised and argued very heatedly if they appreciated their significance when they appeared in the Bill. They would tell them that they did not appreciate their significance until they came into operation. I feel that sub-section (2) can become an instrument of oppression, and I object to it very strenuously.

Question put and declared carried.

Amendment No. 24 not moved.

SECTION 12.

Subject to the provisions of this Act, the Minister may, in his discretion, grant or refuse an application for an assurance licence.

Mr. Séamus Bourke

I move amendment No. 25:—

In sub-section (1), line 46, to delete the words "may in his discretion grant or refuse" and substitute the words "shall grant".

In every sub-section of this section of the Bill, as in every other part of the Bill, it appears that the Minister is given more than ample powers of control. I do not see what is the necessity for an over-riding condition of this kind. It simply means that, if put into operation, any company which may conform with all the other requirements of the Bill will still acquire no rights under the Bill. It all depends on the whim of the Minister or his officials. I think it is very unfair that companies which have in all other respects conformed to the other requirements of the Bill, should be ruled out just because some official in the Minister's Department objected to its coming within the scope of the measure, and that, in consequence of that, the company should be put to the cost and trouble of going into the High Court to get the decision of the Minister reversed. I think the Minister should try to attempt to justify this provision in some way.

Mr. Lemass

I am afraid I could not agree to accept this amendment. As the Deputy will have seen from the provisions of the Bill, in the case of solvent Saorstát companies, it is made mandatory on the Minister under the various sub-sections of this section to grant the licence applied for, subject to the over-riding condition that a company shall not be licensed except temporarily to do both life and non-life classes of business. If the Minister refuses to grant a licence, as he may do, if the company has failed to make the required deposit, or if he has good reason for believing that the company is insolvent, then there is an appeal to the High Court. I could not agree to accept an amendment which made it obligatory on the Minister to license companies which appear to him to be insolvent. I think we must be given an opportunity of considering that aspect of the matter in relation to each application, bearing in mind that the applicant who is refused a licence has a right to appeal to the High Court.

Mr. Bourke

If they fulfil the other requirements of the Bill they would be solvent, and it might be a great hardship if they were forced to go to the High Court unnecessarily.

Mr. Lemass

So far as a Saorstát company is concerned, it is mandatory on the Minister to give a licence unless the conditions of the Bill are not fulfilled, such as the condition in relation to the deposit or the condition in relation to solvency.

Amendment, by leave, withdrawn.

An Ceann Comhairle

Amendments Nos. 26 and 27 might be debated together.

Mr. Keyes

Amendment No. 26 is not being moved.

Amendment No. 26, by leave, withdrawn.

Mr. Bourke

I move amendment No. 27:

Before sub-section (2) to insert a new sub-section as follows:—

After the coming into force of this part of this Act no foreign company shall be licensed to carry on—

(a) the fire insurance of any building used as a private dwelling the amount of which does not exceed £2,000; and

(b) engineering, plate-glass, court bonds, solicitors' and trustees' indemnity insurance.

I had a number of amendments more or less on the lines of this one and the amendment of the Labour Party which has not been moved. By the way, I think it is a pity that the Labour Party is not here to discuss this amendment. Perhaps they are unable to be present to-day owing to the convention which is being held elsewhere. If that is the case, I think we should adjourn consideration of this measure to allow of their being present because this is a matter in which I think they should be interested. The Minister has apparently set his face against giving any concessions to the Saorstát companies. In that attitude I think he is very ill-advised. He has told us that the native companies will receive consideration in the Bill in a different way from that which I have been trying to achieve by inserting these amendments. When he was asked to explain what were the advantages that the native companies were going to get, he said they were in the reinsurance provisions of the Bill. Then he admitted afterwards that the whole question of the reinsurance provisions is very problematical. We do not know whether they are going to come into operation at all and certainly as they appear in the Bill, it does not appear as if they were going to be of any advantage to the Irish insurance companies. The Minister has said that this Bill is not going to do any serious injury to the Irish companies. I do not wish to go back over the arguments I have already used, but there is no doubt about it that if this Bill is put through in its present form, as a result of the partition measures in the Bill, it is going to destroy the identity of Irish companies and place them under other hardships which will put them at a serious disadvantage in competing with other companies. I would ask the Minister again to accept the amendment or to bring forward some alternative proposal which will indicate that there is a possibility of allowing native companies to do fire and accident business along solvent lines.

Mr. Lemass

This amendment and a number of other amendments of a somewhat similar kind raise directly the principle of the Bill. The Deputy has stated that I have set my face against giving any consideration to the Saorstát companies. I deny that emphatically. In my opinion the Bill which is before the Dáil is the best possible measure that can be produced for the assistance of the Saorstát companies in the present stage of their development. It is brought before the House here because we regard it in that light. For reasons which I explained at length when introducing the measure, I do not think it advisable at the present time to exclude external companies from carrying on insurance business here.

Mr. Bourke

We are not asking you to do that.

Mr. Lemass

The purpose of the amendment is to exclude foreign companies from doing certain classes of business. Part of the amendment is designed to prevent their doing a class of business which is more profitable than any other class of business. I think that is the wrong way to set about restricting the activities of foreign insurance companies here.

Mr. Bourke

If the Minister would tell us right away we would be quite satisfied.

Mr. Lemass

I think I have done so. If the Deputy studies the Bill closely and the statements which have been made as to the manner in which the provisions of the Bill will be operated, he will discover what, in my opinion, is the right way to deal with the position. If we tried to do too much now, we might inflict very considerable harm not merely upon the country but also upon the Saorstát insurance companies. It is necessary to encourage the growth of the Saorstát companies into strong organisations before any step forward from the position taken up in this Bill is attempted. It is also, perhaps, necessary to emphasise that this Bill does not confer any privileges upon foreign insurance companies. The right to receive a licence to carry on insurance business here is conferred upon foreign companies which have been doing these classes of business in the past. If we were proposing to allow new foreign companies to come in or existing foreign companies to extend the classes of business in which they have been engaged, then it might be contended that we were giving them some privileges. That is not proposed. In fact, the only provisions contained in the Bill relating to foreign companies are provisions designed to allow these companies which were doing business in the past to continue to do it in the future, subject to the more severe restrictions which the Bill imposes upon all companies engaging in insurance.

Amendment, by leave, withdrawn.

An Ceann Comhairle

Amendments Nos. 28, 32, 37 and 40 are similar in nature, and I assume that the Committee will be satisfied to take a decision on amendment No. 28.

Sub-section (3) Whenever an application is duly made in accordance with this Act by a Saorstát Eireann company which, on the 31st day of October, 1935, carried on neither life assurance business nor industrial assurance business or which is formed after such date for an assurance licence to carry on either or both of the said businesses, the Minister shall, subject to the provisions of this Act, grant such application, if, but only if, all the following conditions are complied with, that is to say:—

(a) the issued capital of such company is not less than two hundred thousand pounds and the paid-up capital of such company is not less than one hundred thousand pounds, and

(b) the issued shares of such company are, to an extent not less than two-thirds (in nominal value) thereof and carrying voting rights (whether immediate or to arise in certain future circumstances), in the beneficial ownership of a person who is or of two or more persons all of whom are citizens of Saorstát Eireann, and

(c) the majority of the directors (other than a managing director giving the whole of his time to his duties as such director) of such company are citizens of Saorstát Eireann.

Amendment No. 28:—

In sub-section (3), line 56, to delete the figures "1935" and substitute the figures "1934."

Mr. Bourke

Amendment No. 28 is consequential on amendment No. 40. In all legislative measures which have for their object economic or financial charges which may result in people who have the opportunity of getting inside information, it is generally a point of honour for the Government to see that proposals which are afterwards to take legislative form are not forestalled and that nobody will be able to anticipate what the proposals will be. We have had considerable information in the Press recently of a not too pleasant kind with regard to the divulging of Budget secrets. The Press is so full of that information at the present time that I do not intend to make further comment upon it. In connection with this particular Bill, I regret to say that something very similar to the revelation of a Budget secret seems to have taken place. After going over the genesis of this Bill, a measure was first introduced about 18 months ago. The title and long title were placed before the Dáil. Between the introduction of that particular measure and the Second Reading of the Bill which we have now before us, a company happened to be incorporated in the Saorstát. In dealing with a measure of this kind the Minister could have taken up two possible attitudes. He could have said: "I am introducing a measure which is going to deal with the insurance business of this country and, while that measure is going through the Dáil, I am going to see that no further insurance companies are established and that the status quo will remain until the Bill becomes law." In the second place, he could have said: "I am introducing this measure and the field will remain open until, finally, the Bill becomes law. After that, I am not going to allow any other companies to start operations in this country."

In this case, after the First Reading of the Bill that preceded this Bill, a company was floated in this country and, as I said on a previous occasion, it did not get very much support from the public. Everybody who knew anything about the condition of the market in Ireland realised that there was very little prospect of an Irish insurance company being floated successfully. Apart from the subscriptions of the directors, their friends and people intimately associated with them, the public took very little interest in that flotation. To make up for that difficulty, the Industrial Credit Corporation came to the rescue and subscribed £56,000. In addition to that, a corporation which was set up as a result of the intervention of the Dáil, a corporation which was given its status by the Dáil—the Public Bodies Mutual Insurance Company, a company established for the purpose of providing insurance for local authorities at a lower premium than the premium which would be payable to other companies — subscribed £5,000 to this company, a company which, we must assume, will be in competition with itself for the fire business of public authorities. This particular company was so constituted and its articles of association were so drafted that they fit, as the fingers of one's hand fit into a glove, into the provisions of this Bill.

Mr. Lemass

In what respect?

Mr. Bourke

The amount of capital for example.

Mr. Lemass

In what other respect?

Mr. Bourke

The number of Saorstát Eireann nationals that must be on the board, and in other respects.

Mr. Lemass

What other respects?

Mr. Bourke

It so happens that that company has since been given practically a monopoly of the fire and accident business of this country which was previously done by Irish companies. A promising Irish company doing fire, general and life business could not drop its life business and do fire business. They are blocked by Section 12 (9) of this Bill. This company has been given practically a monopoly of the fire and general business previously done by Irish companies. I think it is a very unfair thing that the old-time companies who actually travelled a very rough road in order to get to the present position should be shouldered aside by this new company, a company which I would describe as a cuckoo company. Apparently the old-time companies are to be shouldered aside; this new company is put in the position of eventually excluding all the other birds, and is to remain in the nest for the future. That was what influenced me in introducing this amendment. I think that such a company should not be started, and the Minister should not stand over giving it a monopoly in this country.

Mr. Moore

There is something self-contradictory in Deputy Bourke's description of the origin of the new insurance company. The Deputy suggests that in its origin it had the benefit of information as to the contents of the then forthcoming Insurance Bill. At the same time the Deputy points to the failure of the company as a public flotation; the issue was not taken up. It looks rather curious that people who were in possession of valuable information and who knew that this company would be in such a very exceptional position were prepared to make a present of the profit on 56,000 shares to a semi-State corporation.

Mr. Bourke

These people could not state that publicly.

Mr. Moore

It is strange that these people were prepared to part so simply with 56,000 shares which, on Deputy Bourke's postulate, were worth a great deal more than their face value.

Mr. Bourke

Not necessarily.

Mr. Moore

In that case the Deputy's point would fail. If the company have been put into a privileged position by the knowledge they were given in advance as to the contents of this Bill, then it must be presumed that the company, because of that exceptional position, would consider that its shares were worth more than their nominal value, particularly in view of what the Deputy said as to the business that was waiting for them once they came into existence. I do not believe that the company got any special information at all as to the contents of this Bill.

Mr. Bourke

They knew that the company should have a capital of £200,000 and £100,000 paid-up capital.

Mr. Moore

That, surely, would not be any proof that they got any exclusive information?

Mr. Bourke

Not conclusive proof.

An Ceann Comhairle

The Committee is not investigating the affairs of any company.

Mr. Moore

Yes, but a very serious allegation has been made as to the origin of this company. It has been practically asserted that they got exclusive Government information as to the contents of this measure.

Mr. Bourke

On the face of it, they must have got some information.

Mr. Moore

On the face of it, Deputy Bourke's general statement is self-contradictory. I do not think it could happen at all that the promoters of that company would not be able to ensure the success of the flotation if what the Deputy says as to the information they acquired is correct. It would be a most extraordinary thing if the promoters, having that information, were to make a present of the profit on 56,000 shares to a semi-State corporation.

Mr. Lemass

I take it that Deputy Bourke was referring to the Insurance Corporation of Ireland. Why does he refer to that company only? The flotation of that company was not the only transaction in relation to insurance business that took place. Another company, which was owned by a foreign company, was purchased by another Irish group.

Mr. Bourke

The principal objection is that some Government corporation with a very high official at the head of it subscribed funds to the company.

Mr. Lemass

The Deputy's allegation is that there is evidence in the prospectus that preceded the flotation of this company or in its memorandum or articles of association that they had information concerning the contents of this Bill which nobody else had.

Mr. Bourke

It looks very like it.

Mr. Lemass

In what way does it look very like it? What is the authorised capital of the Insurance Corporation of Ireland?

Mr. Bourke

It is £200,000.

Mr. Lemass

So far as I am informed, the capital is £500,000. What are the provisions of this Bill concerning the directors? It is that two-thirds of them should be Saorstát nationals. Is there anything about that in the prospectus to which the Deputy refers? The Deputy's allegations are based on very tenuous grounds. That company was formed with a capital of £500,000; all the directors are Irish nationals and all the shares are owned by Irish nationals. Because the provisions of this Bill require that a new company must have an authorised capital of £200,000 and that two-thirds of its directors must be Irish nationals, the Deputy has jumped to a certain conclusion.

Mr. Bourke

They must have as paid-up capital £200,000.

Mr. Lemass

Of course, they must. There is that similarity between the company and the provision in this Bill, and on that ground the Deputy throws out the allegation that information was given to the directors of this company. Does the Deputy say that they made a profit out of the information?

Mr. Bourke

Not yet; they are only getting going.

Mr. Lemass

The Deputy says the company has a monopoly. Does he still stand over that statement?

Mr. Bourke

There is only one other Irish company doing "fire".

Mr. Lemass

There is one other, that is the Hibernian. The Deputy's statement about a monopoly is all nonsense.

Mr. Bourke

I did not say a monopoly. I said a practical monopoly.

Mr. Lemass

It has not got a monopoly of the business. It has not got half the business.

Mr. Bourke

It has practically got a monopoly.

Mr. Lemass

Where? At any rate, there is the Hibernian Insurance Company—is not that so? Is not that a very serious interference with its monopoly? And there are other companies in existence. There is nothing under the Bill to prevent any number of companies being started.

Mr. Bourke

If they can get 56,000 shares from the Government they can.

Mr. Lemass

Who says they cannot? The Deputy has said something about the Industrial Credit Corporation. The Industrial Credit Corporation is completely independent of Government influence. Its board is not composed of Government officials. I have nothing to do with the decision of the Industrial Credit Company. I have nothing to say as to whether they grant a loan or as to whether they are to underwrite any issue. The Industrial Credit Company entered into an agreement to underwrite the Insurance Corporation of Ireland's issue of stock. Some part of the issue was not subscribed, and the Industrial Credit Company hold the shares. How many I do not know. That was not the only proposition that was put up to the Industrial Credit Company with a view to underwriting public issues. There were other propositions of a similar nature put to that body. The decision of the Industrial Credit Company not to underwrite or to support those issues was not influenced in any way by the Government or by the Department of Industry and Commerce. This business of making wild allegations without foundation of any kind is bringing the Dáil into disrepute. It is a thing that the Deputy ought to discontinue. It is not doing my reputation any harm, and it certainly is not doing the Deputy's reputation any good. In this particular case it is just nonsense to say that there was information given to these people that was not given to others. It is perfectly true that some weeks before the Bill was circulated to Deputies, a draft of the measure was given to everybody interested in industrial companies. That is the only possible leakage of information to which the Deputy could refer. Some weeks before the Bill was circulated to the House, every insurance company operating in this country received a copy of the Bill and was asked for its opinions concerning the measure. That matter was discussed here. I think I did quite right in providing for the circulation of these draft copies. It enabled the insurance companies to make their representations concerning the provisions of the Bill, not merely to the Department of Industry and Commerce, but to Deputies in due time.

Mr. Bourke

You gave them a very short time, a matter of days, although it took some seven years to produce the Bill.

Mr. Lemass

There is one other thing I want to say. Some time before that, representatives of the Industrial Credit Corporation approached my Department and stated they had before them certain proposals for the underwriting of public issues relating to insurance propositions. I understood there was not merely one, but a number of such propositions under consideration by the board of the company at the time, and, as a First Reading had been given to an Insurance Bill, they asked for information on this point, whether there was anything in the intended legislation which would make it impossible for any of the companies in the flotation of which they were asked to take an interest to carry on and which would justify them in delaying the public issues in each case until the legislation had been enacted. They were advised that the nature of the proposals was such that there was no provision in the Bill which would make it illegal for such companies to engage in such business here, provided they qualified under the various provisions set out here.

But that information was available to anybody who sought it at that time and, in fact, as Deputy Bourke well knows, there was a very large number of different insurance propositions being discussed in various circles at the same time, not all of which were proceeded with. The particular company to which the Deputy refers was in no different position to any other company or group interested in a public issue in connection with insurance business and they got no information that was not available to anyone else. In fact, their articles of association do not conform so closely to the provisions of the Bill as to justify the Deputy's suspicions. In one respect only is there similarity and in every other respect to which the Deputy refers the Deputy is wrong.

Mr. Dillon

Does the Minister seriously tell the House that no one of the seven gentlemen whose names are connected with the Insurance Corporation of Ireland, or their representatives, had direct or indirect advice from him or consultation with him or his officials in connection with the flotation of that company? If he does tell us that, nobody in the State will believe him. Does anyone seriously suggest——

An Ceann Comhairle

The Deputy must realise this, that if a Minister states in this House that no such information was given, the Minister's word must be accepted.

Mr. Lemass

May I intervene on a point of personal explanation? I said that the company got no information which was not available to anyone else. That is a somewhat different statement to that which the Deputy attributed to me.

Mr. Dillon

We will extract slowly the fact that these gentlemen did get information and did float the company with the consent and the approval of the Minister and we may get to the fact, after some time, that it was floated with the deliberate purpose of forming a repository into which would go the fire and accident business of all existing Irish companies who come within paragraph (b) of sub-section (4) of Section 12. Everybody knows that that was the purpose of this flotation. Everybody knows these gentlemen must have been advised that there was some such provision in this Bill.

Mr. Lemass

I again state there was no such advice given.

Mr. Dillon

Everyone knows these gentlemen must have had some knowledge that there was a proposal of this kind on the stocks; otherwise, being gentlemen of such high standing in commercial circles in this country, they would not have dreamt of floating a company of this kind, where you have already dozens of companies fighting for fire and accident business and quite unable to get enough to satisfy their present requirements. It is not a question of a series of Irish companies notoriously insolvent looking for fire or accident insurance risks. Nothing of the kind is happening. I can think of at least four Irish companies operating here that are perfectly solvent and have funds adequate to meet any risk, and reinsurance treaties adequate to cover any conceivable risk that could be put up to them in regard to fire or accident. Let the House understand this, because an attempt will probably be made to put something over on the House in this regard, that fire and accident business bears no relation at all to life business. Those of the Irish companies which are tariff companies confer complete immunity on any person offering them a risk. The moment they accept the risk a tariff agreement enters into operation and the risk is spread over a series of companies with which the Irish company has reinsurance treaties. Some of the Irish companies are not tariff companies and they have their reinsurance treaties with Lloyds.

There could arise in no rational person's mind any doubt of their security in giving a fire or accident insurance contract to any Irish tariff company or any company which had a reinsurance treaty with Lloyds. In face of that situation we are asked to believe that a body of the most prominent business men in the country suddenly assembled and someone said: "Boys, what about starting a new insurance company?" and they all said: "Yes, it will be great fun." No one asked if there was going to be an Insurance Bill. Perhaps somebody did and everybody said: "It is a secret; we do not know what is in it. It is a toss-up whether our company will be able to carry on profitably or not after this Bill passes, but let us take a chance. We will not wait here. We are a body of seven men going to ask the public for funds. We will not wait to see what is in the Bill. When the Bill is published it may transpire that this cannot be carried on profitably, but let us take a chance." These seven distinguished men then put their names to a prospectus of that kind.

Does anybody outside Grangegorman believe a tale like that? Of course they got the information that the proposal they were going to put before the people could be profitably carried on under the terms of the Bill, and I have no doubt they were told that it was highly likely the provisions of the Bill would materially assist a company of their standing in going in for the fire and accident business. The Minister, in his reply to Deputy Bourke, shows his own hand. The policy of the Minister was to strip the fire and accident business off all the existing composite companies and leave two companies operating in the Saorstát, the Hibernian Insurance Company and the Insurance Corporation of Ireland, controlled by Irish nationals, competing for the fire and accident business. That was his policy.

Mr. Lemass

That is not the policy as stated by me.

Mr. Dillon

That is what the Minister intended.

Mr. Lemass

I never intended it then, nor do I intend it now.

Mr. Dillon

The Minister challenges Deputy Bourke on the point that he is leaving the two companies to compete for the fire and accident business. The Minister points out that that rebuts any suggestion of a monopoly. The Minister did not want to be put in the position of creating a monopoly for Irish companies; he wanted to be in a position to say to Deputy Bourke if he suggested there was going to be a monopoly in favour of the Hibernian Company: "There is not; we are going to have the Hibernian and the Insurance Corporation of Ireland." The purpose of setting up the Insurance Corporation is to provide a repository for the fire and accident business. The Minister says that allegations of this kind bring discredit on the Dáil. If the Minister will deal frankly with the Dáil it would be unnecessary to extract information from him just as if one were getting a cork out of a vintage wine bottle, breaking the cork half a dozen times before you extract the last scrap of it. Why did he not get up and tell us honestly and frankly that he wanted to have two insurance corporations, that he wanted to have two companies competing for fire and accident business? Why did he not tell them that, if this company was started, they stood a good chance of getting business? If he had gone to all the insurance companies and told them that neither Deputy Bourke nor I would have any trouble. But what I certainly complain of is that under a cloud of anonymity and secrecy a certain group of honourable citizens are put in an extremely ambiguous position of having taken action which can only be explained by the fact that they had some information from the Minister that nobody else had.

Mr. Lemass

Is the Deputy alleging that?

Mr. Dillon

Yes.

Mr. Lemass

And the Deputy has some information to justify the allegation?

Mr. Dillon

I have inferences, drawn from a series of incidents that have taken place, sufficient to satisfy anybody who is not an inmate, or who ought not to be an inmate, of the Grangegorman Lunatic Asylum.

Mr. Lemass

But the Deputy is satisfied also?

Mr. Dillon

Those are the facts, and the Minister, it is perfectly obvious, knows that those facts are true. If he had told them out honestly and frankly at the beginning there would be no necessity for any trouble at all, but the Minister delights in conducting clandestine transactions of this kind and of doing the petty dictator in Upper Merrion Street. That is what has given rise to all the trouble. If he took Parliament into his confidence no difficulty would arise. I think that the circumstances surrounding that flotation are undesirable. They are undesirable as a result of secrecy. There would have been no objection at all if the Minister had made a public statement giving to every insurance company in the country the same notice that he gave to these. Now Deputy Bourke puts in an amendment to alter the year to 1934, but that would have operated this insurance company out of existence.

Mr. Lemass

But it would not, and that is the joke.

Mr. Dillon

Well, this company was floated in 1935.

Mr. Bourke

Take all the amendments together.

Mr. Dillon

I am not prepared to support the Deputy in doing that, and I will state my reasons why. The Minister for good or ill—I think for ill—is the Minister for Industry and Commerce, and if the Minister, through his indiscretions, leads a body of honourable citizens into committing themselves financially to a project of this kind, then I think the House is bound to stand over what the Minister has done. I do not believe, and I know that neither Deputy Bourke nor anybody believes, that the Minister has been engaged in some transaction designed to secure for himself, or for anyone in whom he is personally interested, a material reward.

Mr. Lemass

Why does not the Deputy allege that?

Mr. Dillon

Because I do not think it is true. If I thought it were, I would say it. The Minister, because he looks upon himself as a little Hitler, a little tin god, dispensing lordly favours from Merrion Street, has got himself into silly messes of this kind. I do not think that we should visit the consequences of the Minister's folly on the heads of enterprising citizens who have fallen in with what I believe to have been the Minister's suggestion. I have no doubt, however, that he represented to these gentlemen that a proposal of this kind would be useful from the national point of view. I think that he acted foolishly in making the suggestion, and I think he ought to be warned by what has happened and not go on with that kind of codology in the future. If he has a plan of this kind in mind, then he ought to open his mind to Parliament and allow the suggestion to come from Parliament and not from the inner sanctums of Upper Merrion Street.

Mr. Lemass

I just want to point out that the enactment of this amendment would not alter the position of any insurance company in relation to the Bill, and, therefore, it is entirely unnecessary. I do not propose to deal with the impertinences of Deputy Dillon but, in case any one should be misled by what he has said as to my attitude, I want to make the position clear and to say that I hope to see not one but at least half a dozen Irish insurance companies, with the same financial resources as the strongest of the existing Saorstát companies, formed to engage in fire and accident business here. I hope that the operation of this measure will result in the formation of such companies, and that its introduction will induce people to take the necessary steps to that end.

Mr. Bourke

I, no more than Deputy Dillon, have no intention of penalising the people who, as a result of this company being established, took shares in it; or of preventing them from competing in the ordinary way for insurance business. This amendment, which is really a consequential amendment, and the other amendments in my name were put down in order to clear the air on this particular point. In my opinion this is a method of doing business that should not commend itself to the Minister or to anybody else. If the Minister had taken the various other companies into his confidence and consulted them——

Mr. Lemass

What companies consulted me that did not get the same information? The Deputy has full information on that point.

Mr. Bourke

——he would have got co-operation from them in drafting this Bill. We all realise that there is a difficulty in dealing with the situation in the country, but if the Minister had done that he would have got full co-operation. This hole-and-corner method of doing business is not satisfactory. The Minister says that he hopes there will be half a dozen Irish insurance companies formed to engage in fire and accident business here. If people want to start a company they must first of all have a paid-up capital of £100,000. In view of the experience of this particular company which could not even get £50,000 from the board, how does he think that six new companies are going to get the amount of money that they would require from the Industrial Credit Corporation? Does he think that people are going to invest their money in these companies to compete against the one already established?

Mr. Lemass

The Deputy thinks that he can make use of the privileges of this Dáil to make allegations against me, allegations which might be serious in certain circumstances. I do not mind Deputy Dillon because——

Mr. Bourke

I made no personal allegation against the Minister.

Mr. Lemass

——that is his sole rôle in this House—to act as a sewer pipe through which any dirt can flow into this Assembly.

Mr. Dillon

May I ask, Sir, if that is a strictly Parliamentary observation?

An Ceann Comhairle

It is not.

Mr. Lemass

It is perfectly true. Deputy Bourke made the allegation that a particular company, for some reason which I do not know, was given privileges which were not available to others. Deputy Bourke is a director of an insurance company, and, presumably, he knows the contacts that exist between that insurance company and my Department. I invite him or any other Deputy who is familiar with the business relations between insurance companies in this State and my Department—they are continuously coming to the Department and getting information from it on matters relating to the intentions of the Government, or as to the nature of the legislation that we have in contemplation, and have discussed these matters with me on many occasions—to say that they were not given the fullest information that it was possible to give.

Mr. Bourke

After the Bill was circulated.

Mr. Lemass

Long before the Bill was circulated, and long before the heads of the Bill were drafted. The managing director of the company in which the Deputy is interested had many discussions with me as to the nature of the legislation that might be introduced. The Association of Irish Insurance Companies sent deputation after deputation to put forward their proposals. These proposals were discussed at length, and various objections to them were pointed out and answered. Perhaps it is too much to say that they were fully aware, but at any rate they had a general idea of the lines that the legislation to be introduced were likely to take. The people who are concerned with the particular insurance company that the Deputy has attacked had no more information on that point than other people interested in the extension of existing insurance businesses or in the establishment of new ones. They had no more information than was given to the parties who acquired the equity in the Hibernian Insurance Company, or the parties associated with proposals for the formation of other insurance companies which have not yet been created, no more information than was available to the existing Saorstát companies who were interested in various projects of one kind or another, and Deputy Bourke is in a position to get full information upon that point. He is in a position to know that, and if he had made the inquiries he should have made before committing himself to these statements in the Dáil, I do not think the speech he delivered here would have been delivered.

Mr. Dillon

The Minister says that full information was afforded to the boards of all the Irish insurance companies whenever they came to him.

Mr. Lemass

Whatever information it was possible to give.

Mr. Dillon

Now we are getting it qualified. I know that that is not true. I have been in close touch with certain boards of insurance companies, and such information was not forthcoming.

Mr. Lemass

The Deputy has just asserted, Sir, that a statement I made is not true.

An Ceann Comhairle

Such a statement may not be made.

Mr. Dillon

I have just been described by the Minister as a sewer pipe. However, if you pass over that and desire me to withdraw the suggestion that the Minister is unconsciously misleading the House, I shall very gladly submit to your ruling. The Minister accidentally conveyed a false impression to the House in saying that all the information that could be asked for by boards of insurance companies was furnished by his Department.

Mr. Lemass

I did not say that.

Mr. Dillon

The Minister did not say that? Then it disposes of that.

Mr. Lemass

The Deputy stated that I said that all the information that could be asked for by insurance companies was supplied. I made no such statement. I said that at various times, long before the heads of the Bill were prepared, discussions took place between myself and representatives of all the insurance companies upon the question of the nature of the legislation to be introduced.

Mr. Dillon

That is a very much more moderate statement than that which the Minister first made. Certain discussions did take place from time to time between the Minister and representatives of the Irish insurance companies, but I am not aware that, at so early a stage as April, 1935—15 months ago—the Irish companies had any definite information as to the nature of Section 12, sub-section (4) (b). My submission is that it is perfectly clear that that information was available at that time to somebody. The Minister works himself up into a rage with regard to this matter, and endeavours to suggest that allegations of corruption are being made against him and his Department. I want to make this very clear, that, when I consider it necessary to make an allegation against the Minister, or any of his officials, of corruption, that is to say, the acceptance of a bribe or personal advantage for communicating confidential information to outside persons, I shall make that charge. Until I make it, I do not want to have it saddled upon me.

Mr. Lemass

You just preface your remarks with a reference to the Budget leakage report in Great Britain.

Mr. Dillon

I think Deputy Bourke very properly drew the attention of the House to the fact that while that kind of talk was going on, it was very necessary that we should make it perfectly clear that we in this House have no reason to believe, or any desire to allege, that there is any corruption of that character in the Minister's Department. As I say, when there is, I shall allege it, but it is quite another thing to allege, as we do now, that the Minister acts with indiscretion and, in effect, unjustly, in taking to himself the dictatorial powers he longs to enjoy and a wide discretion as to what consultations he will enter into and at what stage these may properly be entered into. This is exactly the same issue that arises in connection with licences and a variety of other matters in his Department. The Minister wants to arrogate to himself the right to decide finally as between the rights of one citizen and another, and that is a matter upon which we challenge him. We say that the exercise of that right is indiscreet and undesirable in this case, and I think it has been pretty clear from the debate here that while the Minister's first position was that the Insurance Corporation of Ireland had no information that everybody else had not got at any time, or did not know anything about what was contained in the Insurance Bill, other than the Long Title, it now emerges that, in fact, the Insurance Corporation of Ireland had very extensive information, was given abundant information, and the Minister goes on to say that similar information was given to everybody else. That is a very different position from the position taken up by the Minister when this matter was first mentioned and, I think, something much closer to the truth than his first suggestion. At the same time, I think it is a pity that the thing should have proceeded along the lines it has, and I suggest that, in future, if the Minister thinks it desirable to communicate prognostications of the contents of impending legislation which would affect vested interests in this country he should communicate them by way of White Paper and distribute them broadcast amongst all interested parties and not wait for certain parties to come to his office and ask questions, while others who want information just as badly do not approach him at all and have to do without. Let him draw up a memorandum of so much information as he is prepared to publish and make that available to everybody. In that event, nobody will be entitled to complain.

Amendment, by leave, withdrawn.

An Ceann Comhairle

Amendments Nos. 29, 30 and 43 deal with the capital of the new company. Amendments Nos. 29 and 43 should certainly be taken together and the decision on No. 29 will govern No. 43.

Mr. Bourke

I move amendment No. 29:—

In sub-section 3 (a), line 1, to delete the word "two" and substitute the word "one" and in line 3 to delete the words "one hundred" and substitute the words "thirty-five".

I do not see why the Minister is so keen on the figure of £200,000 issued capital and £100,000 paid-up capital. I think a much smaller amount, say, £35,000, would be much better in the conditions obtaining in this country for the establishment of a company. The Minister must realise that, after all, capital is not such an important thing in an insurance company. A company with a large fund, with an expanding business and doing a profitable business is in a very much sounder position than a company started top-heavy with capital, which is never able to build up a fund or to do the type of business sufficient to maintain it. Unless the Minister, for some reason, is wedded to the figures of £200,000 and £100,000, I think he should accept this amendment.

Mr. Lemass

It is, perhaps, not correct to say that I am wedded to the particular figures in the Bill, but I think it is necessary in order to protect the insuring public that we should require that companies commencing to undertake insurance business should, in future, be provided with adequate capital resources. The proposals in the Bill are, in our opinion, not unreasonable. The acceptance from the public of immediate subscriptions for the purpose of providing benefits at some indefinite date in the future carries with it a very grave responsibility. An institution accepting that responsibility puts itself in the position of a trustee towards its clients, and where so many opportunities exist for mismanagement and misapplication of funds, it is essential that those who undertake this class of business should themselves possess reasonable financial strength to justify the trust which their clients place in them. Failure in the past by insurance companies to meet their obligations has resulted from the fact that they started business without sufficient capital. The best way to protect the public against what I may call mushroom insurance companies, is the requirement of a minimum paid-up capital. In fixing a minimum at a sum of £100,000 we do not think we are fixing an excessive figure. I may say that the question arose as to the formation of a new company to take over the fire and accident business of certain Saorstát composite companies, and, possibly, Deputy Bourke has some such matter as that in his mind. I caused to be intimated to certain parties interested my willingness to consider an amendment to the Bill which would permit such a company to operate, irrespective of this provision, provided that it was reasonably sound in capital, even though the capital resources did not reach the figure mentioned in the Bill.

Mr. Bourke

Will the Minister leave that matter open?

Mr. Lemass

I am prepared to have that matter considered. There is on me, as Minister for Industry and Commerce, an obligation to see that any such company is reasonably sound and likely to succeed. But having regard to the fact that any such Saorstát company, entitled to do fire and accident business at present, will be entitled to do so although not having the same resources as mentioned in the Bill, I am willing to put into that position a new company formed for the purpose of taking over, and carrying on this fire and accident business, but the whole scheme is subject to the new company being a sound one. I am sure there should be no difficulty in that if the companies concerned are anxious to proceed in the matter. But in regard to new companies to be started after the Bill becomes law, I do not think the requirement of a minimum capital of £100,000 is excessive. My feeling in that regard is all the stronger, because I am anxious to see a number of such companies started, as I said; but I would dislike very much to see a number of companies started that did not possess the strength and resources indicated in the Bill. I do not think, when the Bill becomes law and the manner of its operation becomes known, that there will be difficulty in securing the co-operation of the investing public in establishing such companies.

Amendment, by leave, withdrawn.

Amendments Nos. 30, 31 and 32 not moved.

Mr. Bourke

I move amendment No. 33:—

In sub-section (4), line 25, to delete the word "and" and to delete lines 26 to 30 inclusive, sub-section (4) (b).

This is a very important amendment and raises the whole question of what I term the partition principle and what the Minister calls the valuation proposals of the Bill.

An Ceann Comhairle

Was not that decided on amendment No. 6?

Mr. Bourke

It was decided in a very narrow way.

Mr. Lemass

It was discussed but hardly decided.

Mr. Bourke

Practically the same argument holds good in both cases. I think there is no justification on the part of the Minister for splitting up these Saorstát companies, and not allowing them to carry on as composite bodies—those companies which are already composite bodies. This amendment is put down for the purpose of enabling any company, at present a composite company, to continue as such if it so desires. As I said, when speaking on an earlier amendment, the real hardship consists in that. By the licensing provisions in the Bill, the Minister puts all companies, irrespective of their genesis or antecedents, whether foreign or native, on the same level. Once they get a licence, the general public will regard them as on the same footing. They will not get any business by merely being labelled Saorstát companies. That was one advantage that native companies had, in the past, over foreign corporations, but in every other respect they were in a position to get business that the others could not. The cream of the business has been skimmed off by foreign companies. When the Minister brings into force the licensing provision he will do away with any advantage that the native company had. Also, by what I call his partition proposals, he destroys the identity of the Irish companies, and by destroying their identity he destroys their good-will. These companies while in existence had time to build up a reputation of giving good service to the public generally. That good-will was worth a considerable amount of money, and was more valuable in some respects than their capital. Under the Bill, also, the overhead charges will be increased. They will not be increased actually, but every overhead charge which covered the two halves of the business will now be incurred to cover only one half of the line. Everyone will realise how composite companies will suffer when half of their business is taken away from them. Such companies at head office and in the country will only have one class of business to attend to as compared with the time when they were composite companies.

There is another point. The conditions under which insurance will be done here will be more onerous than in other countries, particularly in Great Britain. The foreign companies do about 10 per cent. of their business in this country. No matter how bad conditions are here it would pay them to carry on and to wait on until the native companies went to the wall. When the Irish companies are knocked out of business then the foreign companies will make their own terms with the Minister. For this reason I think the Minister should be very slow in going ahead with this provision. I know his main reason in insisting upon it is because of the fact that companies doing composite business are under great temptation to support their fire and accident business out of their life business. Certainly it is a practice which should not be tolerated, and I myself would be willing to support the Minister in taking most drastic powers to prevent it.

I did make a suggestion on another portion of the Bill, but a person is at a disadvantage in trying to introduce an amendment, because you have to attach the amendment to something, and it is not always satisfactory. However, I am making the suggestion that the Minister should make the regulations as drastic as possible, so that it would be impossible for companies in future to deal with their funds in this way. I think that would be a more satisfactory way of dealing with the matter than this way of cutting the companies in two, and leaving them with top-heavy overhead expenses, thus adding very considerably to the great task that the Irish companies, and, in fact, all insurance companies have, of bringing the expense ratio down to a proper level. It is not lack of capital so much as the difficulty of reducing expenses that has been the bane of Irish companies. Let the Minister's intentions be what they will, I am afraid that he is not going to improve the conditions under which Irish companies are doing business by insisting on this.

Mr. Costello

This amendment of Deputy Bourke's raises, as he has stated, the question of the principle embodied in the section. Beyond partitioning the business of life and general, accident, and all these other kinds of businesses it also raises some other points of detail on the proposal contained in paragraph (b) of the sub-section. I would prefer to deal with the general principle underlying the idea of the partitioning of the two classes of business when speaking on the section as a whole, but I may, in the course of the remarks I have to make on the amendment, make some observations on the general principle. Before I do so, I should like some explanation from the Minister as to the precise significance of paragraph (b) of this sub-section. I confess that I find the sub-section as it stands extremely difficult to construe. So far as I have been able to satisfy myself as to its meaning and intent, the sub-section appears to impose on Irish companies, which have hitherto been carrying on a composite business, the necessity of doing one of two things. They must either, immediately this Bill becomes law, drop their fire and general business, or else apply to the Minister for a licence to carry on fire and general business in conjunction with their life business for the purpose of enabling them to amalgamate with another company and also to transfer their fire and general business to still another company.

Leaving aside for the moment the position of an Irish office which has hitherto been carrying on a composite business, a life and general business, where the company decides to drop its general accident business, let us consider the position where they want to get rid of that business. Under the proposal in paragraph (b) they cannot merely transfer their general and accident business to another company. They must, first of all, amalgamate themselves as a life office with another life office or offices. Then they must find some other company to take over their general and accident business. So that you have this extraordinary position of an existing company carrying on, prior to the passage of the Bill into law, fire, general, accident and life business, and when the Bill becomes law, it can no longer carry on a composite business. It must carry on life and industrial insurance and, either drop the rest of its business, or proceed to amalgamate with another company. If it wants to carry on its composite business for a short time, it can only do so on the conditions laid down in paragraph (b). It must then, not merely carry on its life business, but it must find some other company to amalgamate with to carry on that life business. Then, having found that company, it must still find a third company to take over its general and accident business.

I cannot understand the necessity for this complicated provision. I could understand the Minister saying: "I will not allow a company to carry on a composite business which it had previously carried on; it must elect between carrying on life and industrial business and general and accident insurance." There is no power in this Bill to enable an Irish company carrying on a composite business to elect. It can only carry on life and industrial business. As far as I have been able to ascertain from a perusal of Section 12, an existing Irish company carrying on a composite business cannot elect to drop life and industrial business and carry on general business. It must drop its general business or amalgamate its life business with another company, and then find a third company to take over its general business.

I am quite unable to understand what is the significance of these proposals, what is the meaning of them. Why must an existing composite office, in order to get rid of, or to get more value for its general business have to amalgamate itself with another company in order to carry on its life business in getting rid of its general business? I cannot see the point of that. I do not know what is the meaning of it, nor do I appreciate what the Minister thinks will emerge from these complicated provisions. As a practical proposition, I should say it would be an entirely impossible achievement, and the net result of Section 12 (4) (b), so far as its effect on an Irish composite office, if passed into law as it stands, will be that each of the Irish composite offices will be obliged to drop its general business. They will not be able to sell that business to either of the two existing general offices in the Free State at present because, obviously, neither the Hibernian Insurance Company nor the Insurance Corporation of Ireland will pay anything for an asset which they can ultimately get for nothing by simply sitting down and waiting and doing nothing.

What is to become of the policyholders between the period when the Bill becomes law and the expiration of their policies? The company has no funds. It cannot carry on business; it cannot collect premiums, but, nevertheless, policies exist on which liabilities to a very considerable extent may accrue. Who is to pay these policyholders? Who is to indemnify them against the risk covered by the policies? Suppose I have a policy with an Irish company at present indemnifying me over a period of 12 months against my liability under the Workmen's Compensation Act, and this Bill becomes law, say, next month. I have paid one single premium covering me for 12 months. A workman in my employment meets with an accident in September, as a result of which he is incapacitated for life. Who is going to indemnify me against that liability? The Company with which I am insured cannot do so because they will be put out of business by this Bill when it becomes law. There is no company ready and willing to take over that liability, and, as I understand it, the effect of Section 12 (4) (b) on policyholders will or may be disastrous. Those are matters that I certainly would like the Minister to clear up. As I say, I propose to leave over the general question of partitioning business until we come to deal with the matter as a whole on the section, but assuming for the moment that this sub-section (4) (b) is going to be passed into law, I should like the Minister to direct his attention to the points I have raised and on which I am anxious to obtain information.

Mr. Lemass

I am disposed to agree with Deputy Costello that it is desirable that we should discuss the principle of the division of business on the section rather than on this amendment, although the amendment has more direct relation to it. My feeling, however, as to the wisdom of that course is based on the old adage that hard cases make bad law. I think that the case made by Deputy Bourke is a case which might appeal to Deputies, although not directed against the principle, because it is based on the inconvenience or difficulties that may be created for particular organisations by the application of the principle to them in present circumstances. I think that we should not fail to enact what is in my opinion a good principle, and a good provision to have in our insurance legislation, merely because it is going to create certain immediate difficulties. Those difficulties can be got over, and when the initial period has passed the operation of the principle will be such as to result in a considerable improvement in the general machinery for the conduct of insurance business here.

Deputy Costello raised certain points arising from the phraseology used in paragraph (b) of sub-section (4). I agree, and in fact I stated here upon another stage, that the phraseology of the section may require to be recast. It may require to be revised apart altogether from any additional provisions that may be inserted in the Bill, but, if the development to which I referred on the previous amendment should take more definite shape, some further amendment of the paragraph may be necessary in any case. It is the intention to provide that if a Saorstát insurance company, doing life or industrial business, and in a position that its solvency cannot be questioned, desires to continue to do life business, there should be no power to interfere with it. When saying that, I stress at the same time my point of view that the amalgamation of existing life and industrial assurance businesses, particularly industrial assurance businesses, is desirable, and the whole trend of Government policy and of the legislation enacted here should be in that direction. We are not, however, taking any powers to compel foreign companies to participate in any scheme of amalgamation, nor should we in these circumstances have power to compel an Irish company to participate in a scheme of amalgamation, unless there is in the circumstances of that company something which makes it desirable to do so.

There is this, however, in the provisions of the Bill, relating to the Saorstát and foreign companies to which Deputy Costello refers; as the Bill stands, a Saorstát composite office can, if it desires to do so, continue its life business and must dispose of its general business, whereas a foreign composite office can dispose of its life business and continue to carry on general business. The reason why the Bill is framed in that manner is because in the case of the Saorstát companies it seems that the general branch business, if divorced from the life branch, would not be supported by adequate resources to justify the granting of licences to the separate companies. I anticipate, however, that the companies may put forward proposals or a plan for some mutual arrangement for continuing their general branch business in a manner which will offer sufficient safeguards to the insuring public. As I have indicated, I am prepared in those circumstances to effect the necessary amendment to the measure on the next Stage.

There is also, of course, the point to which some Deputy referred last night, that a Saorstát composite company can only transfer its general business to another Saorstát company, whereas a foreign company can transfer to a foreign company. The sole reason why the Bill is framed in that manner is because it is designed to develop national insurance business, and it would be against that object to allow the transfer of the general business of any Saorstát composite office to a foreign company. In reply, therefore, to the points made by Deputy Costello, I admit at once that the wording of the section may have to be revised when the next Stage of the Bill is reached. It is not intended to prevent a Saorstát company continuing in life business where the circumstances of the company are such that there can be no public grounds for preventing it from doing so. It is proposed that a Saorstát composite office can only dispose of its general business. It can dispose of that general business not merely to some existing Saorstát company, but also to a new company to be established in accordance with the provisions of the Bill, or, as I have indicated earlier, to a new company to be established for the purpose, which would be facilitated by an amendment to the Bill which I am prepared to entertain. In relation to the foreign companies, a wider discretion is given —foreign composite companies are not subject to the restriction that they must dispose of their business to Saorstát companies. It might be difficult to arrange for that under the circumstances; nor do I think that it is necessary, bearing in mind that the Bill is designed by another method to increase the amount of Irish insurance business handled by Saorstát offices, and that we are relying upon that alternative method rather than on any direct transfer such as might be suggested, and is, in fact, suggested in some of the amendments moved.

Mr. F. Lynch

While I agree that the principle which is dealt with in this amendment can be appropriately discussed in discussing the section as a whole, at the same time I feel that this amendment is directed towards removing from the Bill the provision which is the most objectionable from the point of view of the Saorstát companies. If the amendment were carried, it would kill the whole principle of partition. I think there can be no question that it is extremely hard lines on those Saorstát composite offices which, for the last 12 or 15 years, have built up their businesses on both legs, as Deputy Bourke called it yesterday, and which were carrying on both businesses on a sound basis, their accounts being kept separate, and both sides of their business being kept financially sound. Taking their general business from such companies, undoubtedly, will place many of them in a position that will make it extremely difficult for them to carry on their life business. Their agents throughout the country have been carrying on both ends of the business, and while their time was mostly devoted to collecting industrial premiums or looking out for ordinary branch business, at the same time it was part of their duty to canvass, where they saw an opening, for life or general business as well.

I think that, undoubtedly, the effect of this proposal will be to render a good many of those people redundant and I am afraid that it will also have the effect, in spite of the proposal in the Bill that there can only be a transfer of the business to Saorstát companies, that eventually a considerable amount of the business will be transferred to foreign companies. At the actual moment of transfer, perhaps, it will be possible to carry the business over to either one or more Saorstát companies, if those companies accept the liabilities during the current year of insurance; but when that year has expired, if, for instance, as a result of the transfer the employe or the resident inspector of one or more composite offices finds himself redundant and out of a job, he will be snapped up, or may be snapped up, by one of the foreign companies. Anyone who knows anything of insurance business, especially of our fire and general insurance business, knows that it is to a large extent a very personal business and that the resident inspectors in the various counties have very great influence with the persons who insure; that mostly persons who are insuring against fire or against other contingencies of that kind are, to a great extent, indifferent as to what company covers their risk. There may be some, of course, who would be very insistent that their business should be done with Saorstát companies, but I should say that, for the most part, persons would be quite willing to go along with the particular inspector with whom they had been doing their business all the time and that if he came along and canvassed them and said: "These people have fired me," or, "I have lost my job with the company as a result of the Insurance Act of 1935, and I am now doing business with another company—a foreign company—and will you continue to do your business through me?"—if such inspectors came along in that way, I have no doubt that they could influence 75 per cent. of the premium incomes they were accustomed to collect and that they could influence it in whatever direction they wished.

As I have said, these companies have spent considerable sums in building up their fire and general business. There has been a great deal of enthusiasm, during years past, put into the making of that business, and they are now to jettison it without any provision whatever for compensating them for the work they have put into it and for the money they have spent in creating it. I see no provision in the Bill dealing with that question. This amendment should be pressed to a division, personally, because I think that the provision in the Bill—I refer to Section 12, sub-section (4), paragraph (b)—is probably the most objectionable provision in it.

Mr. Costello

The Minister has justified his refusal to listen to the appeals made to him by Deputy Bourke by reference to the old adage that hard cases make bad law. I think the Minister misapplied that adage, because here we are making the law and I think that Deputy Bourke's point is that we should make bad law in order to create hard cases. However, as we will have to consider this general principle on the section, I do not propose to go into it at the moment beyond indicating this: that I have not yet heard from the Minister any reason whatever justifying this principle of partition either in reference to Irish companies or in reference to British companies. I approach the proposals in this Bill with the knowledge that the Minister has a difficult problem to meet and solve. I approach those considerations with rather an open mind—prepared to be convinced, if the Minister can put up sufficient reasons justifying the principle of the partitioning of business that is enshrined in Section 12 of this Bill in reference to both sets of companies carrying on business. However, until such reasons have been given to me, justifying the conclusion that this is the best way of meeting that problem which exists in this country, and in the absence. of any reasons up to date, I agree that we must vote against the proposals contained in sub-section (4) of Section 12 of the Bill.

Now, I hope I am not unduly optimistic in inferring from the Minister's remarks that he himself does not like the provisions of paragraph (b) of sub-section (4). As I explained when I was speaking, I find them, from the point of view of phraseology alone, almost incomprehensible and, from the point of view of principle, entirely beyond my comprehension. The Minister stated he anticipates that proposals may be put to him by the Irish companies to carry out a plan for the transfer of their existing insurance business to another company to be formed under this Bill. If his anticipations are realised that will be all to the good, but anybody who has had any experience of the amalgamation of business knows of the almost insuperable difficulties that he in the way of carrying out successful amalgamations. It takes no great imagination to see what tremendous difficulties there are in the way of staffs, in the way of carrying the burden of existing liabilities, and providing for the continuance of the good-will of each of the amalgamated concerns in the new concern. A host of other matters will fall to be met with before any such plan as the Minister anticipates will be brought to a successful achievement. Personally, I hope the Minister's optimism is justified. Of course, he is a most optimistic Minister in every respect.

Mr. Lemass

I thought I would get this Bill through yesterday.

Mr. Costello

I think some sort of Coueism could hardly bring about what is proposed. I press the Minister between this and the next Stage to reconsider Section 12, not merely in the light of its phraseology but in the light of the principle involved. I cannot see why any existing Irish composite office should not be allowed to carry on that business for a period specified in the Bill if necessary, which would enable that company to transfer the general business to some other company and to realise some tangible asset in return for the goodwill which will be transferred. The proposal, if it stands, will benefit two companies. All they have to do under the Bill as it stands is to sit down and the business will fall into their laps. I do not say that that principle is enshrined in paragraph (c). If so, I should strongly object to it. The existing companies have something in the nature of good-will of their general business, which ought to be realisable as a saleable asset. The Minister, in paragraph (b) of Section 12 (4), is taking something away from these composite offices. That may not be his intention, but certainly that is the result of the proposal in paragraph (b). On the Report Stage, the Minister ought to make provision to enable these companies to carry on their business pending sale or transfer to another company. They ought not to be in the position of being obliged to get rid of an asset, which ought to be a saleable asset. The goodwill ought to be worth something to them, and they ought to be able to realise on it, because their business is very seriously interfered with by the Bill. One other point I should like to refer to. It came rather as a surprise to hear the Minister stating that he was anxious to see numerous other Irish companies being formed to carry on general accident business. So far as I was concerned, that was certainly something in the nature of a startling statement to come from the Minister. I would have thought that we had at present, between British, foreign, and Irish companies, sufficient people to prey upon this country. If we are going to have let loose the numerous other Irish companies that the Minister wishes to see started under the Bill, I do not know what is going to happen in the way of cut-throat competition. It may be that it would be good for the ordinary person who wishes to insure his life, his motor-car, or his servants, but I doubt that very much. I should like to know what is the reason underlying the Minister's tremendous desire to see numerous other Irish companies formed to carry on general accident business. We have plenty of accidents in this country, but I do not see that we have a sufficient population to support numerous Irish companies, the existing Irish companies, numerous British companies, as well as foreign companies. Perhaps the Minister would be good enough to enlighten us as to his reason for making the extraordinary statement he made.

Mr. Morrissey

The Minister's statement had the same effect on me as it had on Deputy Costello, that of letting loose a number of new companies on the people. I would not like to see an increased number of companies here. I would like to see a number of the companies we have carrying on insurance business more efficiently, and getting a greater number of people to cover their potential liabilities by way of insurance, because it seems to me that in that respect we are a long way behind other countries. What we want is not a greater number of new companies, but to be sure that the companies operating here will be able to meet their liabilities when they arise. As far as I am concerned my position on the amendment is this: I am prepared to go as far as possible with the Minister to ensure that the money set aside to meet the claims of life and industrial policy holders is not going to be taken for any other purpose. As far as the Minister's intention is concerned I think it is a sound one, but I am not satisfied that the only solution of the problem to be tackled is the proposals in Section 12. Does the Minister contend that he has not been able to devise any measure short of forcing the companies to divide their business?

Mr. Lemass

May I point out that it was more or less agreed that we would discuss the general principle on the section? At present we are confining ourselves to the phraseology of sub-section 4 and Deputy Bourke's amendment. I did not deal with the general principle at all.

Mr. Morrissey

It was intimated that before we deal with the general principle of the section a division will be taken on the amendment. That seems to me to alter the position. I do not see how we could divide on the amendment without discussing the general principle. Deputy Lynch stated that if the amendment was carried it would remove most of the objections to Section 12.

Mr. Lemass

It would only terminate this provision in so far as it relates to Saorstát companies.

Mr. Morrissey

The Minister will agree that that is the real trouble with most people as far as it relates to Saorstát companies. I am in favour of the Minister's intention so far as it relates to all companies, whether foreign or Irish. Anyone who gives it thought realises that there is danger in the present position. I am not at all satisfied that, in order to safeguard the policy holders from that danger, it is necessary to insist on the companies dividing up their business. Deputy Lynch stated quite rightly that, so far as the Irish companies, or any companies similarly situated are concerned, it is going to throw a great burden and great overhead expenses on companies in their infancy if they are compelled to carry on without fire and general business. The Minister knows quite well that in the case of Irish or any other companies starting, for the first 20 years their expenses are very much higher than the expenses of companies that have been in existence for a longer period. It is known to the Minister and to Deputies that the fire and general insurance business has been of great assistance to Irish companies. I doubt if the Irish companies would be able to carry on if the Minister's present intention was given effect to, because it means a loss of their fire and general insurance business, and means more than that—an increase in the expense ratio. It means also that you are going to kill the confidence of the people of this country in Irish companies. The people will be very slow to effect either life or industrial insurance with them.

Whilst I am saying that, I want to make it clear that if the Minister can prove to the House that, in order to safeguard fully the interests of policy holders, nothing short of what is contained in the Bill will suffice, then as between the companies and the policy holders I am with him. I am not at all satisfied, however, that the Minister cannot find safeguards sufficient for the policy-holders' interests without forcing the position that has been forced in the Bill. The Minister has talked about this only having certain immediate effects on the company and as if these difficulties would disappear in a year or two. He knows that this is not so. There will be certain very lasting effects, certain very definite effects as far as a number of the companies are concerned but, as I say, if this is the only solution we have, and we have to take this step in order to safeguard the policy holder, then let us take it. I am not, however, prepared to go as far as the Minister suggests until such time as he has informed the House that nothing short of what is contained in the Bill will provide adequate safeguards for policy holders.

Mr. Lemass

I am satisfied that there is no way of preventing the use of life policy-holders' funds for general branch purposes otherwise than by effective separation of the classes of insurance as proposed in the Bill. In any event, if the Bill contains that principle at all, it should apply to all classes of insurance companies, both Saorstát companies and foreign companies.

Mr. Morrissey

I agree on that.

Mr. Lemass

I could not possibly contemplate a position in which you would have a separation of businesses forced on the foreign companies and permitted, as this amendment is designed to permit it, in the case of a Saorstát company. On the other question raised by Deputy Costello, I may say that the aim of the Bill is to ensure that a much greater proportion of the general business arising hereafter will be done by the Saorstát companies. We believe it will be effective to that end. Because of that, it is clear that additional Saorstát companies will be required to handle it. The existing companies could not handle more than a small proportion of the total of general insurance business arising here. In any event, in relation to that class of business, the existence of a number of separate units, provided each of the units is sufficiently strong, is an advantage and not a disadvantage.

Mr. Morrissey

That is very questionable.

Mr. Lemass

I do not think so. I do not think anybody who has interested himself in this matter will take another point of view. In relation to general insurance business, there are advantages in having a number of separate units, provided each of the units is in itself adequately capitalised and is possessed of sufficient resources to put its stability and security beyond question. I do not quite know what Deputy Costello meant by the existing insurance companies preying on the public, because he used that phrase in a sentence in which he also referred to cut-throat competition. When he suggests that the Companies Association may sit around a table and say "Let us prey," does he mean that they are going to increase the cost of insurance?

Mr. Costello

You have taken power to stop that.

Mr. Lemass

If there is cut-throat competition, it means that the policyholders are not being preyed upon, because the meaning of cut-throat competition is the sale of a service at less than an economic price.

Mr. Costello

They are cutting the policy-holders' throats because there will not be any funds to meet their liabilities. That is what I meant by preying on them. It is quite compatible with cut-throat competition.

Mr. Lemass

That is not the usual sense in which that phrase is used. In any event I do not think that the perils of the jungle will be increased by the addition of a number of new Irish general insurance companies, because their development would, I think, synchronise with the development of an intensity of competition from other quarters.

Mr. Costello

I should be quite satisfied with the Minister's explanation if he is correct—and we must assume that he is correct—in his statement that the existing companies cannot handle all the business and that new companies are required. I must say that it comes as a complete surprise to me to learn that the existing Irish companies cannot handle as much business as they can get.

Mr. Lemass

Surely it is not suggested they can handle it themselves and not merely act as agents for placing the business elsewhere?

Mr. Morrissey

As your new companies will do.

Mr. Lemass

A greater portion of the business will be retained here.

Mr. Morrissey

It is very questionable. I should like to hear the Minister justify that.

An Leas-Cheann Comhairle

A direct vote on amendment No. 33 would render it impossible for Deputy Lynch to move the next amendment, No. 34, so in order to save amendment No. 34 I am putting the question: "That the words in paragraph (b), sub-section (4), `such licence is required by such company,' stand part of the Bill."

Question put: "That the words in paragraph (b), sub-section (4), `such licence is required by such company,' stand part of the Bill."

The Committee divided: Tá, 57; Níl, 26.

Tá

• Aiken, Frank.
• Bartley, Gerald.
• Beegan, Patrick.
• Boland, Gerald.
• Bourke, Daniel.
• Brady, Brian.
• Brady, Seán.
• Breathnach, Cormac.
• Briscoe, Robert.
• Concannon, Helena.
• Corbett, Edmond.
• Corry, Martin John.
• Crowley, Timothy.
• Davin, William.
• De Valera, Eamon.
• Doherty, Hugh.
• Everett, James.
• Flinn, Hugo. V.
• Flynn, Stephen.
• Fogarty, Andrew.
• Gibbons, Seán.
• Harris, Thomas.
• Hayes, Seán.
• Houlihan, Patrick.
• Jordan, Stephen.
• Keely, Séamus P.
• Kehoe, Patrick.
• Kelly, James Patrick.
• Kelly, Thomas.
• Keyes, Michael.
• Kilroy, Michael.
• Lemass, Seán F.
• Little, Patrick John.
• Lynch, James B.
• MacEntee, Seán.
• Maguire, Ben.
• Maguire, Conor Alexander.
• Moane, Edward.
• Moore, Séamus.
• Murphy, Patrick Stephen.
• Norton, William.
• O'Briain, Donnchadh.
• O Ceallaigh, Seán T.
• O'Dowd, Patrick.
• O'Grady, Seán.
• O'Reilly, Matthew.
• Pearse, Margaret Mary.
• Rice, Edward.
• Ryan, James.
• Ryan, Martin.
• Ryan, Robert.
• Sheridan, Michael.
• Smith, Patrick.
• Traynor, Oscar.
• Victory, James.
• Walsh, Richard.
• Ward, Francis C.

Níl

• Belton, Patrick.
• Bennett, George Cecil.
• Bourke, Séamus.
• Burke, James Michael.
• Byrne, Alfred.
• Coburn, James.
• Cosgrave, William T.
• Costello, John Aloysius.
• Desmond, William.
• Dillon, James M.
• Dockrell, Henry Morgan.
• Dolan, James Nicholas.
• Fagan, Charles.
• Brennan, Michael.
• Broderick, William Joseph.
• Brodrick, Seán.
• Finlay, John.
• Fitzgerald, Desmond.
• Lynch, Finian.
• McGilligan, Patrick.
• McGuire, James Ivan.
• McMenamin, Daniel.
• Morrissey, Daniel.
• O'Leary, Daniel.
• Reidy, James.
• Wall, Nicholas.

Tellers:—Tá: Deputies Little and Smith; Níl: Deputies Bennett and Fagan.

Question declared carried.

Mr. Lynch

I move amendment No. 34:—

In sub-section (4) (b), line 26, after the word "company" to insert the word "either" and at the end of paragraph (b), line 30, after the word "company" to add the following words and figures:—

"or for a period of three years to enable such company to form a subsidiary company for the purpose of transferring the said other assurance business of such company to such subsidiary company—such subsidiary company to have a nominal capital of not less than £100,000 with minimum paid-up capital of £35,000."

From what the Minister has said, this amendment should commend itself to him. He said he was anxious that an Irish company should be formed which would take over the business that the composite offices would be forced, under paragraph (b), to transfer to some other Saorstát company. I am not tied down to the amendment as it stands in the sense that this provides room for each company to form a subsidiary company of its own. But I think that a period of three years should be allowed the companies to enable them to come together and to see whether they could not, between them, form a new company which would take over the business that they have been carrying on for a number of years and the good-will of which they have got. This would enable them to take over the fire and general business of the Saorstát's companies that will be affected by this section.

From what the Minister has already said, this amendment should commend itself to him. I understand that the Minister would be prepared in the formation of such a company to consider a smaller nominal and a smaller paid-up capital than is provided for elsewhere in the Bill. This amendment suggests a nominal capital of £100,000 and a paid-up capital of £35,000. Those figures would appear to me to be sufficient to meet the case. The important thing would be to give the companies a three years' period to enable them to come together and see whether such a company could not be established. The staffs of the composite offices would be less likely to lose their employment than they are as the Bill stands at present.

Mr. Lemass

The Deputy quoted me as saying that I was anxious that a new company would be formed to take over the business of Saorstát offices. I do not think I used the word "anxious." I intimated that if there was a desire to do so and if a scheme were formulated which was sound in every other respect, but did not provide for the minimum capital stated in the Bill, that I am prepared to consider an amendment which would meet the position. That fact was conveyed to the interested companies some time ago and no doubt they have had the matter under consideration since. I do not think I could agree to the proposal that the time during which the composite companies should be allowed to carry on business should be extended to a period of three years. While the time was not actually specified in the Bill, I had a much shorter period in mind than three years. Neither would I be prepared to say that a paid-up capital of £35,000 would be sufficient. I think that amount would be regarded as inadequate. But, of course, in say- ing that I have in mind a company that would propose to do all classes or most of the classes of general business to which the Bill refers. A company proposing to do only certain of these classes or even one class of them might be adequately capitalised by £35,000. Therefore, my opinion upon that is subject to certain qualifications. The Bill aims at securing the transfer of the nonlife business of the Saorstát composite companies to an existing Saorstát company or to a new Saorstát company with sufficient capital resources to justify the undertaking of it. That purpose would be defeated if the amendment were accepted. On the two questions, therefore, raised by the amendment my position is that I would regard the period of three years as too long. In any event I think it is better to leave the period indeterminate as the Bill provides.

As to the question of paid-up capital, in the ordinary cases £35,000 would be insufficient in relation to a company formed to take over the general business of the existing composite offices. On the question of the introduction of an amendment which would provide for granting a licence to such a company even though its paid-up capital was less than the £100,000 which the Bill provides in the case of new companies, I would like to reserve my opinion as to what that paid-up capital would be until I have precise information as to the class of business proposed to be done and the effect on the position of the company of the arrangements made with existing composite offices.

Mr. Dillon

The Minister says he communicated at some stage with the interested offices his readiness to amend this Bill in such a way as to enable the composite offices to float, under less stringent capital terms than the Bill proposes, a new company for the purpose of taking over their business. To whom did the Minister communicate that willingness on his part? I never heard of it. I was interested in the proposals made to his Department between the period of the Committee Stage of the Bill and the present stage of the measure. I never heard of any proposal by which the Minister would assist the Irish insurance companies in this matter. I would be very grateful if he would let the House know to whom he communicated his readiness to agree to a scheme of that kind. Deputy Lynch's amendment is intended to facilitate the existing compauies to divest themselves of their business. Why is it under Section 12 (4) that the Saorstát company is required to divest itself of its general business to a Saorstát company, whereas under Section 12 (7) an extern company is free to divest itself of its general business either to a Saorstát company or to an extern company? When the time comes for disposing of the general business, the difficulty will be to get a price for it. If the company has been making profits in the past, the wider the market the better chance there will be of getting a good price. Why are Saorstát companies constrained to sell in a restricted market, while the extern companies are free to sell to any licensed insurance company in this country?

Mr. Lemass

I dealt with this question during the discussion on the amendment relating to that matter. The reason that a transfer of the general business of a Saorstát company can only be made to a Saorstát company is that the business at present is carried on by a Saorstát company, and the object of the Bill is to develop such business in the Saorstát. In these circumstances it would be against the object of the Bill to allow the transfer of a Saorstát business to a foreign company or companies. The same consideration obviously did not apply in the case of existing foreign companies at present doing a composite business here. In my opinion, it is not desirable to require those companies to dispose of their general business to Saorstát companies, because Saorstát companies might not be in a position to take over such a business. In any event, there is this other difference between the provisions made in the Bill for dealing with the Saorstát and foreign companies, that the Saorstát companies must dispose of their general business. The foreign company may dispose of either branch of its business. That matter was fully referred to by me when discussing the previous amendment; on the other question raised by Deputy Dillon, I may say that the communication to which he refers was addressed to the Saorstát companies that were interested.

Mr. Dillon

I think all the Saorstát companies were interested in the matter to the extent that they were acting together. I have no reason to believe that any such communication as the Minister states was issued from his Department reached certain companies with the affairs of which I am familiar. I would be glad if the Minister would satisfy himself that that information, which he says he had communicated, reached all the Irish insurance companies who are presumably interested in this information, or whether it was addressed to a selected few. I have no doubt, if the latter assumption is true, the Minister will call for an accounting from the person who made a communication like that to one or two companies, and withheld it from the others.

Mr. Lemass

Judging by the correspondence which followed the original letter, I am quite satisfied that all the Saorstát companies are aware of it.

Mr. Dillon

I hope the Minister will look into the matter. I am sure he will agree with me that a communication of that kind should have gone to all the companies. It is obviously undesirable that individual ones would have such notice while others are left without it. I see the reasons that have actuated the Minister in restricting the Irish companies to selling their business to Irish companies and giving foreign companies free play. But surely it is inflicting an altogether unfair burden on the existing Irish companies to ask them to co-operate so far as that with the Government's policy. For instance, you have five Irish companies who have this class of business to dispose of. You have the Hibernian Insurance Company, which might take it from them, and you have the Insurance Corporation of Ireland, which might take it from them. You have then the possibility of these five companies or a group of them forming a new insurance corporation to handle the fire and general insurance business. They are restricted to two potential purchasers and they have to take what the Hibernian or the Corporation will give them, or go without.

Suppose one of these companies, which is at present a composite company, is notified by the Minister after the passage of the Bill that it is insolvent as to its life business, it must dispose of its fire or general business immediately, if it has kept separate funds, and I take it under the terms of the Bill it would still be allowed to dispose of the fire and general business provided it was solvent. That would mean it would have to dispose of it immediately, but in a very restricted market of that kind they would have simply to give it away. Suppose the Minister feels that no matter what considerations are advanced he must insist on the disposal of the business to a Saorstát company, can he not get out of the difficulty by saying that any person acquiring the business must acquire it on an actuarial valuation? In the case of fire and general business it would not be necessary to have an actuarial valuation; all you would need is an ordinary valuation of what the business is worth and you might provide a board of assessors before whom the matter could be brought, and it could be transferred on that valuation. The Minister could say that an Irish company might either sell its business or bring it before the board of assessors, have it valued and transferred at the valuation. Unless some such right is given, and unless the selling company is given some power of exacting the value of its business, I feel that Irish companies will be obliged to jettison their fire and general business, because they will be unable to get the market price.

Mr. Lemass

The Deputy cannot represent the position as being one in which this composite office will be suddenly notified that they have to-dispose of their general business. They are aware now of the provisions of the Bill—they have been for some time. In fact, the Irish composite offices, which are three in number, have had discussions with me and with officers of the Department, and they are already giving consideration to these provisions in the Bill. There are alternative courses open to them. Each of them can dispose of its general business to an existing Saorstát company. They can arrange for the formation of new companies that will be qualified for a licence, and I have intimated my willingness in relation to them and their existing business to accept an amendment to the Bill which will permit of a new company being formed to take over the business without conforming to the requirements as to minimum capital which is set out here.

As to the companies being aware of that fact, I discussed it with representatives of the companies concerned as well as sending communications to confirm what I have stated. I am quite certain they are fully informed on that point. It is not impossible before the Bill comes into operation, or certainly before the withdrawal of the temporary licence is effected, that these companies will have made satisfactory arrangements to deal with the position.

Mr. Costello

The Minister is not quite correct as to the alternative courses open to Irish insurance companies. He stated one of the courses open to the company was to transfer their general business to an existing Irish company. They cannot do that under paragraph (b) of Section 4 unless at the same time they amalgamate their life business with another company.

Mr. Lemass

I explained to the Deputy that the phraseology of that paragraph may require revision. I do not wish to be put in the position of having, in relation to an Irish company, of the solvency of which there can be no question, greater powers in that respect than I would have in relation to a foreign company doing the same class of business.

Mr. Costello

Do I take it the Minister's intention is to secure by an appropriate amendment that one of the courses open to Irish composite offices is to transfer existing general business to an existing Irish company without the necessity for amalgamation?

Mr. Lemass

Yes. Again I want to qualify my statement, because I am anxious to secure an arrangement in relation to these matters which may enable the intention of the Government to be fulfilled while at the same time meeting quite reasonable objections which the companies have to put forward. In relation to this class of business, particularly industrial assurance business, I think amalgamation is a good thing for everybody concerned, the companies, the insured persons and the public. I would like to see that amalgamation effected. My statement that a number of sound units is desirable applied only to fire and general business. In relation to industrial assurance business, I think we might take the reverse position and say that one company, properly organised, would be the proper arrangement. We are not taking powers under this Bill to create that position compulsorily, but I hope that as a result of forces that will be set in motion consequent on the passage of the Bill, the tendency will be in that direction and we may get voluntary co-operation in effecting amalgamation, even in relation to a solvent Irish company. I would not care to be in a position to use compulsory powers where such compulsory powers did not exist in relation to foreign companies doing the same class of business.

Mr. Dillon

What the Minister says makes me rather uneasy. It is very easy to say that things are going to be put in motion which will tend towards amalgamation and the survival of only one company for industrial assurance because the Minister is of opinion that industrial assurance can best be effected for the populace as a whole through one company. That sounds harmless. But suppose you have a perfectly sound company doing a sound business on the most conservative lines and it finds itself, in due course, confronted by the amalgamation of a number of other companies who have got themselves into deep water through resorting to practices which a solvent company will never resort to, and which, as a result of resorting to such practices, have spread themselves a bit further afield. Suppose these unsound companies come together with assistance from the Minister who avows his intention of promoting amalgamation, a situation may arise in which you have a number of unsound companies amalgamated into one supported by funds supplied by the Minister, going out on a campaign of strong competition against a comparatively small company whose only crime was that it maintained itself solvent at the expense of the expansion that it could have purchased by making itself insolvent. That alarms me. I feel that, if the Minister is going to make up his mind to use State pressure to enforce amalgamation, he ought to use legislative pressure to do that.

Mr. Lemass

We are not proposing to do that now.

Mr. Dillon

I do not think that it is desirable at all to force any solvent company into amalgamation against its will. I do not think that State influence or State pressure should be used towards that end. The Minister says now that he hopes to set in motion a series of forces that will promote amalgamation. We all know that if the Department of Industry and Commerce, supported by the Department of Finance and the Industrial Credit Corporation, put their minds down to it they can make the position of an independent company operating exclusively in Saorstát Eireann virtually impossible. I would much sooner that they would come out into the open, announce their intentions and allow substantial justice to be put into this Bill rather than that they should adopt a vague policy of imposing amalgamation on companies through indirect pressure. I would ask the Minister to elaborate what he meant when he said that forces would be set in motion which will tend towards amalgamation. Will he say what are those forces, and how he proposes to influence development in that direction?

Mr. Lemass

The forces of commonsense.

Mr. Dillon

I regard this as a serious business. The Minister may legitimately take the view that certain lines of action are commonsense lines of action. I may take the view that they are not. If the Minister has certain lines of action in his mind, I would be glad if he would tell us what they are to see if we can adapt our position to what his intentions are.

Mr. Lemass

I do not propose to say any more about it. So far as this Bill is concerned, we are not taking power to compel the amalgamation of all companies that are doing industrial insurance business here. At some stage that may come, but there is no proposal at the moment to legislate for it. At the same time, I think that it will become more generally realised that that is the desirable arrangement. All the experience of larger scale units in operation, perhaps the example of other countries and other factors will, I think, operate to create a position in which there will be a more general realisation, both amongst interested parties and the general public, of the desirability of unification, or at any rate a much greater degree of unification than now exists in industrial insurance business.

Mr. Costello

I would be glad if the Minister's anticipations were realised, and that the existing composite offices were able to put up a plan to him which would be acceptable to him and also to the companies. But we have to envisage the difficulty which must exist before such a plan can come to fruition, and realise that it may never come to fruition. Under the Bill the composite office is to drop its general business. What I want to know from the Minister is, what is to become of the policy holders whose policies are unexpired at the time this Bill comes into operation? An office has been carrying on business for some years, and it cannot suddenly drop down on one section of its business.

Mr. Lemass

We are not releasing it from its liabilities.

Mr. Costello

But it cannot carry on business if it has no funds. It has staffs perhaps with whom it has contracts extending over a period of five years or more—specialised staffs brought into the concerns some years ago whose contracts are still in operation. Surely, some provision ought to be made to deal with matters of that kind. It is not sufficient, nor is it just, that companies should be left there holding a non-existent business with no assets, or very little assets, and with perhaps heavy contingent liabilities.

Mr. Lemass

Why does the Deputy say that there are no assets?

Mr. Costello

The business was the asset. The goodwill is gone. It is an unsaleable asset in normal circumstances under the provisions of this Bill.

Mr. Lemass

The various reserves which a company doing general business will have built up against these liabilities at any time would still be there, and we must presume that its claims to experience are not likely to be anything worse because of the fact that it is going out of business.

Mr. Costello

I speak tentatively on the subject of insurance business. I should think, however, that it is run on actuarial calculations of normal risks, and that one of the risks not anticipated is the risk of a Bill of this kind coming in, and the separating of their risks over a period of years on an actuarial basis.

Mr. Lemass

As regards general business, they carry on on a year to year basis. There is no continuing contract extending over a period of years.

Mr. McGilligan

With policy holders?

Mr. Lemass

Even in the case of policy holders. So far as a company doing ordinary accident business is concerned, it enters into contracts from year to year.

Mr. Costello

Take the case of a company which holds premises under a lease at a large rent. When taking those premises they anticipated naturally that they would be able to carry on business for years. That is a thing that will now become not an asset but a liability to the company. That is just one example of the effect that this Bill may have on existing composite offices.

Mr. Lemass

What we propose to do is to give them reasonable time to make arrangements to deal with these difficulties, and that is what we are doing.

Mr. Costello

Time, I suggest, is a very poor substitute for cash or for a business, or for the value of goodwill, and that is what is being destroyed here. The value of the goodwill in this business is being completely destroyed, and nothing is being left to the companies but liabilities. Perhaps this is an aspect of the case to which the Minister would give consideration.

Mr. Lemass

I agree fully that if we were to step in and say to a company doing any class of business—I am not thinking now of insurance business only —that it may not, after a certain date in the future, continue to do that business, certain difficulties would immediately be created. My justification for doing it in this case is the desirability of effecting a change. I think the advantages to be secured by effecting the change outweigh the disadvantages and that, as a change will probably become necessary in any event, at some stage, it is better to effect it now than later. At any rate, the difficulties and inconvenience caused to Saorstát companies will be less now than they may be in the future. Nevertheless, we think we are putting these Saorstát companies in a position in which they can get out of the situation without loss, by arranging for the transfer of this business to existing companies, or to a new company, as the case may be, and the carrying on by the company of the retained business which may become, and should become, more valuable in the future.

Mr. McGilligan

Can they off-load all their contracts? Can they force any other contracts which are an obligation on them on the company which takes the transfer?

Mr. Lemass

I should not like to answer that question straight away. I know there are some companies which have made rather fantastic contracts with some members of their staffs, and they may create certain difficulties, but they will be comparatively slight difficulties compared with the general amount of business which these companies are going.

Mr. McGilligan

Therefore, it ought to be a good thing for the transferee to take even these fantastic contracts with staffs over?

Mr. Lemass

Some of the officials of some of the companies here have put themselves into positions in which they have contracts of a most unusual and very onerous kind.

Mr. McGilligan

Formed under ordinary business conditions.

Mr. Lemass

I am not so sure about that, either.

Mr. McGilligan

Was there anything wrong about them?

Mr. Lemass

No, but I think the practice which has developed in that regard in one or two cases was rather open to criticism, having regard to the interests of the policy holders and the shareholders in these companies. I will say that.

Mr. McGilligan

And who is it going to be taken out of now?

Mr. Lemass

These companies which are doing a composite business, in so far as they have contracts with their staffs, will presumably have to discharge these contracts. We are talking about the disposal of a portion of the business they were doing previously.

Mr. McGilligan

But which carried these fantastic contracts.

Mr. Lemass

Not necessarily. In fact, as Deputy Fionán Lynch pointed out, the majority of the members of the staffs of these companies were engaged in both classes of business, and there are very few who specialise in the one form of business.

Mr. Costello

Surely that is not right? Surely a person looking after employer's liability business or motor car business will not at the same time be doing industrial assurance business?

Mr. Lemass

Not all. Some of them may be specialists.

Mr. Costello

I fancy, speaking with almost complete ignorance of the practice of insurance companies, that it would be very surprising to learn that an agent or a manager dealing with the accident branch of a composite office would also spend portion of his time dealing with the industrial branch.

Mr. Lemass

I was talking of staffs in general.

Mr. Costello

I want to make it clear, without being unduly sticky on this point, that while I mention the point of the staffs, I am certainly not looking after the interests of persons with fantastic contracts or contracts made with a view to this particular legislation. What I am looking after is the interest of the policy holders or even the interest of, say, an injured workman. Suppose there is a man in the employment of a person who has a policy with company A. The person who has that policy may not be a mark for the amount of the liability that is covered. The liability is instituted, say, last year, but, by reason of the seriousness of the accident, will last for the rest of that workman's life. This company A is going out of business so far as that accident business is concerned.

Mr. Lemass

But it is not released from liability under its contracts.

Mr. Costello

I know it is not released as a legal proposition, but I am speaking of it as a practical proposition, and, as a practical proposition, it should have against that liability a certain reserve fund sufficient to cover it. How can the Minister be sure of that? Has he considered that aspect of the case in connection with these proposals? I agree that if the company had power to sell its goodwill—call it that for want of a better name—freely, the situation from the point of view not merely of policy holders but persons who have obligations against, or rights enforceable against, the policy holders would be that their interests would be protected. Take the instance of a workman who has met with an accident arising in the course of his employment. His real security for his compensation is not his employer but his insurance company, looked at as a practical proposition. If, suddenly, the insurance company, which is the source of his compensation and the real security for it, is interfered with in its business—it may be true to say that as a legal proposition the liability is still there and it may also be true to say that there ought to be sufficient funds to meet it—as a practical proposition, I rather fancy that that man's security is very seriously prejudiced, if not completely jeopardised.

Mr. Dillon

Let me put another point to the Minister. I recognise that you cannot legislate for exceptions, but surely we are not working around to the position that a solvent company in this country is an exception? It does not seem to me to be any defence for doing companies substantial injustice in this matter of assigning to say that certain ones of them have oppressive and unusual contracts with their officers, because, if there are such, and there may be, there are others that have no such contracts and who should be put under no such penalty. I do not know whether the Minister has touched on this point. Most of these companies who engage in fire and accident business are tariff companies and have tariff contracts with the tariff groups in Great Britain. Some of them are not tariff companies and have been constrained to do their reinsurance through Lloyds. None of them, and I do not suppose any insurance company in the world, could meet its fire claims out of its own funds. All of them lay off a considerable part of their liability by way of reinsurance. Is any provision being made to ensure that the tariff agreements which certain of the companies have will be carried over to any new amalgamation that may be set up under this Bill, and, if such an arrangement is not made, how is that difficulty going to be overcome?

Mr. Lemass

The difficulty of reinsurance?

Mr. Dillon

Yes. Suppose, at the date of amalgamation, there are a number of claims current, all those claims having been covered through the tariff agreement with the group of companies in Great Britain who are within the tariff ring. The companies purport to assign to the new amalgamated company their risks and assets. They must be in a position to assign only their risks qualified by the tariff reinsurance they enjoy, but the companies who have made a tariff contract with one of the amalgamated companies cannot be compelled to consent to the assignment of that tariff contract to the amalgamated company.

Mr. Lemass

The risk will be terminated by the repayment of the unexpired portion of the premium.

Mr. Dillon

Suppose the Minister is an insurance company and he takes a claim for £100 and lays off 80 per cent. of it to the tariff ring? That risk is from 1st January to 31st December. On 1st July, he amalgamates, and, in the process of amalgamating, he assigns to the amalgamated company all the risks and assets current. Every risk he assigns carries with it a tariff reinsurance and the tariff ring in England says "We will not consent to the assignment of our reinsurance contract to the amalgamated company." What is going to happen? I move to report progress.

Progress reported: Committee to sit again later.