Molaim: "Go léifear an Bille don dara h-uair anois".
Is é is cuspóir don Bhille seo trí leasú éagsúla a dhéanamh ar reachtaíocht dlí árachais — leasuithe a bhaineann le Cuideachta Árachais Saoil na h-Éireann Teoranta, le ráthaíochtaí onnmhairithe agus le ráthaíochtaí i ndáil le hiasachtaí ón mBanc Eorpach Infheistíochta.
This short Bill contains three separate amendments of insurance law. The first relates to Irish Life Assurance Company and the Insurance (Amendment) Act, 1938, under which the company was set up. The purpose of the amendment is, primarily, to allow Irish Life to enter the non-life insurance market in Ireland through a subsidiary company. The second amendment refers to section 2 of the Insurance Act, 1953, which covers export credit insurance. It is proposed to increase the aggregate of the Minister's liability under export credit insurance policies from £100 million to £300 million. The final amendment affects the Insurance (Amendment) Act, 1978, which was introduced to allow banks to do certain types of guarantee business, and is by way of confirmation that banks licensed in the State can guarantee loans issued by institutions such as the European Investment Bank for industrial development projects in this country.
Many Deputies will be familiar with the history of Irish Life, but it is worthwhile recounting that the company was brought into being by the Insurance (Amendment) Act, 1938, to take over the business of several existing insurance companies which had run into financial difficulties. The 1938 Act enabled the Minister for Finance to contribute the very large sum in those days of £1 million towards meeting the deficiencies in the funds of the insolvent companies in question. The 1938 Act provided that the business of these companies would be transferred to a special company referred to in the Act as the terminating company, which would, in time, transfer the business to a company known as the Permanent Company. The transfer to the Permanent Company was effected in 1947 and this Permanent Company is now known as Irish Life Assurance Company Limited.
I do not think anyone can doubt that the measures taken by the Government in this case have resulted in one of the major successes in public enterprise. Irish Life is now our largest insurance company with assets in 1980 of over £700 million. These assets, which represent the savings of individual policy holders, have provided valuable investment funds for the economy as a whole. The performance of the company's investments has ensured a continued and sustained growth in premiums to the company. The success of Irish Life's investment policy is a tribute to its business acumen and to the freedom of action and flexibility allowed to the company in such matters. This is essential in the area of life assurance where the company is competing with many other insurers who enjoy this freedom. Thus while the Minister for Finance controls the shares of the company, Irish Life is in practice run on a strictly commercial and independent basis.
Within the past few years there have been important changes in insurance in this country mainly stemming from moves to open up the Irish market as a result of EEC Directives. Already we have seen the implementation of the EEC Non-Life Directive in 1976 which provided easier access to our non-life market for EEC insurers. A similar effect on the life assurance market will emerge when the EEC Life Directive is brought into force shortly. Of course, liberalisation in the EEC works both ways. We gain access to other EEC markets and I would certainly like to see Irish insurers take more positive steps to expand into these markets.
Irish Life itself has sought to diversify and extend its activities, for example, into overseas markets. The company has recognised the desirability both for its own investment portfolio and from the point of view of extending the range of insurance services to its clients, of being able to engage in the non-life insurance market. Being able to compete in both markets will strengthen the company's domestic base. Under Irish insurance law, and indeed in an EEC context under the First EEC Life Assurance Directive, it is not possible for a company which is authorised, for example, to transact life insurance, to engage in non-life insurance, and vice-versa, except through a subsidiary company.
There are several examples of such subsidiary companies already in the Irish market. However, the Insurance (Amendment) Act, 1938, places an even greater restriction on Irish Life by providing that it can only carry on life assurance business and it cannot, therefore even by way of subsidiary company, engage in non-life insurance. The basic purpose of the first section of the Bill is therefore to remove this restriction and allow Irish Life to establish or acquire such a non-life subsidiary. This does no more than place the company on the same footing under insurance law as any other life insurance company.
Deputies will know that Irish Life has made a successful offer for a majority holding in the share capital of Church and General Insurance Company Ltd., which has been in business since the early 1900s. This offer was conditional on the enactment of legislation enabling Irish Life to make the necessary changes in its memorandum and was also subject to a decision by me not to make an order under section 9 of the Mergers, Takeovers and Monopolies (Control) Act, 1978. As I mentioned in the Seanad, I have decided not to make such an order and I am allowing the take-over to proceed.
I am confident that this new partnership between Irish Life and Church and General will redound to the benefit of the policy holders of both companies. Church and General in the recent past have expanded their business considerably, underwriting risks other than those related solely to Church interests. There is every reason to believe that the take-over by Irish Life and the strengthening of Church and General's base, which this will provide, will enable this expansion in business to be maintained and will help to increase the share of the insurance market underwritten by native Irish offices. For Irish Life the acquisition of Church and General involves a closer relationship with a continental insurance company which has a substantial equity holding in Church and General. This connection with a leading continental insurer should benefit Irish Life in any plans to extend operations in that market. I am hopeful that Deputies will agree that this take-over is indeed a welcome move, involving an important strengthening of the native Irish interest in insurance, and the prospect of involvement in the European insurance field.
Finally, still on the subject of Irish Life, the Bill also provides in section 1 for two further slight amendments to the Insurance (Amendment) Act, 1938. The first will enable certain purely technical changes to be made in the memorandum of association of Irish Life, to bring the description of life assurance contained therein into line with the EEC Life Assurance Directive. The second will allow Irish Life to delete certain spent provisions from their memorandum. These latter amendments which arise out of the particular wording of the 1938 Act are basically of a technical nature and do not make any real change in the company's position.
Section 2 of the Insurance Act, 1953 enables the Minister for Trade, Commerce and Tourism, to give guarantees with respect to the insurance of risks in connection with exports. Under the Act, the aggregate amount of the liability at any time for principal moneys in respect of export guarantees was set at £2 million. With the sharp growth in our exports since then, this figure has been successively amended, reaching the present limit of £100 million in the Insurance (Amendment) Act, 1978. Already, however, this latest limit is in danger of being breached. At the end of 1980 the actual aggregate of liability stood at £68.1 million. the opportunity is being taken in this Bill therefore, to amend the relevant Insurance Act and increase the present limit to £300 million. I know that the size of this increase is large, but it has been set at this level so as to keep pace with the expanding value of our exports and to remove the need for further upward adjustment of the limit for several years.
The availability of export credit insurance is an important asset to our exporters enabling them to minimise the effects of a wide range of commercial and political risks involved in exporting. The presence of an export credit insurance policy is also of considerable value as security with banks when the exporter wishes to raise working capital. The recently introduced export credit finance scheme for goods sold on short term credit bears testimony to this. The scheme is proving to be very attractive to exporters and in itself will encourage greater use of export credit insurance.
I am sure the House will agree that against this background the increase now proposed in the State's liability is a price worth paying to maintain this important export support.
The final provision in this Bill confirms that licensed banks in this country can guarantee loans made by institutions such as the European Investment Bank to industrial development projects in this country. The Insurance (Amendment) Act, 1978, allows licensed banks to undertake certain types of guarantee and suretyship business specified in the Act, which were previously regarded as insurance business. Unfortunately certain doubts have arisen as to whether, within the exact and very specific terminology used in the 1978 Act, licensed banks are allowed to guarantee loans from the EIB. The EIB requires guarantees for its loans and it was the intention in 1978 to allow such loans, amongst others, to be covered by bank guarantee. In order to put this matter beyond any doubt it has been decided to amend the 1978 Act in the manner set our in section 3 of the Bill. The provision of EIB loans is important for this country given our development needs and I feel that Deputies will be willing to agree the small amendment provided for in section 3 of the Bill.
Finally, before commending this Bill to the House, I may say that it has been the intention for some time to undertake a complete overhaul of Irish insurance legislation in general. This exercise is complex but is well advanced and I hope to introduce the necessary amending legislation fairly soon. For this reason, the present measure has been limited to the few specific items for which there is an immediate need and which could not await the finalisation of the major Bill now being processed.
I recommend this Bill to the House and I am hopeful that Deputies will be agreeable to enabling the Bill to be passed speedily. Molaim an Bille seo don Teach.