Dáil Éireann díospóireacht -
Wednesday, 22 Feb 1989

Vol. 387 No. 5

Private Members' Business. - Insurance Bill, 1987: Committee Stage (Resumed).

Question again proposed: "That section 43 stand part of the Bill."

Question put and agreed to.

SECTION 44.

Mr. J. Bruton

I move amendment No. 37:

In page 24, in line 28, after "insurance broker" to insert "or insurance agent".

This amendment is to give power to the Minister to require bonds of agencies as well as of brokers. The arguments made earlier in relation to this part of the Bill dealt with potentially unfair competition between brokers and agents, in that agents do not have the same heavy responsibility in relation to indemnities, maintaining office standards, etc., as brokers have. One of the problems relates to indemnity insurance and that is why I suggest that both might have to have indemnity insurance. The arguments have been made already and I do not want to go any further into them.

Minister of State at the Department of Industry and Commerce (Mr. S. Brennan)

I take it we are talking about adding "insurance agent" after "insurance broker" in this section. It is not proposed that agents would require professional indemnity. It is proposed that brokers will have professional indemnity and the reason is that under section 50 of the Bill insurance agents are already provided with partial professional indemnity. Indeed, under that section, insurance companies are fully responsible for tied agents and under section 51 the insurance company will be responsible for premiums paid to intermediaries for renewal and accepted proposals. Because of the responsibility of the insurance company for the agents, as it were, it is not necessary to lay the professional indemnity requirement on the agency.

Mr. S. Barrett

In relation to the amendment, does the Minister not accept that an agent could give advice to a member of the public and is, therefore, acting as an agent? Surely the whole idea of professional indemnity insurance is that, in the event of a claim for negligence being brought against a person, there are means to meet a particular claim. There is a very big difference between a tied agent and an agent. A tied agent is tied solely to a particular insurance company whereas apparently this Bill is endeavouring to provide for brokers, semi-brokers and tied agents. The whole concept of professional indemnity insurance is to have cover in the event of a claim for negligence being brought against you as a result of improper practice or advice.

Mr. S. Brennan

I appreciate the Deputy's point that there is a difference between agents and tied agents. However, because of sections 50 and 51, it is not necessary to lay down professional indemnity insurance as a requirement for agents because of the large responsibility which the company have for the agents, tied or otherwise. It is clear from section 51 which company the agent was acting for and, in those circumstances, the person who might feel that his or her agent has been negligent would almost certainly have a case against the company via the agent for professional negligence.

It is quite clear why brokers should have professional indemnity but there does not seem to be any requirement or need for it in relation to agencies because of the fact that we are now effectively making companies responsible for agents.

Mr. S. Barrett

Section 50 defines a tied agent and, by its very nature, it means a person who is tied to a particular company and who clearly acts on behalf of that company. However, we are talking about a sort of semi-broker who acts for eight particular companies and I do not think one could argue in law that a person is tied to eight companies. A tied agent means that if I am selling insurance I am acting on behalf of a company to which I am tied, whereas an agent with four companies on the general side and four on life has discretion as to where he or she will place the business. They are not tied to a company and, therefore, they play the role of broker and decide to which company they will give the business. Surely claims for professional negligence can arise in those instances? It is different when you talk about the treatment of premiums paid to intermediaries, that is where somebody is acting as an agent on behalf of an insurance company and the company accept liability for the premium collected on their behalf. However, we are talking about professional negligence and there is a very big difference between that and collecting premiums for somebody else. I think Deputy Bruton is right.

Mr. S. Brennan

Let me point out that when I refer to section 51 I am referring to the new section 51 which I propose to insert in the Bill and not the section currently marked as section 51. Under the new section it would be clear which company the agent is acting for. If we take the case of an agent acting for a maximum of four it would be clear under the new section 51 which of the companies the agent is acting for in each case. Therefore an aggrieved person who feels that an agent has acted in an negligent manner could take a professional negligence action against that company. It would be possible to identify the company in question.

Mr. S. Barrett

The Minister of State is missing the point. We have a solicitor present among us whom, I am sure, has professional negligence insurance. A professional negligence claim can arise from the giving of improper advice to a person who suffers as a result. If I were to give advice to individuals and then decide where I am going to place that business I would be acting as an independent agent up to the point where I decide that I will give the business to a certain company. We cannot change the law of agency as it is traditional along with all the general principles of insurance.

Mr. S. Brennan

We are changing the law of agency.

Mr. S. Barrett

One cannot change the law of agency just like that.

Mr. S. Brennan

That is what we are doing.

Mr. S. Barrett

The law of agency?

Mr. S. Brennan

Yes.

Mr. S. Barrett

One cannot just change the established law of agency.

Mr. S. Brennan

Why not?

Mr. S. Barrett

It applies not only in the area of insurance but also in many other areas.

Mr. S. Brennan

We are changing it as it applies in the area of insurance.

Mr. Taylor

There is nothing constitutional about the law of agency.

Mr. S. Barrett

The Deputies are missing the point I am making. If I were to go out to meet Deputy Brennan, who places a problem in front of me, and asks would he be covered if such a thing happened and I, as an agent acting on behalf of four agencies, advise him that he would, with the result that he goes ahead and takes out a particular policy and I decide to give the business to one of the four companies I act as agent for, fill up the proposal form and give it to one of the companies who accept the proposal form and underwrite the risk, this would not take away from the fact that prior to any proposal form being completed that I gave advice which turned out to be incorrect. Therefore, I would need to cover myself against the possibility of a professional negligence claim being made. How could the company be held responsible in respect of any advice I may have given prior to the filling in of a proposal form? This is the point that is being missed.

Mr. S. Brennan

I can see that the Deputy is concerned but I am convinced that the provisions of the new section 51 which I propose to insert in the Bill would meet his concern. As it would be possible to identify the company it would be possible to sue the company. The Deputy is saying that an independent agent may give general advice on insurance which may turn out to be inaccurate but that is a difficult matter to pin down. What we are talking about is the giving of advice pertaining to a particular proposal form. I would not envisage the agency getting involved to any major extent as they would not have an enormous proportion of the market. By definition they would not maintain the overview maintained by brokers. Therefore, I would not envisage them being involved to a major extent in the giving of specific advice. Where specific advice is given the company may be sued in respect of negligence on the part of the agent. Only a very small area may be left uncovered but I am convinced it is reasonably small and of no great significance.

Mr. S. Barrett

That is what professional indemnity insurance is all about.

Mr. S. Brennan

I am not talking about the giving of broad and general advice such as that a person must take out an insurance policy some day. I am talking about the giving of specific advice in relation to specific companies.

Mr. S. Barrett

If a person were to ask me would he be covered if such a thing were to happen and I were to reply that he would and then fill up a proposal form which I give to an insurance company, would any one of the four insurance companies stand over any bad advice I may give?

Mr. S. Brennan

It is important that the Deputy should finish his example. The answer to that question is yes. In the example the Deputy has given where he advises a particular customer, fills up a proposal form and sends it off to the insurance company, he would then be dealing with a specific insurance company. If it turns out to be the case that the advice given is very bad the company could be held responsible. We cannot do any more than that.

Mr. S. Barrett

They could not possibly be held responsible. With the greatest of respect, the Minister of State is fooling himself.

Mr. J. Bruton

That would not be in accordance with natural justice.

Mr. S. Barrett

If I were to hold myself out as being as an insurance agent, a semi-broker, and a person asks me if such a thing were to happen would he be covered and I reply yes and fill out a proposal form and give it to an insurance company, who would not even know that I have given bad advice, they would be held liable. This is despite the fact that I could have given it to any one of the four companies. That is what professional indemnity insurance is all about. I put it to the Minister of State that this whole thing is cockeyed and would result in massive problems.

Mr. S. Brennan

I am prepared to deal with the wording of the amendment in front of me.

Mr. S. Barrett

The Minister of State is not prepared to say that he will consider this matter on Report Stage. He is just sitting there and will not accept any advice or any argument. There is no give whatsoever. If the Minister of State would only ask us to give him one hour so as to check these points and to come back on Report Stage we would be satisfied, but all he does is sit there and say that what we are saying is not right, whereas everybody knows he is wrong.

Mr. J. Bruton

He should accept the amendment and get on with it.

Mr. S. Barrett

Why will the Minister of State not accept the amendment?

An Ceann Comhairle

Please, Deputy, let us hear the Minister.

Mr. S. Brennan

The company would be held responsible in respect of any insurance proposals made and that is why we made no reference to professional indemnity insurance.

Mr. S. Barrett

Let us suppose I am an agent with four agencies on the life side and four agencies on the non-life side and I do business with a person who asks me a particular question. If that person asks me if he be covered under his existing policy if such a thing were to happen and I reply that he would, and complete a proposal form in respect of some other class of insurance and it subsequently turns out that the event the person referred to actually happens and goes along to the company only to find out that the advice I gave was wrong, even though I was not involved in that case, surely as a professional insurance agent I would have some liability in law for negligence. The Minister of State is assuming that all insurance companies are going to accept willy-nilly anything he or I say in regard to any question they are asked. It is too absurd to be considered.

Mr. Taylor

The key point the Minister is missing, and I think we have stayed on this point far too long, is that the insurance agent is not the agent of the company but rather the agent of the customer. That is the nub of the issue.

Mr. S. Brennan

I would refer the Deputy to section 50 which states that an insurance agent shall be deemed to be acting as the agent of the undertaking. It cannot be made any clearer. The section states that an insurance agent shall be deemed to be acting as the agent of the undertaking to whom a proposal is made. That does amount to a change in the law of agency and I accept that.

Mr. S. Barrett

Of a particular proposal.

Mr. S. Brennan

Yes.

Mr. S. Barrett

I am talking about general advice you are giving as an insurance person.

Mr. S. Brennan

That is section 50.

Mr. S. Barrett

In section 50 the Bill explains what a tied agent is. A tied agent in the insurance world means somebody who enters into a contract with an insurance company to sell their product and their product only and is paid a different form of remuneration from that of other people in the business. They do not have discretion——

Mr. Taylor

Let me refer the Minister to the very section he referred us to, section 50 and the last sentence of sub-section (1). The beginning of the section refers to being the agent in a limited specified way. Now here is the nub of it. It goes on to say: "In such circumstances only, the insurer shall be responsible for any errors or omissions in the completed proposal form". In those circumstances alone where he fills the form out in his own hand under section 50, is he deemed to be the agent of the insurance company, thereby proving my point that in every other single case he is the agent of a customer, not of the undertaking? Does the Minister see my point?

An Ceann Comhairle

Deputy John Bruton has been anxious to get in.

Mr. J. Bruton

I hope the fact that we are working on limited time is not being used by the Minister in order to refuse to take reasonable amendments from this side of the House. I am beginning to fear this is the case. If it is, I assure him that no legislation coming from his Department will have any facility from this side of the House in future.

Mr. S. Brennan

That is an unnecessary threat.

Mr. J. Bruton

I feel the Minister is not taking this on board.

Mr. S. Brennan

I have taken many of the Deputy's amendments.

Mr. J. Bruton

I want to take this instance as an example. The purpose of this amendment is simply to allow the Minister to require professional indemnity insurance of agents if he decides to do it. It is simply to give him the power to do it. It is not requiring him to do it. If there is a doubt, as there may be, in the Minister's mind — we are not in the time available to us here this evening going to be able to come to a conclusion as to whether the Minister is right, whether Deputy Barrett is right or whether the truth is somewhere halfway between the two — surely the sensible thing to do is take the power to impose professional indemnity as the amendment propose. If on reflection the Minister discovers it is not necessary to use it, then he does not use it. Surely he should not reject an amendment which simply gives him a facility to take certain protective measures merely on the basis of a difference about facts between himself and Deputy Barrett. If there is such an argument, let him take the facility, use it if he needs it and not use it if he does not need it.

Mr. S. Brennan

I am concerned to ensure that there is a clear difference between brokers and agents. That is what I am trying to do in this legislation.

Mr. J. Bruton

The Minister can still do that.

Mr. S. Brennan

That is why when we have an opportunity here I am trying to ensure that we build a professional body of brokers and that the agency system over a period tidies itself up.

Mr. J. Bruton

The Minister can still do that under the Agreement.

Mr. S. Brennan

If the Deputy feels very strongly about adding "insurance agent" I am happy to accept that, but I want to put on record that the intention will be not to use it in these circumstances for the foreseeable future. If it is important to the Deputy we will be happy to take it. A person dealing with an agent will be informed under the provisions of the Bill that the agent can only offer a policy with four companies and that limits the quality of advice that can be given. The only area that is out of this professional indemnity provision is the advice area. Most of that advice will come from brokers. Companies with a small number of agencies are being told in this legislation to stand over the errors and omissions of the agent. I think the Deputies are overstating the case. A company who stands behind the errors and omissions of the agents are a fair solace for the public. It is fair cover for the public to know that the insurance company stand over the errors and omissions of an agent. Really I do not see what the fuss is about.

Mr. S. Barrett

A tied agent.

Mr. S. Brennan

A tied agent is a different animal. A tied agent is a specific person who deals for one company. I am sure that when the Deputy was studying the Bill he spotted that the company are fully responsible for the tied agent, so the public are totally protected in both cases.

Mr. S. Barrett

They are not fully responsible for an untied agent.

Mr. S. Brennan

If the Deputy wants me to add "insurance agent" I will take that, but not under threat of lack of future co-operation. If he feels strongly about it I am prepared to put it in but to add that I do not envisage it being used in the foreseeable future.

Mr. J. Bruton

I thank the Minister for that and I accept he is doing it on the strength of the arguments that have been put and on no other basis. He will have this power and at his leisure he can consider whether he should use it. If he decides not to use it I am not going to argue with him about it. At least he has the power.

Amendment agreed to.

Section 44, as amended, agreed to.

Section 45 agreed to.

SECTION 46.

Mr. J. Bruton

I move amendment No. 38:

In page 26, subsection (9), line 18, after "altered" to insert "by an order approved by resolution of both Houses of the Oireachtas.

This is concerned with a provision here whereby the Minister may increase the amount of the bond required of an insurance intermediary. The Minister has power under this Bill to prescribe different amounts for the bond and to increase them as he wishes by order. This section simply provides that to prevent this being increased in a very vertiginous way such an order should be approved by both Houses of the Oireachtas. I do not want to make a big issue of it.

Mr. S. Brennan

We had something similar earlier in the day where this idea of a positive affirmation of an order was suggested as a better approach than giving the House power to annul an order or regulation that was laid before the House for a 21 day sitting period. It was explained at that time that in this industry it is important to be flexible, to be able to act swiftly and to be able to make orders and regulations. As it is the Minister will have to wait for 21 days to see if the House will annul the order, it might unnecessarily slow down the procedure if the Minister of the day had to seek an order to be approved by both Houses of the Oireachtas, because there may be a degree of urgency about it. Therefore, I propose to stick with the original approach.

Mr. J. Bruton

I withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed: "That section 46 stand part of the Bill."

Mr. S. Barrett

I want to ask for a few points of clarification. Subsection (3) reads "...holds a bond to the value of £25,000 or 25 per cent of life assurance turnover, whichever is the greater,". What is meant by "turnover"? Is the Minister talking about claims going through an intermediary's account?

Mr. S. Brennan

The word "turnover" is defined on page 26, line 26.

Mr. S. Barrett

With respect I fail to see what is the purpose of this provision in relation to life assurance. To my knowledge there are no insurance brokers in the country who would be holding life assurance premiums in bank accounts on behalf of insurance companies. The business does not work that way; moneys are paid directly into insurance companies. Is the purpose of a bond to deal mainly with general insurance brokers or life assurance brokers?

Mr. S. Brennan

It is a consumer protection measure and applies to both. It does not apply to turnover of less than £25,000. In regard to the example the Deputy gave, explaining how the system works — that sometimes it is paid directly to the insurance company — I should tell him that, in that case, a bond is not required. Under the provisions of the Bill, if the money is not paid into the account then it is not deemed to be "turnover" for the purposes of the section. Where it is paid directly to the insurance company obviously one does not have to get a bond. That should alleviate the Deputy's concern.

Mr. S. Barrett

When dealing in what is known as the area of general insurance — fire and property liability — is the maxmum bond held £25,000? Is that correct?

Mr. S. Brennan

We are talking about a maximum bond of £25,000 on the non-life side.

Mr. S. Barrett

What is the purpose of that?

Mr. S. Brennan

To ensure that when people pay over funds to insurance intermediaries they are protected. Incidentally the Deputy might recall the travel agents' bonding system introduced some years ago on which this provision has been modelled to a large extent. The Deputy will recall travel agents running into difficulties when people were left without funds. In a similar fashion this provision is to ensure that, if a broker has funds in the account and the company gets into financial difficulties, there is at least some cover there for people who have paid over their money. It is a consumer protection provision.

Mr. S. Barrett

Is the Minister not aware that moneys held by an insurance broker on behalf of an insurance company are deemed to have been paid to an insurance company if the broker subsequently goes into liquidation? The same does not apply in the case of the travel agency business. In the non-life area no consumer has ever suffered as a result of an insurance broker going into liquidation. In all cases the company will be deemed to have received the money even though the money might not actually have been received by them but had been collected on their behalf. I fail to understand how the insertion of a sum of £25,000 will solve the problem because, by and large, the amounts of money that would be involved would be greatly in excess of that amount. The point I am making is that, in the life area, it will not apply to any broker because at no time would any broker have in excess of £25,000 in a bank account on behalf of a life assurance company. In the area of general insurance it has always been the practice that moneys paid to an insurance broker on behalf of a company are held by the broker on behalf of the company and a client has never suffered. Therefore, I fail to see the need for the provision.

Mr. S. Brennan

The Deputy may well be right, that this consumer protection measure may not be necessary. I accept that the Deputy's knowledge of the business is considerably better than mine on a day-to-day basis. If the money is paid directly, if it does not reach the limit or whatever, that is fine, that protects the consumer. In cases where the client account receives premiums, on either side — and I accept that it is not as serious on one side as the other — we are endeavouring to ensure a measure of protection for those funds while in the hands of the intermediary. It may never be needed but it is important that it be included in the legislative provisions just as it was in relation to the travel agency business.

Mr. S. Barrett

Is the Minister saying that the provision of the section will not be implemented if not required?

Mr. S. Brennan

Of course we will enact the provisions of the section to ensure that those bonds are taken out where the money is in the account. If the amount does not reach £25,000, then the bond is not needed. Whether the provision applies is not up to me or the Government. That will depend on the level of the account, when it is triggered in itself. I do not trigger it; what triggers it is the level of the account.

Mr. Cullen

With regard to subsection (2) (b) may I ask the Minister two questions. How was the figure of £25,000 arrived at. Obviously the provisions of this section deal with the incidence of fraud. The reality is that most people will adhere to the business regulations laid down. How will the Minister administer this provision if it is to be by reference to the preceding accounting year? Is it not the case the damage will have been done and the horse will have bolted if there has been a case of fraud? If the person is of a fraudulent disposition he will have committed the crime. Of what benefit will the provisions be in that sense?

Mr. S. Brennan

When one is setting limits one must make a stab at them; there is no real scientific basis for that figure. It is an estimate of what might be outstanding for a month or two in the case of a smallish broker. It is purely an estimate and is as good as anybody else's. If there is a better figure around, let us hear it, but it seems to us to be a sensible kind of figure given the type of turnover of many smaller brokerages. We can base it only on the preceding accounting year; it is firm, audited, is there and is definite. I cannot think on what else it could be based.

Mr. Cullen

While it may sound fine is not the reality that if something has gone seriously wrong the person will have long since disappeared before it is established administratively what has happened, before the books will have been examined? How will it operate in practice?

Mr. S. Brennan

I understand the Deputy's concern. The bond will be there: once the client account hits the £25,000 level there is a requirement to get a bond for the remainder of the year to cover turnover to the extent of £25,000. Once that bond is in place, if the company is wound up, that bond will be available to meet aggrieved persons' claims.

Mr. Cullen

Subsection (4) reads:

Subsection (2) shall not apply to an insurance intermediary if his turnover does not exceed £25,000 by reference to the previous accounting year and does not exceed £25,000 in any subsequent accounting year.

Does not the same argument apply here? If somebody is intent on defrauding the system he will do so in a year in which he has no indemnity, bond or anything else. Why was this subsection included in the first place?

Mr. S. Brennan

We took the view that if somebody had turnover of less than £25,000 we would not be bothering them. That view is commonsensical and omits a whole range of smaller brokers, constituting a vast improvement on the circumstances obtaining. The position obtaining is that there are no bonding arrangements. An insurance intermediary can go down the tubes leaving people high and dry, and it happens.

Mr. S. Barrett

When does it happen?

Mr. S. Brennan

I have seen cases reported in newspapers from time to time. Over the past year I have seen a few that have gone under the Companies Acts.

Mr. Cullen

Would the Minister not agree that, in practice, the same will apply?

Mr. Taylor

While the idea of the bond is an excellent one the points being made — which have some force — are: how is the Minister to know or ascertain whether a turnover has exceeded £25,000. If he does, how will he know whether the person concerned has a bond? Would it not be necessary to provide that, to secure his continued membership of the association, he would need to produce his bond to them for inspection?

Mr. S. Brennan

The insurance company have the responsibility before they pay commission or do business to check that the person has a bond. Before they do business with a person they must check whether a bond is required and if it is required they must check to see it has been taken out. That is the best policing system we can have.

Mr. S. Barrett

Am I correct in saying that this section applies to all insurance intermediaries?

Mr. S. Brennan

Yes.

Mr. S. Barrett

If the Minister of State is telling us that an insurance agent will now be an agent of the company, I wonder why the insurance agent will need a bond? If he is an agent for the company he will be collecting money for the company.

Mr. Taylor

He is only agent for the company in one specific instance.

Mr. S. Barrett

No. We are told that we are trying to protect the consumer in this legislation. The issue under discussion will not arise in life assurance because no insurance broker or agent will have more than £25,000 in an account at any one time. Therefore, the bond provision will not apply, but I wonder what the position will be in regard to an insurance broker who is involved in life and general insurance. Will such a person require two bonds?

Mr. S. Brennan

Where there is a composite intermediary one bond is required to the extent of 25 per cent of turnover. That is covered in subsection (3).

Mr. S. Barrett

Is that 25 per cent of life assurance turnover?

Mr. S. Brennan

Yes.

Mr. S. Barrett

And he will need a bond of £25,000?

Mr. S. Brennan

Yes, or 25 per cent of the combined turnover, whichever is the greater.

Mr. S. Barrett

Subsection (3) refers to life assurance turnover.

Mr. S. Brennan

I will return to that point at a later stage.

Mr. Cullen

What Deputy Barrett is saying is that those who want to deal exclusively in the life end of the business do not need to have a bond at all. Is that the point?

Mr. S. Barrett

And the £25,000 from the general broker is not worth anything because he is not responsible.

Mr. S. Brennan

Is the Deputy saying that perhaps bonding requirements are not needed in the industry?

Mr. S. Barrett

They will not apply.

Mr. S. Brennan

That is what the travel agents thought.

Mr. S. Barrett

Travel agents are different. An insurance broker is issued with a renewal form, in the case of motor insurance, by an insurance company, he sends it to the client, collects the money and is deemed to have done so on behalf of the insurance company once the money is remitted to him. If, subsequently, the insurance broker goes "bust" the insurance company are at the loss and not the client. The client's cover is in force because the insurance broker has binding authority to put him on cover once he receives the premium. Again, the provision shows a lack of understanding of the industry. The Minister is asking brokers like Coyle, Hamilton and Hamilton, for argument sake, the largest brokers in the country on the general side — God knows how many hundreds of millions of pounds of a turnover they have — to take out a bond for £25,000 although they do not need it.

Mr. S. Brennan

That is not correct.

Mr. S. Barrett

The provision is unbelievable.

Mr. S. Brennan

What is the Deputy saying?

Mr. S. Barrett

I am telling the Minister that such insurance brokers do not need a bond.

Mr. S. Brennan

I should like to clear this matter up because I have often listened to this charge of a lack of understanding of the industry very often and that is not a substitute for a debate on the sections. Is the Deputy saying that brokers or agents never hold money on behalf of clients? If they hold money on behalf of clients I want them bonded.

Mr. S. Barrett

I have given the Minister of State an example.

Mr. S. Brennan

Do they hold money on behalf of clients?

Mr. S. Barrett

No, they do not.

Mr. Taylor

Of course they do.

Mr. S. Brennan

Is the Deputy telling the House that insurance intermediaries never hold money in client accounts on behalf of people who have paid over their money?

Mr. Taylor

I sued a few of them in my day for money that could not be got.

Mr. S. Brennan

Deputy Barrett is being disingenuous in regard to this issue.

Mr. S. Barrett

They hold it in respect of insurance companies and not on behalf of clients.

Mr. S. Brennan

Whose money is it?

Mr. S. Brennan

It belongs to the insurance companies because the broker is acting as agent for the insurance company when collecting the premium.

Mr. S. Brennan

If a person pays money to an independent broker who puts the money in his client account——

Mr. S. Barrett

On whose behalf is it collected?

Mr. S. Brennan

——and the broker subsequently goes down the tube, the client will suffer. I want to ensure that the client who has paid over the money is protected. The Deputy is being disingenuous in giving the impression that brokers or agents never hold clients' money and that, therefore, there is no exposure. That will not wash with me.

Mr. S. Barrett

I am trying to explain to the Minister of State what happens.

Mr. S. Brennan

I know what happens.

Mr. S. Barrett

If I receive a set of motor renewals from company "A" tomorrow morning to be sent to clients I also receive a certificate of insurance attached to each renewal. When a person pays a premium to an insurance broker the broker issues the certificate of insurance on behalf of the insurance company and will hold the premium on behalf of the company. The client is on cover and the insurance company has given the client cover through the broker.

Mr. S. Brennan

What is the position with regard to a client who pays in advance? What is the position of the client who pays £100 in advance? That money will go into the broker's or agent's account but the money belongs to the client and not to the insurance company. As long as there is a client account to hold money belonging to those intending to take out insurance policies and that is not paid over to the insurance company we will need bonding.

Mr. S. Barrett

It is a waste of time talking to the Minister of State about this. I should like to ask him to have a look at the matter between now and Report Stage.

Question put and agreed to.

Section 47 agreed to.

SECTION 48.

Mr. J. Bruton

I move amendment No. 39:

In page 27, subsection (1), between lines 30 and 31, to insert the following:

(d) he displays prominently, in such form as may be specified by the Minister, at the entrance to any premises in which he is conducting his business as insurance agent, a notice drawing attention to the fact that he is an insurance agent and not an insurance broker and indicating the distinction between the role and competence of an insurance agent and that of an insurance broker.

There has been a lot of argument about the difference between brokers and agents and the difficulty brokers have because of the more onerous requirements imposed on them. On the other hand, people may not realise the benefit of dealing with a broker in that a broker has a much wider choice and a better freedom in the giving of advice than has an agent. People may not realise that and my amendment is designed to require a person who is dealing as an agent to make it clear that he is an agent and not a broker and to indicate the difference between what is the competence of a broker and the competence of an agent.

The Minister of State has said that he was anxious that there should be such a distinction and my amendment would assist him further in that direction by requiring a public display of such a notice.

Mr. S. Brennan

Subsection (1) (b) states that an insurance agent must state on his letter headings and business forms that he is an insurance agent and that he must name the companies. A person corresponding with the agent will be well aware of the companies involved. I do not know of any legislation that lays down for an industry or a profession a requirement that there should be a display in a hall or at an entrance to a building indicating the difference between it and the other end of the profession. I could not imagine a solicitor's office having a notice to the effect that they were solicitors and would do the following work, and barristers having a board indicating the type of work they are involved in. The amendment is unnecessary and excessive.

I know the Deputy is just trying to make sure people understand. I do not think it is necessary to lay on particular enterprises the obligation to display prominently at the entrance to their premises information as to the distinction between themselves and their competitors.

Mr. J. Bruton

An alternative would be to require them to actually give a piece of paper to anyone with whom they are dealing explaining who they are and what their competence is. I am prepared to accept that if the Minister feels it would be aesthetically unpleasing to display a notice. My concern is that the information should be conveyed.

Mr. S. Brennan

I will see if there is any administrative way in which we can ensure that that information is conveyed. Section 48 (c) provides that the agent has to inform any proposer of an insurance contract that he is an insurance agent and of the names of the undertakings for which he is an agent. I take the Deputy's point that it does not go on to explain the law on the matter or what the differences between one and the other area, but I do not think we should deal with that by way of publicly displaying a notice.

Mr. J. Bruton

Would the Minister be prepared to accept the addition of the words "and indicating the distinction between the role and competence of an insurance agent and that of an insurance broker"?

Mr. S. Brennan

I would be a trifle worried about asking the agent to explain in writing to a proposer what the other fellow does. I think it would be inviting difficulties.

Mr. J. Bruton

The Minister could ask them both to do it.

Mr. S. Barrett

What is to stop me going to any large town in Ireland, opening up an office and calling myself a broker? How would the public know whether I am an insurance broker or an insurance agent? Is the person behind the counter obliged to explain that he is an insurance agent and not an insurance broker and that under the 1989 Insurance Act, he is an insurance agent because he holds eight agencies with insurance companies and is not an insurance broker because he does not hold ten agencies? That would be ridiculous.

Anybody could call himself an insurance broker. Are people allowed to put up plates and call themselves solicitors or accountants or whatever? Surely they must produce a piece of paper to show that they have qualifications. Is the Minister going to send inspectors from his Department to every town and village to check on pieces of letter headed paper, telling people to take down signs because they do not qualify under the 1989 Act? Who is going to stop me from calling myself an insurance broker when I am an insurance agent? A person looking for advice might not even see letter headed paper at that stage. Does the insurance agent have to explain to the customer that he is an agent and has four agencies with four companies? Are we really serious? How is that going to benefit the consumer?

Mr. S. Brennan

That is not what the Bill sets out to do, and neither did the 1986 legislation. What we have done is to make a considerable distinction between brokers and agents. Under this legislation it will be up to the companies who are signing the cheques, the people with the clout in this industry, to establish whether they are dealing with agents or brokers. If they are dealing with agents, the agent puts the four names on his letterhead. All we are talking about here is the misleading sign on the door. At the moment there is nothing about that in the legislation; there is nothing about five or six agencies; there is nothing about professional indemnity or about bonding.

Mr. S. Barrett

The Minister is introducing legislation which is clearly trying to define and draw a line that is so ridiculous.

Mr. S. Brennan

We have defined it. We have put in bonding; we have put in indemnity; we have made the insurance companies responsible; we have made it possible for the public to know by looking at the letterhead whether they are dealing with agents or brokers, and that is a 100 per cent advance on the current situation where there is very little control and the public have no way of knowing with whom they are dealing.

There are other areas where people call themselves things and it is a continuing problem because one could not possibly police it on a town by town basis. A broker is defined in this Bill, an agent is defined in this Bill, and therefore one is not entitled to call oneself a broker unless one complies with the Bill. It is as simple as that. The Deputy is not being fair in saying there is no way of knowing the difference between brokers and agents. We are making a substantial difference here and it is as far as we can possibly go.

Mr. Cullen

I do not want to rehash old ground. The Minister referred to the question of legislation for an agent having two or three agencies and what the criteria would be for those in the gap between three and five. Why cannot the Minister legislate along the lines that there should be only three agencies for an agent, leave the gap, set the rules of the game and say that there is nothing in between?

Mr. S. Brennan

We are coming to that amendment next.

Mr. Cullen

I will wait until then.

Mr. Taylor

On a point of order, as we are approaching half past nine and the Committee Stage must finish, I want to make a strong protest about the way we organise our business in this House. I went to no little trouble and prepared 15 amendments which are on the Order Paper. If they had been adopted or considered by this House they would have made a major improvement to the law here on the matter of insurance. We now find, notwithstanding all that trouble I went to, that we cannot debate them now in Committee Stage as a result of our procedures and as a result of some sections taking an inordinately long time — secton 43 went on for over an hour.

It is most unfair that backbench Deputies who try to make a contribution to the law making of this country — and there is nothing political in it, it has nothing to do with votes because there is not one vote in it from end to end — are denied the opportunity to air their views on any of those 15 amendments. It is absolutely outrageous. It is no wonder that sometimes some of the legislation we pass turns out to be a laughing matter, and it is very discouraging to Deputies who try to make a contribution on non-political matters when they find their efforts totally frustrated in this way.

An Ceann Comhairle

We are dealing with this Bill in accordance with the decision of this House on this day and this House adopted this procedure with its eyes open.

Mr. Taylor

That is what I am criticising, a Cheann Comhairle.

An Ceann Comhairle

The time is well nigh to put the question. I take it that Deputy Bruton's amendment No. 39 is withdrawn.

Amendment, by leave, withdrawn.

Mr. J. Bruton

I move amendment No. 40:

In page 27, subsection 2 (a), line 33, to delete "four" and substitute "three".

Mr. S. Brennan

In regard to amendments Nos. 40 and 41, I cannot accept them on the basis that if the number of agencies for brokers is five, the logic is that it has to be four for agents. Otherwise what does one call the person in the middle. Deputy Bruton is suggesting three, so there are five for brokers and three for agents. So what does one call the person with four?

Mr. J. Bruton

They either have four or they have three or less, and there is a gap in between. A person who has four has to get a fifth or has to drop one. I suggest you put the question, a Cheann Comhairle.

Mr. S. Brennan

It is not as simple as that because there is also the question of people's livelihood involved in this area. I am not sure it would be wise to do as the Deputy suggests.

Mr. S. Barrett

I thought the Minister was concerned about the consumer.

Mr. S. Brennan

I am also concerned about people's livelihood.

Mr. S. Barrett

Now the truth is coming out. This Bill has nothing whatever to do with the consumer. The consumer is not being taken into consideration at all.

Mr. S. Brennan

The Attorney General's office advises me that there may be a constitutional difficulty. I am passing on formally to the House, whether the Deputy likes it or not, the advice I have from the Attorney General's office.

Mr. Carey

The Attorney General is very slow with other matters.

An Ceann Comhairle

Please, Deputy.

Mr. S. Brennan

There may be a constitutional difficulty in further limiting the power to make a livelihood from many people who have existing businesses.

Mr. Cullen

The Minister is blurring the matter.

An Ceann Comhairle

As it is now 9.30 p.m. I am required to put the following question in accordance with the order of the Dáil of this day: That the amendments set down by the Minister for Industry and Commerce and not disposed of are hereby made to the Bill in respect of each of the sections undisposed of, other than section 59; that the section, or as appropriate the section as amended, is hereby agreed to; that the First and Second Schedules and the Title are hereby agreed to and that the Bill, as amended in Committee, is reported to the House.

Mr. S. Barrett

Is it in order to say that you are bringing this forward to Report Stage?

An Ceann Comhairle

We will proceed with Report Stage after this, Deputy.

Mr. J. Bruton

I want to give notice that I wish to reintroduce amendments Nos. 40 and 41 on Report Stage.

An Ceann Comhairle

I take it then that the proposal I have made is agreed? Agreed.