I should like some information about this Bill. First I should like to know when these new bodies will be set up and when they are likely to be in operation and prepared to take business and what is contemplated in case of there not being a sufficient number of authorities participating. I take it the essence of insurance is that a sufficient number should participate. Are you going to drop the whole scheme if it receives inadequate support, and is it proposed to re-insure or to enter into any arrangement with private insurance companies with regard to underwriting risks which might arise before an adequate reserve is built up? I can perceive there might be very heavy claims during the first year or two which might have to be met by a special levy on the local authorities, and thus the Bill would cause unfairness during the initial period.
LOCAL AUTHORITIES (MUTUAL ASSURANCE) BILL, 1926—SECOND STAGE.
CATHAOIRLEACH
The Minister for Local Government, who is in charge of this Bill, is engaged and cannot be here. I do not think it is fair to be putting those conundrums to the President.
I should say that there are certain conditions laid down in some of the sections, for instance Section 3; no indication there is given as to when the company is to be formed. I presume formalities have to be complied with before a company comes into being. I should say that a company or society must satisfy the Minister for Industry and Commerce under Section 4 with regard to certain matters. I presume re-insurance would be absolutely necessary, at least until after a sufficient sum has been carried to reserve. I doubt if any sum carried to reserve would be sufficient to meet re-insurance.
In the absence of the Minister for Local Government, as chairman of the particular body from which this has emanated, I should like to supplement the statement of the President. When this Bill is passed it will only put public bodies in Ireland in the same position as the local authorities have been in England with the sanction of the President of the Board of Trade in England. That is the position that has been recognised with regard to local authorities in England for the past twenty years or more. This Bill purposes to be an amending Bill to enable the local authorities of Ireland to have mutual insurance in the same way as the local authorities in England.
Even with the passing of the Bill it will be necessary before any number of local authorities should contemplate mutual insurance that they should get a certificate from the Minister for Industry and Commerce, who occupies an analogous position to that of the President of the Board of Trade in England to enable them to embark on the enterprise. He must first be assured that they contemplate engaging in mutual insurance purely—that is to say, that they only insure their own risks; also, he can take other considerations into account. He may ask them what are the possibilities of the enterprise being sufficiently well supported to embrace a substantial number of authorities from the outside. At any rate, he can withhold his certificate until he is absolutely satisfied that any association will have sufficient insurance given to them through their articles of association, and that they have complied with all the requisites of the case. In so far as Senator Sir John Keane's inquiry refers to the local authorities who are disposed to engage in such mutual insurance schemes, practically all the local authorities were represented on the General Council of County Councils, and that is the vast majority of the county councils of Ireland. The municipal authorities were unanimous in promoting this scheme. It is not a new thing by any means. It was projected years ago. At various times during that period the agitation in favour of it has been revived. Recent events have brought matters to a head and the General Council said the time was ripe to engage in this mutual insurance. That is of secondary importance. There are, already, a number of bodies who have signified their intention of adopting this scheme once the amending Bill gives them power to do so.
With regard to the third point as to the re-insurance of the risk undertaken by such an association, in order to dissipate any doubts in the minds of Senators as to what may or may not arise in that connection, I can quote Senators the experience of a body similar to that which it is proposed to set up in this country—that is, the Municipal Mutual Corporation of England. That body, twenty-two or twenty-three years ago, got permission similar to that which we are getting now, that all local authorities should be allowed to engage in mutual insurance. They could only persuade thirteen local authorities to join up at the outset. They took their courage in their hands and to-day, after an experience of over twenty years, that Municipal Mutual Association has over £300,000 in reserve to its credit. During that period they have reduced the premiums on insurance to the local authorities who have associated themselves by upwards of £70,000.
We propose that any aggregation of authorities for the purposes of carrying out the intentions of the Bill, shall form itself absolutely upon the lines of the Municipal Corporation arrangements. In doing so they will be pursuing the same policy which the Municipal Mutual pursued in the early stages, and in that way they would be practically re-insuring for every risk.
CATHAOIRLEACH
It is right to call attention to the fact that under the Bill there is no provision to that effect.
There is a provision that this Bill is only an enabling Bill and that a certificate must issue from the Minister for Industry and Commerce.
CATHAOIRLEACH
Is there any provision in any previous Act which compels them to re-insure? I do not know of any.
There is no provision compelling them.
CATHAOIRLEACH
That is the point Senator Sir John Keane is anxious about.
I did not hear him say anything about compelling. I thought he wished to inquire as to how the risks are safeguarded in the early years.
CATHAOIRLEACH
His question was whether under this Bill they should be compelled to re-insure the risks, but there is nothing in the Bill to compel them.
That is a very proper matter for the Minister for Industry and Commerce to insist upon, prior to issuing a certificate—that he will be assured as to the policy that such a company or association is inclined to pursue. He would necessarily and very properly require full assurance with regard to that. Following the lines laid down by the Municipal Mutual in England, all risks at the outset would be re-insured. Re-insurance is, of course, the very basis and the life of insurance. No company, even Lloyds, would dream of carrying on without re-insuring. It is at the very root of the whole business of insurance, but the Municipal Mutual re-insured fire risks for seven years. Its own reserves were built up at a certain point. Then it began to retain portion of its risks, well within its own reserves. The associated authorities built their business on absolutely secure lines from the outset, not only securing sufficient safeguards so far as they themselves were concerned, but also as regards any of the bodies who insured with them. So far as I know the position, these are, I think, sufficient reasons to allay any feeling of anxiety. I think there is a sort of general agreement that this Bill should go through as a non-contentious measure. Really it would be an anomaly if British Acts of Parliament and the Insurance Act of 1909 were capable of being interpreted, as they had been, in favour of the local authorities in England so as to allow them to carry on their own insurance business, and that the same Acts of Parliament should be interpreted by our own Government against our local authorities so as to preclude them from doing the same sort of business. That would be an anomaly, and the objection to this Bill would be tantamount to that.
I do not really regard this Bill as contentious, but I see some difficulties that may arise. Will it be possible for a local authority to back out or withdraw whenever it likes from the Association? I do see that possibly they may not be satisfied and they may withdraw. If any substantial number of authorities withdraw from the scheme, they may jeopardise the funds.
There is nothing obligatory in this measure. It is merely, as Senator Kenny has said, an enabling measure. The British Associated Local Authorities Company came into being before the 1909 Insurance Act. That Act made it obligatory on insurance companies to make a very substantial deposit. The only exception to making this deposit was in the case of mutual insurance companies, and it was on some technical ground held that local authorities could not combine for the purposes of mutual insurance. This Bill is intended to remove that difficulty and to allow local authorities to combine in the same way as private individuals for purposes of mutual insurance, but there is no obligation on any local authorities to join this Association. If they do join it, they can resign from membership in the ordinary way as if they were insured in any other company.