Business in relation to an insurer is defined as including the business of managing investments and assets held by the insurer. Let us assume that a company have many and diverse activities. Are all these activities covered?
Insurance Bill, 1983: Committee and Final Stages.
No. The updated definition of insurer is contained actually in section 7. It should be noted that in the Insurance Act, 1964 the definition of insurer is confined to non-life insurers.
In other words it refers to the insurance aspect only?
Is the Minister saying that business as defined in section 1 refers to an insurance company and just the insurance aspect of that rather than other activities that the company may be involved in? In other words, if a company have other interests, for example, investment interests or what they regard as being investments, garages and so on, are these included in this section?
Let us be clear about this. I have said that it is also connected with section 7 because while the primary responsibility of the administrator on his appointment would be to ensure that the insurance company as such would be carried on in a business-like manner in their day-to-day activities his main responsibility would be, over a period of time, to return it to a viable financial position. It also states in the legislation that as well as the powers of an administrator, he would assume most of the powers of a liquidator, and that would give him certain jurisdiction over certain other aspects of related or subsidiary businesses or companies.
The degree of the connection between the insurance company and the related businesses would be a major factor in determining his jurisdiction, and he could at any time resort to the court for advice if he was in doubt or if he thought that any action being taken or not being taken by any subsidiary or associated company was detrimental to the interest of the insurance company or was impeding him in carrying out the main function which he had as administrator to return the business to a viable concern. So it is not possible to answer the question in the narrow definition of the first section. It has to be taken in relation to other sections also.
I take it that the court means the High Court?
Tomorrow morning the Minister or his legal representatives will be in the High Court for petitions and affidavits and so on. Will the company concerned be told of this position before tomorrow morning, and have they the right to appear in court and make a statement or whatever?
I will have to make this clear as I have tried to do all along, and which I have done successfully all day. I am not in a position to speculate about a particular company. This Bill has a general application. I have indicated that under its provisions, if it is passed, an application will be made to the High Court in the morning but I cannot speculate on a particular company. What the Senator is asking me is a matter for the courts. If the presentation is made in such a way that the courts do not think it has been properly prepared or properly conducted or that someone's interests are not being catered for, I am quite confident that they will deal with that situation. So it is not appropriate, and in fact it might be totally inappropriate, for me to go into detail as to what may or may not happen in court proceedings. All the Oireachtas does is to pass legislation which creates a framework in which the court operates and interprets.
We are sailing into the choppy waters that Senator Hanafin referred to a few minutes ago. Already Senator Fallon in asking the questions has referred to subsidiary companies such as garages. If we are to proceed along those lines the Minister could find that by the time the morning comes all his effort had been in vain. I suggest Sir, with respect, that we proceed with extreme caution.
On a point of clarification, the Minister says that he is going into the courts tomorrow morning for specific purposes. Am I to understand that he is going into the courts to ask the courts to rule or to pass judgment on certain matters? This Bill will not be law tomorrow morning. It will not be signed. Could I ask for clarification on that?
That is the whole point. There has been agreement that it would pass all Stages in both Houses today. All Stages have already been passed in the Dáil and we hope that it will pass all Stages in this House by 10 p.m. and that a motion requesting earlier signature by the President will also be passed by the Seanad.
Séamus De Brún
Is that not for signature within five days?
No. It is for an earlier signature motion which would allow the President to sign the Bill tonight.
I assume the Minister will not name the person concerned, that it is a matter for the court purely.
It is not a matter for me to name the person here.
Certainly not here.
Would this take away from any creditor of the company the right to take the company to court for debts at present owed by a subsidiary of the company? The company may have investments in particular areas which are not in the insurance business. In company law this is a very relevant question because it could have repercussions for many people.
In company law one is mainly dealing with a liquidator being appointed. This is a totally new departure in so far as we are not looking for a liquidator to wind up the company. We are looking for somebody to get the company back on its feet as a going concern. While most of the powers of a liquidator would be conferred on such a person, those powers which would not be appropriate or which could be an impediment in fulfilling his obligations to get the company back to a good financial position have been deleted or altered. No obligation of the company in normal trading circumstances would be altered. If there was a legitimate claim against the company while the administrator was there, he would have the obligation to meet that legitimate claim.
Under a receivership all the claims against the company prior to the receivership are considered not to be included in the receivership. In a liquidation all the claims not taken into account before the liquidation are taken into account. Is the administrator going to act as a liquidator or a receiver in terms of moneys owed by this company or subsidiaries? Are all claims against this company before today's date or tomorrow's date to be met?
All claims stand.
And they will not stand in the sense of a liquidation?
Would it not be true to say in dealing with the question raised by Senator Lanigan that when this Bill is passed the creditors should be in a happier frame of mind than they might have been earlier today?
They will be considerably relieved.
Is the question raised by Senator Lanigan not at least partly dealt with in section 3 (2) (a) where it says that no proceedings or resolutions for the winding-up of the insurer can be done without the permission of the court? The whole thing will be supervised by the court. That would be an answer to Senator Lanigan's question.
When will the 2 per cent levy commence? Will it date from some time in the future or will it be back-dated? I assume it will work in the same way as the 1 per cent Government levy and that it will apply to the premium renewal notice sent to clients. Instead of having 1 per cent it will be 3 per cent and the 2 per cent difference will go to the compensation fund.
How will it operate and when will the extra 2 per cent levy commence?
It will come into operation by ministerial order on the appointment of the administrator. It will be calculated on a quarterly basis, not an annual basis. It will be required to be paid into the fund quarterly on the basis of no more than 2 per cent of premium income.
Take the case of a person getting a renewal notice next month. He would have his premium plus 1 per cent Government levy as at present. Will it be 3 per cent from next month? When will it be paid into the company?
This has nothing to do with the Government levy. This fund has nothing to do with the Exchequer. It is a compensation fund.
In other words a company will pay 2 per cent of all premiums for the past year?
They will pay quarterly on future premiums.
Will they ask the policy holders for this money?
They are entitled to do that.
I would say with regard to section 10 that this is not a marvellous new system which somebody has thought up so we can save companies from receivership and liquidation without it costing us anything. The point is that the general body of insurance payers are going to have to foot a bill to the extent of 2 per cent per annum. It is right that it should be done.
Whether it is motor policy or whatever.
There is no fear of getting something for nothing. Somebody is going to have to pay for it.