PRIVATE BUSINESS. - LOCAL AUTHORITIES (MUTUAL ASSURANCE) BILL, 1928—COMMITTEE STAGE.

Wednesday, 11 July 1928

Dáil Éireann Debate
Vol. 25 No. 2

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The Dáil went into Committee.

Section 1 put and agreed to.

AN LEAS-CHEANN COMHAIRLE: Information on Patrick Hogan  Zoom on Patrick Hogan  In regard to amendment No. 1 to Section 2, standing in the name of Deputy Flinn, it is out of order because it creates a contingent liability on State funds, and also because it is outside the scope of the Bill.

Mr. MacENTEE: Information on Seán MacEntee  Zoom on Seán MacEntee  With regard to Deputy Flinn's amendment, I do not think it creates a contingent liability, except with the consent of the Minister for Local Government and the Executive Council. The Minister for Finance has complete discretion in the matter. The exact terms of the amendment are:—

To insert before sub-section (4) a new sub-section as follows:—

“Irish Public Bodies Mutual Insurances Limited shall until it shall be otherwise enacted offer to the Minister for Finance for re-insurance such proportion of each risk accepted by the company as the Minister for Finance shall determine: provided always that the Minister shall have power to accept or refuse all or any part of any such risk.”

It does not create a contingent liability on the part of the Minister for Finance. It creates an obligation on the company to offer to the Minister for Finance for re-insurance a certain proportion of the risk it accepts. There is nothing in the amendment which could compel the Minister if the company made such an offer to him to [248] accept any portion of it. It does compel the company to make the offer, but it does not create any contingency that the Minister would have to accept such an offer under any circumstances. The amendment was drawn up to enable this particular principle to be discussed, and therefore the ruling you have given was borne in mind. If you read the amendment I think it is quite clear it imposes an obligation on the company to make an offer, but it certainly does not create any contingency in which the Minister would be compelled to accept the re-insurance offered to him.

AN CEANN COMHAIRLE: Information on Michael Hayes  Zoom on Michael Hayes  resumed the Chair.

Mr. BLYTHE: Information on Ernest Blythe  Zoom on Ernest Blythe  The point is it enables the Minister to accept the risk. Generally votes that are passed in the Dáil only enable a Minister to spend. This amendment authorises the Minister to take a risk which involves expenditure.

Mr. MacENTEE: Information on Seán MacEntee  Zoom on Seán MacEntee  This amendment does not authorise the Minister to do anything. To make the amendment fully operative the Government will have to accept the principle, and introduce a Bill empowering the Minister for Finance to accept these risks. There is a difference there. There are two different points to be considered. As I have said, the amendment would make it obligatory on the company if the Minister so required to offer to the Minister a certain proportion of each risk for re-insurance. I believe there is a power the Minister would have to get by a separate Bill from this House to enable him first of all to acquire any portion of such risk and to accept it if offered. The two things may be complementary to each other but they are separate proposals. If the Minister were to introduce a Bill to enable him to give effect to the principle of State re-insurance which we have introduced here I feel at the same time he would have to introduce an amending Bill to this Act. In anticipation that the Minister will accept the principle of State re-insurance we propose to take time by the forelock and amend this Bill, but that does not create a contingent liability on the [249] Minister. That will be created when the Minister having accepted the principle will introduce a Bill to set up State re-insurance here. The company in accordance with the terms of this amendment will offer some portion of each risk it accepts for re-insurance, and it will enable him to accept that risk when offered.

Mr. BLYTHE: Information on Ernest Blythe  Zoom on Ernest Blythe  I do not know what meaning the Deputy would attach to the proviso, because if we leave out the words which deal with alternatives the proviso reads: “Provided always the Minister shall have power to accept any such risk.”

AN CEANN COMHAIRLE: Information on Michael Hayes  Zoom on Michael Hayes  Would it be possible for the Minister to exercise the power of accepting the risk without accepting liability? In any event I was anxious to hear this amendment explained. The meaning of amendment No. 2 was quite clear but amendment No. 1 is not so clear. Apart from the question of contingent liability, as the Deputy himself has indicated, I think there is a new principle embodied in the amendment namely, the acceptance by the State of risks of re-insurance.

Mr. MacENTEE: Information on Seán MacEntee  Zoom on Seán MacEntee  It embodies it in a particularly restricted form in this amendment in order to deal with certain objections lodged against the proposal by Deputy Good and others. I think we have discovered here a very practical way to meet these objections, and for that reason we thought it pertinent to the Bill, and if it could be discussed I think it would be very useful.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I submit also that it affects a very particular principle in connection with this Bill in that, as has been explained, neither the Department of Local Government nor any other section of the Government take any responsibility for this company, and the introduction of the principal Bill was simply brought about in order to give the General Council of County Councils who unanimously desired it an opening to start a company on these particular lines. The purpose of this Bill is to hold a position that was thoroughly appreciated and sympathetically dealt [250] with at that particular time, to hold a position that has arisen as a result of a flaw in the original Act, to back this particular company with the possibility of re-insurance and through the Ministry of Finance to impose a certain amount of State guarantee to this company, and put the Government in a position with regard to this particular company that it never decided originally to take, and to go into a position that it has with no other company in the country. I suggest that it is undesirable in principle and against the principle embodied in the Bill to attempt to stretch the principal Act by amendment beyond what we originally intended. If the question of re-insurance through the State has to be considered at all, let it be considered as a separate matter. To consider it simply in connection with amending legislation to this particularly restricted principal Act I think would be undesirable.

Mr. MacENTEE: Information on Seán MacEntee  Zoom on Seán MacEntee  In reply to that I would like to say this, that as a matter of fact the present proposals of the Minister do not hold the company in its former position, owing to circumstances over which the company has no control. I think, owing to the drafting of the original Act, to the legislation which subsequently took place, and to the criticism which took place in regard to this particular measure in this House, that the company has been very seriously damaged, and it was with a view to re-creating a feeling of confidence in the proposal which I think the original Bill contemplated that we introduced this amendment, because, though this is a new principle, if you like—I would not like to admit that it is a new principle—it is certainly an attempt to meet the criticism which was passed on the principle contained in the Local Authorities (Mutual Assurance) Act, the principle that certain public bodies which were not, in fact, mutual could enjoy the benefits of mutual insurance.

AN CEANN COMHAIRLE: Information on Michael Hayes  Zoom on Michael Hayes  This is an amending Bill to the principal Act, which is the Local Authorities (Mutual Assurance) Act, 1926. Neither in the principal Act nor in the amending Bill that is now before us on the Committee [251] Stage is there embodied the principle of State re-insurance, or the acceptance by the State of any re-insurance risks in any shape or form. This is a new principle which cannot be introduced on the Committee Stage of this Bill. On the Second Stage of the Bill, in reply to questions, the Chair made a statement that covered the whole case. That is one reason, and I think sufficient reason, for ruling the amendment out of order. The amendment is also out of order on the ground that, in so far as it leaves the Minister any power at all, that power cannot be exercised without creating a liability on State funds. Amendment 2 introduces another new principle, that is that local bodies would be compelled to insure with this company, and that all contracts with other companies would after a certain date have no validity in law. That, too, is a very important principle, and one which could not be inserted on the Committee' Stage of the Bill. The whole question at issue is that you cannot insert a new principle in Committee on a Bill. The meaning of the amendment is quite clear.

Mr. MOORE: Information on Séamus Moore  Zoom on Séamus Moore  I gather that the amendments under 2 are out of order. There are two sub-sections. Are they both out of order?

AN CEANN COMHAIRLE: Information on Michael Hayes  Zoom on Michael Hayes  Yes. The amendment is to insert two new sub-sections. The first sub-section would compel local authorities to insure their property with one company. That introduces an element of compulsion that does not exist in the principal Act or in the amending Bill. The second proposal is a sub-section which would compel local authorities to levy a rate of 1d. in the £ for a particular purpose, in other words introducing into this Bill, which now places no obligation of any kind on local bodies, an obligation to levy a rate of 1d. in the £. I think that this Bill could not be used at all for the purpose of compelling local bodies to levy a rate.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  On Section 2 perhaps a word might be said, as we are dealing with the company here. I think Deputy MacEntee's suggestion [252] was that something like Deputy Flinn's amendment was necessary in order to improve the position of the company from the point of view of confidence and security. Certain points with regard to the security were raised on the Second Reading, and I said I would look into that matter. Again, the Minister for Local Government stands in relation to this company in no way differently from the way he stands in relation to any other insurance company. There is no responsibility on the local bodies to insure through this company. But the company was formed for the reason that it was perfectly clear that a good deal of money was being unnecessarily paid away in premiums. For instance, in returns furnished by 199 out of 326 local bodies it was shown that, during a period of eleven years, the eleven years prior to the setting up of this company, these 199 local bodies had expended £78,848 in premiums, and had recovered only £5,796; in other words, that their fire loss on the premiums paid was only 7.3. The fire loss ratio during a period of nine years on the insurance of county council property in England and Wales was 11.9. For twenty years with these local bodies that were members of the Municipal Mutual Insurance Company the fire loss ratio was 16.7 whereas the general fire loss ratio of companies doing fire business in England, as published in 1927, was 55 per cent. So that as between paying a fair premium and paying the type of premium that local bodies were paying before, there is a very big margin for saving, even while doing almost complete re-insurance.

Deputy Thrift raised the question as to what would happen if there was a £60,000 loss, and if the company was not fully re-insured. During the last thirty years there has not been a fire loss to a local body in this country to the extent of half the amount that Deputy Thrift mentioned. The normal fire loss ratio is very small. There is no moral risk with regard to the kind of property that is insured, that is, nobody is likely to come along and put a match to his own property. The fire loss ratio during the nine months for which the company has issued its report was only 4.29, as against a normal [253] people that the matter has been examined carefully at headquarters, loss in England during 1927 of 55 per cent. of the net premium. Therefore the company, so far as we know anything about it, is dealing with a very low rate of loss. We are informed that it is re-insuring in the most conservative possible fashion. The directors are shown in the last annual report. The Chairman is Senator Kenny, the Vice-Chairman, Count O'Byrne, of the Tipperary County Council; the Chairman of the Dublin County Council is on it, as well as a number of other prominent persons in local government. It is on their capacity to direct the company along satisfactory and sound lines that the local bodies who insure with the company must depend, and there is not, to my mind, any grounds— good, bad or indifferent—for suggesting that the security of this company is not perfectly satisfactory for the people who insure in it. That is as it affects my outlook on the matter with regard to the security.

Professor THRIFT: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  The Minister does not deny that the chance is there, though it is a small one.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  At any rate, whatever chance is there is only the chance that these particular men, handling the possibilities of that situation, which are very great, think it is reasonable to take, and I am assured that there is no loss that could happen that their machinery for re-insuring does not adequately cover, so that there is no danger to the local bodies that are members of this company.

Mr. DE VALERA: Information on Eamon de Valera  Zoom on Eamon de Valera  I might say that on this side of the House we are not by any means satisfied with this Bill—at least, perhaps, if I said we were not happy about it, that would express our views very much better than to say we are not satisfied. In other words, we are in the position that we have doubts on various points, and the Minister has not satisfied me, at all events, with regard to some of them. I am afraid that there are other Deputies in our Party in the same position. Our attitude is this: we realise that to refuse to pass a Bill to deal with the particular situation that has arisen might mean, possibly, the breaking up of this [254] examined by experts, that it has been found to be good and is a recommen-company. We do not desire that by any means. We want to see it work and to follow the start that has been made. We are anxious that this principle of combined insurance, leading ultimately, we hope, to mutual insurance, will get every opportunity of proving itself satisfactory, but our feeling is that the way in which it is tackled in this Bill is not the right way. We feel that the particular difficulty which has to be met could be met in another manner. For example, on the Second Reading we indicated that one of the things that might be done would be to exclude them from the necessity of lodging the £20,000, if that was the crux of the situation. Another suggestion that occurred, and to me it seemed all right—though I believe there are difficulties which I did not foresee at the time—was a change of the name, so that there would be no suggestion of mutuality as it is generally understood. Since we were discussing the matter before another point has cropped up, namely, whether deeming it to be mutual, might not make for complications in case of re-insurance, and whether it might not be held by some re-insuring company that, as a matter of fact, as mutuality is deemed to exist here, as a result of that, local bodies are, in fact, liable for any losses that might be incurred. I will admit that it is largely a technical and a legal matter and the Minister ought to be in a much better position than we, who are outside, can possibly be, to satisfy himself both on the legal implications and the question of general security.

The Minister cannot wash his hands out of this by saying, “The State has no responsibility. We are only passing an Act to enable the Company to be formed; we are giving it no State guarantee, no State backing or assurance, and this is simply the same as any ordinary company would be.” I hold when you pass an Act for a special purpose of enabling a company to be set up there is an implication, a suggestion, that those who went to the trouble of bringing in an Act to enable a company to be formed did examine the project, and that there is a certain guarantee given to the local [255] dation to the local bodies to insure with it. I think the Minister will admit that. You can go further. A decision against that company has been registered in the Courts. Now you go to the point of saying: “We are going to mend our hand, and we are going to defeat that decision.” Remember, I am not saying that that should not be done. I am simply trying to make the case that the Ministry in bringing in the original Act, and now in bringing in this particular Bill, are in fact giving a certain guarantee to the local bodies that everything is right and well with this company, that it is a thing that ought to be supported, just, for example, as in the case of the Creamery Bill. In the case of the Creamery Bill, and other Bills of that kind, we are helping another organisation. It is public policy and there is that idea behind it. When this Bill is passed local bodies will certainly get this impression, that it embodies a certain public policy, that it has been examined carefully by the people in charge, and is a guarantee to the people that everything is right. As I say, we are not in a position to know whether everything is right, both from the point of view of safeguarding the public bodies that wish to insure, and from the point of view of seeing that this particular way of getting out of the immediate difficulty that has arisen will not lead to further complications. If we could be satisfied on these two points we would be satisfied with this as a temporary measure, but we would like to see the Department going much further afield than they propose either in the original Act or in this Bill. We believe that the whole question of mutual insurance and the insurance of public bodies ought to be considered from the point of view of public policy, and that some such scheme of mutuality, as was indicated, with regard to the possibilities of re-insurance by the State ought to be considered. I know that that is outside the scope of this Bill, but I am mentioning it to show that we are not against the principle, even though the statement has been made that we are [256] very doubtful about this Bill in connection with the principal Act, and also in connection with the question as to what extent the local bodies are protected. As I say, I believe that you cannot wash your hands out of it and say: “We have no responsibility.” I think this Bill will be taken as an assumption and a guarantee of some sort on our part that everything has been thoroughly examined and that everything is all right.

Mr. MOORE: Information on Séamus Moore  Zoom on Séamus Moore  I suggest that one way out of the difficulty referred to by Deputy de Valera would be if the Minister would consider whether he could not put in an amendment under which he would take the right of auditing the accounts of the Irish Mutual Bodies Insurance Company annually and the right to examine re-insurance agreements. I am quite sure that many local authorities will get the impression that when a company is specially mentioned in an Act of Parliament, and when it has been discussed for several days here, that that company has a sort of hall-mark or guarantee about it. It will be a pity if that impression goes out, and at the same time if it is not the intention of the Government to accept all responsibility for the company. It would be quite easy for the Minister to undertake to have one of his auditors examine the books and to examine the re-insurances each year. It would be a comparatively simple matter and, I believe, that it would at all events save the face of the Dáil in regard to this question. It is a bit surprising indeed that the Government did not take the opportunity afforded by this Bill to explain if they have a policy in connection with insurance or not. They ought to be familiar enough now with the cry that too much money is leaving the country. In this case the money is being paid into the Irish Public Bodies Mutual Assurance Company and practically all of it, I think, is leaving the country, as it will have to be paid out in re-insurances to companies outside the country—eventually anyhow. In any case, even if it were not, there is still with the public bodies a larger volume of insurance than is going to be done by this company. There is employers' liability, fidelity [257] guarantee and a whole lot of other things. It is rather strange that the Minister for Local Government has nothing to say as to future policy in regard to these questions. It would be a very simple matter—at least to us it looks simple—and it would be extremely beneficial to the country, if the State were to arrange to accept re-insurances of any company formed for local bodies insurance or, alternatively, if the Councils were asked to contract—I know that this is practically repeating some of the remarks that were made on the Second Reading, but, as our amendments have been ruled out of order, I suppose the Ceann Comhairle will not be too severe. I think the principle of real mutuality, by which local bodies would agree to be responsible through the rates for losses accruing in the matter of fire, or other disasters, could very well be considered by the Department of Local Government, and that they really should have some policy to announce in connection with it.

AN CEANN COMHAIRLE: Information on Michael Hayes  Zoom on Michael Hayes  This is Section 2 of the Bill, and, as I indicated on Second Reading pretty clearly, the time for raising questions wider than the Bill itself was on Second Reading. I said that if the Bill is narrow then the questions which will arise under it must also be necessarily narrow and the scope for amending it will be as narrow as the scope of the Bill itself. If the House wants a discussion, as it appears to want, on the general question of insurance an opportunity can be found for that discussion presumably, but on the Committee Stage there cannot be a discussion on the general question of insurance, and still less on the Fourth and Fifth Stages.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  The question of security and other questions relating to the company, I think, can be discussed on Section 2. The question of mutuality can be discussed on Section 3. If we took them all on Section 2 perhaps it would be better. The principal points that Deputy de Valera has in mind are: (1) he objects to the retention of the word “mutual”; (2) that the Government definitely does not take any responsibility, good, bad [258] or indifferent, for the company; (3) that the scheme is not satisfactory, as it is not wide enough. On the question of Government liability for the company, the local bodies who insure with the company must do so with their eyes quite open to the fact that the Government accepts no liability or responsibility for the company; that the people who accept responsibility for forming this company, for looking for facilities to form it, and for conducting the company afterwards, are the General Council of County Councils. It must not be taken that the company is to be looked askance at because the Government does not take any responsibility for it. That would be unfair to the company and to the important work that the General Council of County Councils has undertaken in this matter at a time when the Government are not prepared to go any further than to give local bodies, through the medium of the General Council of County Councils, the facilities that the local bodies desired.

Mr. MOORE: Information on Séamus Moore  Zoom on Séamus Moore  On a point of order: does the General Council of County Councils come into this matter as an organic body at all?

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  The General Council of County Councils came into this matter by a unanimous request that they should get facilities for the formation of this company. The people who run the company are the local authorities, who actually come into the company, insuring their property through it, and becoming members of it. That point, perhaps, requires to be made clearer, as a misunderstanding might have arisen from what I said. Under a scheme, the initiation of which was fully approved by the General Council of County Councils, a large number of local bodies have taken this up, and their representatives, including the Chairman of the General Council of County Councils and, I think, the Vice-Chairman—I do not know if Count O'Byrne is the Vice-Chairman of the Council, but, at any rate, he is Vice-Chairman of the company—are the people who run it. It is on their ability, integrity and capacity to do this work that the local bodies [259] who insure with the company must rely for the proper conduct of their business. My own personal opinion is that the local bodies can rely on them with perfect confidence.

On the question of a more elaborate scheme, I as Minister am not prepared to recommend a more elaborate scheme at present for the insurance of the property of local bodies. I do not rule out any consideration of the matter. As a matter of fact, in so far as the present arrangements might be desirably extended, I would be very glad to cooperate in any way with the General Council of County Councils in making their position in this company a more widespread and more satisfactory position, because it would certainly be a great saving all round if all the local bodies were in this. It would be a great saving if we could make it compulsory for all the local bodies to go into this. I am not prepared at present to propose that as a policy. It is a matter that would require consideration, and I do not see any reason why the amending of the original Act should rush me or any of my colleagues interested in the matter into making a different scheme. As I say, it would undoubtedly reduce the premium which local bodies have to pay if they were all in this. It would reduce the amount of the premiums if there were not the competition that at present—because they are free in the matter—this particular company has to go through in competing with other companies, whether native or otherwise. At any rate, the position is that I am not prepared to recommend a wider scheme at present. I simply want to attain the situation which we thought we had attained for this company by the Principal Act.

On the question of mutuality, it is quite clear that the term “mutual assurance” is applied in the British legislation that we inherited to a much wider class of insurance than pure reciprocal insurance. If this particular company was being set up in pre-Treaty times I am perfectly satisfied that it would have been set up in the same way in which the Municipal Mutual Assurance Company has been set up in Great Britain.

[260]Mr. FAHY: Information on Frank Fahy  Zoom on Frank Fahy  Will the Minister tell us if that Municipal Assurance Company in Great Britain was not set up prior to the legislation which defines the word “mutual”?

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  It was set up before the Act of 1909. It was set up before the Act of 1906—the Marine Act —but if you take the Acts subsequent to the Act of 1906 you must realise that the term “mutual insurance” is used for covering people who do not accept inter se liability. The particular case quoted by ex-Deputy Magennis was mentioned here as a precedent that made the local bodies that are members of this company liable inter se for any losses. That is not a fact, because what was established in the particular case referred to by him was the principle that what gave liability to the people involved in any company were the contracts that they entered into with one another through the medium of their Memorandum of Agreement. The company dealt with in that particular case had inserted in their Memorandum of Agreement that they accepted inter se liabilities. It is quite clear that the only liability that the local bodies who were members of this company accept is the ten pounds liability in case of the winding-up of the company. Every section of the 1909 Act shows that by relieving them of the necessity for depositing £20,000 under certain circumstances, these particular types of companies did not accept inter se liabilities; that they simply joined themselves together by association for the purpose of mutual insurance in respect of certain matters. There was no suggestion that there was anything like inter se responsibility involved in the term “mutual insurance.” What we are doing here in respect of this company or any company formed under the Principal Act is that we are giving “mutual insurance” a definition which the British Board of Trade has consistently given to it in dealing with companies of this particular kind; the interpretation which it has given in dealing with the Municipal Mutual Insurance Company. There is nothing at all in the suggestion that by actually defining and interpreting “mutual insurance” in a particular way in this [261] Bill, and for the purpose of the Principal Act, any complications are being created in any way as between the Irish Public Bodies Mutual Insurances, Limited, and anybody they may reinsure with.

They enter into definite treaties with the re-insurance companies and these treaties are such that in the present circumstances if the company was going out of existence on the point of illegality there is not a single one of these re-insurance treaties but would be repudiated by the companies with which the present company is re-insured. There is nothing at all in that. It is simply a bogy raised and you can raise a lot of bogies in this matter.

Mr. J.X. MURPHY: Information on Joseph Xavier Murphy  Zoom on Joseph Xavier Murphy  I want to ask the Minister a question with reference to the companies that this company is re-insured with. Are they ordinary well-known companies and well recognised tariff companies, or are they foreign companies doing business abroad?

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I have no information as to what particular bodies this company is re-insured with. I accept no responsibility for the way the work is done. The work is carried out by a board of directors—ten of them— and their names and everything about them is given in the reports of the company. It would be undesirable, accepting no responsibility for this particular company, that I should go into these matters and that we should deal with them here. We do not go into them with regard to any of the other insurance companies with which the local bodies are insured. If we did we might have a terrible lot of discussion here.

Mr. MURPHY:  I take it the State has given its blessing to this mutual insurance scheme. Surely the State has some interest as to whom the re-insurance is effected with? I understand that these people go abroad. I think they should find companies here in Ireland which give certain employment, to re-insure with. I do not see why the money should go out of the country altogether. I think they should be confined to the companies with offices in Ireland and give employment here.

[262]General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  That case has to be made to the members of the public bodies and they are all members of public bodies who are directors of the company.

Mr. BRISCOE: Information on Robert Briscoe  Zoom on Robert Briscoe  May I ask a question? The Minister made a definite statement previously: that there was no foundation for the suggestion that the members of this mutual body were liable beyond £10. I have Judge Davitt's decision before me, and it would contradict that. I should like to read an extract from it. Judge Davitt said:

“The defendant company is a body corporate, being a company registered under the Companies Acts, 1908 to 1917, upon the 26th September, 1926. It is not a trade union or a Friendly Society and could not be registered under the statute relating to such bodies. It is a company limited by guarantee, the amount which each member of the company undertakes to contribute to the assets of the company in the event of its being wound up being such amount as may be required not exceeding £10,”

and he goes on to say:

“A member of such an association is liable to the full extent of his property for contribution towards the losses which other members may incur by reason of loss of ships insured in the said mutual association, and that liability has no reference to has guarantee at all.”

The judge in that decision there intimated that £10 was specifically stated for winding up, and in quoting this decision he quoted another in a similar case where men had got together for the purpose of insuring ships. In that particular case one ship was lost, and the members under such a clause as this were all liable up to the whole extent of their assets.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Because their articles of association very explicitly involve them in inter se liability.

Mr. BRISCOE: Information on Robert Briscoe  Zoom on Robert Briscoe  And the Minister does not take from this judgment that these people are liable to the full extent of their assets.

[263]General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  No. They are not liable. I shall read the definition of mutual insurance that we have put in here: “The expression ‘mutual insurance’ where it occurs in the Principal Act shall mean insurance by a company in which all the holders of policies issued by such company and no other persons are members of such company whether any liability does or does not exist between such members, each to and with the others, in respect of claims under such policies”; and the statement of what their liabilities are in respect of one another are embodied in their articles of association, and their articles of association make it quite clear that they have in respect to one another no inter se liability.

Mr. G. BOLAND: Information on Gerald Boland  Zoom on Gerald Boland  I ask Deputy Murphy what he means by re-insuring abroad? Does he consider that the sister island is not abroad, or does he think that it is re-insuring at home?

Mr. MURPHY:  I have been informed that a good deal of this re-insurance is done in Germany. I think that is a mistake, because we have a lot of offices established in Ireland by first-rate reputable companies, and I think that re-insurance should be done with them and not in Germany. Of course, my information may not be correct.

Mr. BOLAND:  I want simply to say that as far as we are concerned, if we are the independent nation that we are alleged to be, Germany is no more a foreign nation to us than Britain, and it may be every bit as solvent. I do not know whether it is or not. It would be desirable from the point of view of extending our relations with foreign powers.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I am surprised that Deputy Murphy was not told that our re-insurances were being carried out in Russia.

Mr. BOLAND:  Yes, and in Russia if necessary.

Mr. MATHEWS: Information on Arthur Patrick Matthews  Zoom on Arthur Patrick Matthews  I want to assure Deputy Boland and Deputy Murphy that none of the re-insurance is carried out either in Germany or in France.

[264]Mr. CAREY: Information on Edmond Carey  Zoom on Edmond Carey  I understood this Bill was to legalise a society previously running in the same name. As far as the local authorities are concerned we always ask for a quotation and look to the credentials of the society with which we do business and also we look to getting the lowest tender. If anything has occurred here to make it mandatory on local authorities to insure in certain societies I think that would be unfair. It should not be mandatory on the local authorities to give their insurance to any society. I believe as far as this Bill is concerned, and as far as the society with which it deals is concerned, it is only the same as in the other societies which takes insurance from local authorities and then re-insures again.

Mr. DE VALERA: Information on Eamon de Valera  Zoom on Eamon de Valera  The Minister answered some of the points I raised, but he did not answer one, and that was why the plan of simply excusing this particular company from putting down £20,000 was not followed. Was not the main purpose to excuse and dispense them putting down £20,000?

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  Yes.

Mr. DE VALERA: Information on Eamon de Valera  Zoom on Eamon de Valera  Very well. That seems to be a very simple matter to me, but why was not that direct method for dispensing with it adopted instead of this involved way?

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  What is involved in this particular matter? We have to secure the company in regard to its articles of association framed on the original Bill, which apparently had a flaw in it. We had to secure it in regard to its operations both prior to and since the judgment. That is Section 2. Section 3 makes a definition of mutual insurance, bringing it into harmony with the particular analogous body that is doing the same class of work in Great Britain. We are told, from the point of view of the company and the local bodies which are interested, that there is a virtue contained in the term “mutual insurance,” and that they are loath to do without the use of it. We think that they are entitled to such help as they can get in that matter, particularly when the definition put in here is [265] the definition on which the Board of Trade in England have been acting for quite a number of years. Section 4 refers to Section 4 in the Principal Act where the deposit need not be made if the Minister for Industry and Commerce was satisfied that it was a body that came under the Act. As the courts have ruled that they are the arbiters in the matter, whatever the Minister for Industry and Commerce has done, there is no necessity to have the Minister brought into the picture at all, and Section 4 is put in to take him out. There is nothing complicated in that.

Professor THRIFT: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  Did the Minister say that the definition given in Section 3 was taken from the British Act?

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  From British practice.

Professor THRIFT: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  But surely not in these words. I am anxious to find out what meaning the Minister attaches to the word “mutual.” So far as I can read the meaning, it would be just as effective if it would end up by saying “whether mutual or not.”

AN CEANN COMHAIRLE: Information on Michael Hayes  Zoom on Michael Hayes  Let us dispose of Section 2 first.

Question—“That Section 2 stand part of the Bill”—put and agreed to.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I am going to ask Deputy Professor Thrift if he will listen to Section 31 (a) of the Insurance Act of 1909:

“This Act shall not apply where the company is an association of employers which satisfies the Board of Trade that it is carrying on, or about to carry on, business wholly or mainly for the purposes of the mutual insurance of its members against liability to pay compensation for damages to workmen employed by them either alone or in conjunction with insurance against any other risks incident to their trade or industry.”

It was because the Municipal Mutual Insurance Limited were able to persuade the Board of Trade that they were such a body that in 1918 they were exempted from the position of [266] putting down a deposit of £20,000 while they undertook insurance of that particular kind, and they are not liable inter se for risks and they have not to deposit £20,000.

Professor THRIFT: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  I thought that the Minister began by saying that the expression “mutual” shall not apply in these cases.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  “This Act shall not apply.”

Professor THRIFT: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  Does the Act referring to mutual insurance not apply to the cases you go on to deal with? I am referring to the meaning of the term “mutual.”

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I am asking the Deputy if he can give me an interpretation of the phrase “mutual insurance” in the section? “This Act shall not apply where the company is an association of employers which satisfies the Board of Trade that it is carrying on, or is about to carry on, business wholly or mainly for the purposes of the mutual insurance of its members against liability to pay compensation or damages to workmen employed by them either alone or in conjunction with insurance against any other risks incident to their trade or industry.” The same clause is put in in regard to fire insurance in this particular Act. The practical application by the British Board of Trade of that term, “mutual insurance,” is what we are getting put in here as a statement in law to help to settle our position here, because, for some reason or another, a different interpretation based on the Act of 1906 has been given by our courts to the words.

Professor THRIFT: Information on Prof. William E. Thrift  Zoom on Prof. William E. Thrift  Is the Minister clear as to what the implication of the term is?

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I am satisfied that we have an excellent precedent, whether it is the law in practice or the law in words, for saying that when we have local bodies here combined to do a thing jointly in regard to insurance work they are carrying out mutual insurance.

Mr. FAHY: Information on Frank Fahy  Zoom on Frank Fahy  My interpretation of the section is that it does imply inter [267] se liability. I would be glad if the Minister would quote some case as an example of the practice that obtains in Britain. The only case he quoted was that of the Municipal Mutual Insurance Company of England which was established in 1906, three years before there was a legal definition of the word “mutual.” The law, not being retrospective, did not hit municipal bodies.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  If it were going to hit that company it did not hit them in respect of fire insurance, because they were established prior to the Act, but when they came in 1918 to deal with employers' liability, then if this term “mutual insurance” did not mean the type of insurance that that body was carrying on, it would have hit them in respect of employers' liability, but it did not by a decision of the Board of Trade.

Mr. DE VALERA: Information on Eamon de Valera  Zoom on Eamon de Valera  Though the Minister has satisfied me on some points I am still rather doubtful on others. It is, however, the Minister's responsibility for getting definite legal advice. We have not got that advice here and we have not had an opportunity of looking up cases, but we do not want to inflict any hardship that would follow by rejecting this Bill. Therefore, be it on his head, and on the advice he has got here. That is our attitude in respect to the Bill. We have not had an opportunity of completely examining this Bill in regard to all its implications or the legal implications which there might be, but we are of opinion that it is an unnecessarily long way of doing a comparatively simple thing. However, if the Minister has satisfied himself, through his legal advice, we are not going to oppose it.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  I would like to say that in the interests of the company I have satisfied myself in every possible way that this amending Bill puts them right. I quite appreciate the attitude of Deputy de Valera and the critics on the other side in the matter.

Mr. MOORE: Information on Séamus Moore  Zoom on Séamus Moore  I think it should be understood that we are not satisfied [268] with the statement which the Minister makes when he says that he feels no responsibility for the insurance activities which local bodies may carry on. We hold that the Minister for Local Government, especially in the circumstances that surround this Bill, should take particular care to see that local bodies are properly insured against big losses. We are at variance with him on that point.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  How can I undertake to examine the solvency or otherwise of the various insurance companies with which local bodies insure? I could not possibly do it.

Question—“That Section 3, the remaining sections and the title, stand part of the Bill”—put and agreed to.

Bill ordered to be reported without amendments.

The Dáil went out of Committee.

Bill reported without amendments.

General MULCAHY: Information on Richard James Mulcahy  Zoom on Richard James Mulcahy  In view of the type of understanding at which we have arrived among the various Parties in regard to this matter, and in view of the desirability of putting this company in a legal position at the earliest possible date, I would ask permission to take the Report Stage of the Bill tomorrow.

Report Stage ordered for Thursday, 12th July.


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