Wednesday, 2 December 1981
Seanad Eireann Debate
Minister for Trade, Commerce and Tourism (Mr. Kelly): Baineann an Bille seo le trí ábhair a thagann faoi réim reachtaíocht árachais — comhdhéanamh Chuideachta Árachais Saoil na hÉireann, Teoranta, ráthaíochtaí onnmhairithe a sholáthar agus ráthaíochtaí bainc a sholáthar i ndáil le h-iasacachtaí ón mBanc Eorpach Infheistíochta.
The purpose of this short Bill is to make three changes in insurance law which are of an urgent and highly desirable nature. Firstly, the Bill proposes an amendment to the Insurance (Amendment) Act, 1938, under which the Irish Life Assurance Company Limited were established, in order, mainly, to allow Irish Life to enter the non-life insurance market in Ireland through a subsidiary company. Secondly, the Bill proposes to amend further section 2 of the Insurance Act, 1953, so as to increase the aggregrate of the Minister's liability under export credit insurance policies from £100 million to £300 million. This change is necessary to keep the figure in line with the increasing value and volume of our exports.
 The final amendment affects the Insurance (Amendment) Act, 1978, and is by way of confirmation that banks licensed in the State can guarantee loans issued by institutions such as the European Investment Bank for industrial development projects in this State. I will now deal briefly with each of these three aspects in turn.
Irish Life Assurance Company Limited were brought into being by the Insurance (Amendment) Act, 1938 which provided for the taking over of the business of several existing insurance companies which had run into financial difficulties. The 1938 Act enabled a rescue operation to be mounted to protect the interests of the policyholders, and the companies involved were amalgamated. The Minister for Finance contributed £1 million towards meeting the deficiencies in the funds of the participating companies. The 1938 Act provided that the business of these companies would be transferred to a specially constituted company referred to in the 1938 Act as the terminating company, which would, on a suitable occasion, transfer the business to a company known as the permanent company. The transfer to the permanent company was effected in 1947 and the permanent company is now known as Irish Life Assurance Company Limited.
I think it is fair to say that this rescue operation has come to be one of the most successful operations mounted by the State. Irish Life have gone from strength to strength since their inception and they are now our largest insurance company with assets in 1980 of over £700 million. These assets have provided valuable investment funds for the industrial and commercial sector of the economy and they are also an important source of Government funding via the gilts market. Senators will be aware that while the Minister for Finance owns some 90 per cent of the shares of Irish Life, the company are in practice run on a strictly commercial and independent basis. Freedom of action is essential in an area such as life assurance where the company are competing with other insurers who enjoy this freedom.
 As might be expected, the liberalisation of insurance within the Community has the effect of increasing competition for insurers at home and providing new opportunities in other member states. The non-life market was opened up substantially by the implementation here in 1976 of the EEC Non-Life Directive and the life market will be similarly affected when the life directive comes into effect shortly. In face of this situation, Irish Life have sought to diversify their business and extend their activities, for example, into foreign markets.
For some time past the company have recognised the desirability of being able to engage in the non-life insurance market. Under Irish insurance law it is not possible for the same company to transact both life and non-life insurance. Indeed, this separation of life and non-life activities has been established as the norm in the First EEC Life Assurance Directive for companies seeking insurance authorisations in the Community in future. Nevertheless, it is possible, both under Irish law and the EEC directive, for a company who are authorised, for example, to transact life insurance, to engage in non-life insurance, and vice-versa, via a subsidiary company, and there are several examples of such companies already in the Irish market. However, Irish Life are specifically restricted under the 1938 Act, and their memorandum of association, to the carrying on of life assurance business only, and cannot even by way of subsidiary company engage in non-life business.
The basic purpose of the first section of the Bill is to remove this restriction and allow Irish Life to establish or acquire such a non-life subsidiary. The Bill will, therefore, do no more than place Irish Life on an equal footing with their main competitors in the Irish insurance market and provide them with a broader base from which they can better exploit such opportunities as may arise in the future and diversify into areas of underwriting activity from which hitherto they have been excluded.
Senators will be aware that the company  have made a successful offer for a majority holding in the share capital of Church and General Insurance Company Ltd., a long established Irish non-life insurance company. This offer was, of course, conditional on the enactment of legislation enabling Irish Life to make the necessary changes in their memorandum and was also subject to a decision by me not to make an order under section 9 of the Mergers, Take-overs and Monopolies (Control) Act, 1978. A proposal, accordingly, has been made to me under the Mergers Act and, having examined it in accordance with the usual procedures in these cases, I have decided not to make such an order and to allow the take-over to proceed.
Irish Life in association with Church and General will, in future, be in a position to offer a complete insurance service to their customers and it is their intention to compete through their subsidiary in the market for all classes of non-life insurance, including fire, motor and other liability classes. Section 1 of the Bill is intended to facilitate the company in pursuing this course.
The Bill also provides in section 1 for two further slight amendments to the Insurance (Amendment) Act, 1938. The first will enable certain purely technical changes to be made in the memorandum of association of Irish Life, to bring the description of life assurance contained therein into line with the EEC Life Assurance Directive which will be implemented shortly in this country. The second will allow Irish Life to delete certain spent provisions from their memorandum. It is necessary to effect these minor changes by way of legislation for the same reason which applies in the case of the first amendment, that is that the 1938 Act lays down in specific terms the content of certain of the main provisions of the memorandum and articles of the company and the Act must, therefore, be amended to enable the changes to be made. These latter two amendments are of a technical nature and do not make any real change in the company's position.
Turning to export credit insurance, Senators will be aware that section 2 of  the Insurance Act, 1953 enables the Minister for Trade, Commerce and Tourism to give guarantees with respect to the insurance of risks in connection with exports. Under the Act, the aggregate amount of the liability at any time for principal moneys in respect of export guarantees was set at £2 million. As our exports have grown over the years this figure has been successively amended, reaching the present limit of £100 million in the Insurance (Amendment) Act, 1978. At 31 December 1980 the actual aggregate amount of the liability under the scheme was £68.1 million but the expectation is that the £100 million limit will be exceeded in the very near future. Hence the opportunity is being taken in this Bill to increase the present limit to £300 million. Though the size of the increase is very large, it is tailored to keep pace with the expanding value of our exports and to obviate the need for further upward adjustment of the limit for three to four years.
I can assure the House that export credit insurance is of considerable value to our exporters enabling the various political and commercial risks involved in exporting to be shared and spread. The insurance policy also serves as a gilt-edged security to banks when the exporter wishes to raise working capital, as is amply demonstrated by the recently introduced export credit finance scheme for goods sold on short-term credit. That scheme is proving to be very attractive to exporters and in itself will encourage greater use of export credit insurance.
I hope that the House will agree that, given the importance of what is at stake, that is, the maintenance of a vital export support, the increase now proposed in the aggregate liability with regard to export guarantees can be accepted as both a necessary and timely step. I am confident that this proposal will have the support of the House.
The final provision in this Bill is by way of confirming that licensed banks in this country can guarantee loans made by institutions such as the European Investment Bank to industrial development projects in this country. The Insurance  (Amendment) Act, 1978 allowed licensed banks to undertake certain types of guarantee and suretyship business specified in the Act which were previously regarded as insurance business. Certain doubts have arisen as to whether, within the exact and very specific terminology used in the 1978 Act, licensed banks are allowed to guarantee these loans from the EIB. In order to put this matter beyond any doubt it has been decided to amend the 1978 Act in the manner set out in section 3 of the Bill. The European Investment Bank requires guarantees from banks in the recipient country and confirming this facility in this Bill merely follows the intention enshrined in the 1978 Act to allow banks to give such guarantees.
I am sure Senators know that it has been the intention for some time to amend and update Irish insurance legislation in general. This exercise is well advanced and I would hope to introduce the necessary amending legislation fairly soon. For this reason, the present measure has been limited to the few specific items for which there is an immediate need and which could not await the finalisation of the major Bill now being processed.
Professor Hillery: I should first like to welcome warmly the Minister to the House and to congratulate him on his appointment as Minister for Trade, Commerce and Tourism. As a former university colleague of mine, may I also express the hope that he will, sooner rather than later, find the opportunity to return to his university career?
Irish Life, unquestionably, is one of the success stories among our State-sponsored bodies. In that context I would like to link Irish Shipping which only this morning made the headlines as another success story. From the Minister's introductory  remarks it is clear that from modest and uncertain beginnings Irish Life have now reached the stage of a thriving, multi-million pound organisation. Their activities, by statute, have been confined to life assurance only. The specific purpose of this Bill is to allow the company to acquire 60 per cent of the share capital in Church and General, who themselves are a profitable company. Obviously Irish Life have been flying on one wing only since they could engage in life assurance solely to date. This Bill broadens their authority to engage in general insurance. It is a healthy step forward that a substantial and successful Irish company will now be permitted to engage in serious competition with foreign companies in both life and general insurance.
In summary, we welcome the Bill but we feel that section 1 — since it broadens the scope of Irish Life's activities very considerably — could and should be more usefully teased out on Committee Stage. I hope that the necessary interval between Stages will be made available to tease out section 1.
Mr. Higgins: I shall not welcome the Minister because I had the privilege of being here when the Minister waxed very lyrically indeed in his summary of the debate on the constitutional and legislative change motion.
Mr. Higgins: Like Senator Hillery, I welcome the provisions of the Bill which, as the Minister outlined in his introductory remarks, basically accommodates the purchase of 60 per cent of the shareholding in the Church and General Insurance Company Ltd. by the Irish Life Assurance Company Ltd. As the bargaining progressed for this shareholding, and as Church and General had decided to go into the market-place with their  operation as such, it was with an enormous sense of relief that we all learned that the successful bidders ultimately were the Irish Life Assurance Company Ltd. It is very appropriate that an assurance company with such a long history and with such a marvellous record should have been successful. As Senator Hillery has already stated, it has been one of the success stories in this country and, in view of the fact that the Government have a 90 per cent holding in the company, one of which we should be justly proud. Its history, as the Minister has stated, goes back to 1938 when the Minister for Finance decided to underwrite £1 million in order to bail out companies which had got into a considerable financial dilemma. It was a fortunate intervention.
The Insurance (Amendment) Act, 1938, therefore, which emerged from that situation, enshrined the charter of Irish Life. The Irish Life Assurance Company have gone from strength to strength. They have grown enormously to their present stage when, in fact, their assets actually exceed £700 million where they employ 1,200 people and when they invest 90 per cent of their assets in this country in equity capital, in the funding of industrial and commercial firms, in Government gilts and in industrial and commercial properties. Not alone that, but they have gone outside the scope of the national territory and have diversified into the UK market and have set up numerous branches there.
As the Minister stated, in view of the anticipated competition from EEC insurers as a result of the 1976 directive, there is an obvious need for Irish Life to strengthen their base, to expand and to diversify. As a result of this merger I am delighted to note that they will be diversifying into the areas of motor insurance, fire insurance, accident insurance, property insurance and so on. I think everybody will welcome their intervention in the area of motor insurance which is the subject of a very contentious, continuing debate. Hopefully more competitive premiums will result.
The taking over of the Church and General Insurance Co. Ltd. will give them  the required additional scope. As the Minister has said, the 1938 charter of Irish Life has to be amended. Their merger with Church and General fulfils the need for an expansive role affording greater scope. Church and General are a very successful operation, even though non-life areas account for 4 per cent only of their market. They are in direct competition with something in the region of 30 other companies. They have been enormously successful, their business has grown steadily, their premiums having doubled in 1980 alone.
This Bill advocates the introduction of the technical changes necessary in the charter in order to enable Irish Life, by the taking over of Church and General, to diversify into those multi-areas of insurance. Like the previous speaker, I welcome sections 2 and 3 of this Bill.
Mr. Fallon: I should like to make the observation, previously made by the Minister and by Senators Hillery and Higgins, that the Irish Life Assurance Company Limited have played an enormous role in Irish life generally. We all accept that. We know that they performed a worthwhile rescue operation in the thirties. Their role to date has been excellent. They continued as an industrial branch insurance company and made a very important contribution by taking on the small death policies which enabled many of our poor people to be buried. Recently they widened out considerably indeed in the ordinary branch insurance. Certainly they are stealing the cream of Irish business in the assurance field generally. They have much competition to meet and will have competition in the future. The Irish Life record is excellent. They should be complimented and nobody in this House could have a bad word to say about them. In 1980 they had assets of over £700 million. Church and General, on the other hand, have been a conservative rather small company who did not want growth for some reason. The concentrated their activities on the insurance of the clergy and various convents and schools. That had been their type of business but recently they expanded and competed very well with  all of the other insurance companies. Indeed, their household insurance policy is reckoned to be one of the best on the market. They were excellent in the liability field, in employers' liability and in public liability which for some reason of which many people will be aware, has gone somewhat sour. Therefore, they have curtailed their activities in the liability field. They also transact motor insurance on a small scale, preferring to accept the parish priest, the reverend mother, the solid, gilt-edged risk which, hopefully, will not produce a claim.
Therefore, we have now a marriage of Irish Life and Church and General, a marriage of church and State. Many of the insuring public will see this as the miracle for which they had hoped. We know the state of insurance in Ireland, the plight of the young driver trying to get insurance, the huge premium he must pay. Often he pays more for his insurance premium than he paid for his car. We know how difficult it is for the disabled driver to have his car insured. We know that in industry in the liability field, in heavy employers' liability and heavy public liability there are huge premiums and great difficulty is encountered in getting the risk placed at all.
Is this the answer to all our prayers? Is this what the insuring public have been waiting for for years? Here we have an Irish company, a State company in which the Minister owns 90 per cent of the shares, with assets of £700 million, now entering the general branch field. We are entitled to ask if all the problems of insurance are over. Will this new subsidiary of Irish Life now get involved and take the young driver? Will they take the heavy public liability risks? Will they compete openly and fairly and take as much of the market as is offered to them?
Senator Higgins said he was glad that Irish Life rather than some other body took over the shares of Church and General. That is a fair comment which he is entitled to make. I know that that was a reference to PMPA. Certainly people can criticise the PMPA. People may say that they have branched far away from what they were set up to do. But in fairness to  them we have to say that they are accepting the risks. A 19-year-old driver or a person who may have had a small claim in the past can go to PMPA and they will give him a quotation, and that cannot be said of the other insurance companies, certainly not to the same extent. So I am asking the question: is this State-owned company, with assets of £700 million, the answer to all the ills? I hope it is.
I wish also to make the point that of late Church and General did extend their field and advertised on television saying in regard to their range of risks that one should see one's insurance broker. But their business has been built up over the years — and I am not criticising them — through their own arrangements with the reverend mother and the parish priest and so on. But of late they have approached the insurance broker. When they wanted to build up their income, they went into the commercial insurance field. I hope we will now see a massive extension of this, that the insurance broker, as far as Church and General and Irish Life are concerned, will deal with legitimate insurance intermediaries only. That would be of importance and something that I and most people dealing in insurance would welcome. I hope that as a result of this alteration Church and General will get involved in all classes of non-life assurance including bonds which were mentioned in regard to the tour operators Bill. Bonding is an area which was mentioned freely last week in this House. Hopefully for tour operators, and for all of the other areas of insurance, Church and General will open their doors and will operate in a very open way for the insuring public. I hope that this Bill will be seen as important to the insuring public because I believe that the State has a clear responsibility to that section of the community.
Dr. Whitaker: I welcome the provisions of the Bill. I have followed with great satisfaction the progress of Irish Life since its inception. Indeed, I recall that the 1938 legislation and the Banking Commission Report represented the deep water into which I was plunged as  a young man entering the Department of Finance in 1938. However, enough of nostalgia.
I do not want to say anything about the merger of Church and General with Irish Life because I had a part in it indirectly. But I was interested to hear Senator Fallon refer to it as a marriage of church and State. I cannot refrain from expressing some doubt as to whether the offspring will be as miraculous as Senator Fallon was praying for a moment ago.
My intervention is really to seek further explanation from the Minister as to why there was a principle up to now — and still is in the EEC — of separating life and non-life business. He said in his opening statement that up to now — and of course that is the reason for section 1 of this Bill — Irish insurance law prevented a company from undertaking both categories of business. He also said that this separation has been established as the norm in the first EEC life assurance directive. There must be a good reason for this. Perhaps the Minister would tell us what the basic reason is. I suspect it has something to do with trying to prevent possible losses on non-life business from damaging the life funds and therefore the capacity of a life insurance company to honour the terms of its life policies. If that is the case, then perhaps he would tell us whether in fact operating through a subsidiary enables the life company to separate itself sufficiently from any such contamination of losses in the subsidiary company. Very often, as the Minister knows, parent companies have to guarantee the viability of subsidiaries and I wonder if that will be precluded in relation to insurance companies. If that question were answered perhaps it might help to solve some of Senator Hillery's difficulties about section 1.
Mr. Lanigan: There are just a few things I would like to say. I welcome the Bill. I wonder if a bonding system for insurance brokers could be established because it seems that it is not until something happens that one finds out whether one is insured or not. One of the major problems that one has, whether it be in the life insurance field or the general  insurance field, is that one takes advice from somebody. Whether one takes it directly from an insurance company or from a broker the unfortunate point about it is that one pays one's money and one takes one's chance but one does not know until the fire or the death occurs whether one is under-insured or overinsured.
It is a common occurrence for a robbery to take place in a household and for the person claiming from the insurance company to find that because of inflation he is totally under-insured and cannot recover the value of the goods stolen. The same can happen in the case of a fire. Unfortunately, most people are in the hands of the insurance broker. Is there any intention of bringing in a bonding system for insurance brokers?
Life insurance is the biggest quagmire that anybody can get involved in. Again, there is hardly a person in Ireland who does not have somebody knocking on his door at least once a month selling life insurance of some description and each of them seems to have an advantage. But it is impossible for a layman to find out where the advantage lies because figures can be produced by life insurance companies that are true for a particular age group or a particular period of time. There is no way that a layman can go through the quagmire of life insurance.
On the question of the increase on the export credit insurance from £100 million to £300 million I wonder is this figure enough since we are in competition with exporters from EMS countries and also from Britain. A company based both in England and Ireland has an advantage over the company which is only based in Ireland. If it has an export credit in England of £10,000 sterling it has a distinct advantage over the company based in Ireland with only £10,000 of export credit in punts. Is there any way that an arrangement could be made in the EEC to allow for standardisation of export creditable allowances because when it comes to exports, our exporters are at a distinct disadvantage vis-à-vis international companies? With those comments, in general I welcome the Bill.
Mr. Staunton: I would like to address myself briefly to the Bill and to welcome the Minister to this Chamber this afternoon. I also welcome this Bill. I would like to associate myself with the compliments that have been paid to Irish Life. The foresight displayed within the Department of Finance in coming to the rescue of the various companies that were in difficulty around 1938 has been one of the more enlightened aspects of public life here which led to a very fruitful merger at that time. It is a very successful aspect of the Irish insurance market, with consequent benefits of investment in industry and so on here. It is pleasing to be able for a change to pay this type of compliment in this era of considerable gloom.
This take-over of the Church and General Insurance Company, this merger of church and State, as it was called by other Senators, would appear to have connotations for the Attorney General, in his present review of the Constitution, perhaps recommending to the Government that there should be a re-introduction of that Article of the Constitution which recognises the special place of the Churches in this country. So, we are starting an interesting debate when we talk about this merger. Of course, apart from that, it is obviously very sensible and I approve of it absolutely.
The take-over in question need not have any connotations in so far as mergers or monopolies in those areas in which the Minister has discretion to play a role in another sense are concerned. I understand that the Church and General Insurance Company have only about 4 per cent of the non-life market here. Taking into account that Irish Life are not in that area to start with, this amalgamation simply leads to the amalgamated company having only 4 per cent of the non-life market in a part of the service sector in which they are competing with about 30 other companies. So there is no question of it being undesirable in the context of the undesirable side of monopolies or mergers or what might happen in that particular area.
Let me move on from this issue of Irish Life, and the necessary amending of legislation  to get over that problem, to the two other sections which are contained within this Bill and to which limited reference has been made. The section in regard to export credit insurance is obviously necessary. The fact that the Insurance Act, 1953, enabled the Minister to give guarantees with respect to insurance risks in connection with exports at a level of about £2 million is an indication of the extent of exports then, whereas the present actual level is running at about £70 million. Under present legislation £100 million is the limit and it is expected that that will be exceeded very soon. The very necessity to increase this limit from £100 million to £300 million is an indication of the continuing underlying strength of exports here. This section is welcome for these reasons.
To a degree, the critics of our membership of the Community tend to overlook the intangible benefits which have come to us through our membership of the EEC. There is a tendency to look at the tangible money and the extent to which countries are net beneficiaries or otherwise in so far as the Community is concerned. There is a tendency in some circles to measure Ireland's benefits in the hard terms of the number of pounds we get in a given 12 months. We tend to forget the intangibles. This export credit Bill, for example, points to the incredible intangible there is in having duty free access to a market of 200 million through Europe. It is not illustrated in terms of what we get in pounds from the EEC each year, but the underlying investment inherent in this and the attractiveness of this country as a location for industry to the Americans and the Japanese and others in continental Europe is of huge and incalculable benefit to this country and is illustrated by the dimensions of exports from this country in this particular section.
I would like to refer very briefly to the third section, the European Investment Bank, and the legal anomaly that has made this section of the Bill necessary. I am particularly glad that it is contained within this Bill because it gives me an  opportunity as a legislator to speak very briefly about the European Investment Bank. Again, it is in this same area of exports and export credits and again it is one of these intangible benefits from European Economic Community membership which I do not think is sufficiently appreciated here. Our banking system has, of course, been under pressure in an under-developed country in which there have been massive demands for capital investment in infrastructure, in agriculture, in industry, in the service sector, in the medical and social fields and these constraints have led to certain difficulties. Since we joined the EEC these constraints have been reduced tremendously because membership of the Community and the access of this country to funds within the European Investment Bank have led to this enormous injection of capital funds into this country in very acceptable circumstances and has led to major developments. The dimensions are significant. We are talking about capital investment by the European Investment Bank here since we joined the Community running to about £240 million which I understand is proportionately higher than that in any other member state. It is a very considerable complement. We are talking about long-term funds over ten or 12 years and of 15 years in the case of loans to Bord na Móna for turf development, coming in at interest rates from about 10 to 13 per cent which are extremely favourable interest rates for long-term investment, building up the infrastructure, the energy sector, the agricultural and industrial sectors of this country. Part of that package, of which I am personally aware, is the very significant extent of loans of about £90 million to the Industrial Credit Company since 1978.
For these reasons if there is this legal anomaly in so far as the guaranteeing of loans from the European Investment Bank is concerned, I am particularly pleased to assist the Minister in getting over it to ensure the continuing development of this country through this very welcome source of funds for which we are indebted to the European Investment Bank.
Mr. Leonard: I also welcome this Bill. As mentioned earlier, Irish Life are certainly a success story in a field where many other companies have been anything but successful. This company were set up in a very difficult period in the history of the State, under fairly difficult conditions, to take over from small groups who had problems. The Church and General were selective in their business, interested only in fairly safe bets. It is important that a subsidiary like that is setting up at the present time. Since our entry into the EEC some very large insurance and assurance companies have entered the market here and therefore it is important for us to have a strong home-based subsidiary to counter them.
The Minister said that it is intended to amend and update our insurance legislation. It is important to do this. The question of the very high rates quoted to young drivers for insurance was mentioned. In many cases it is tantamount to refusing them insurance. I hope that if this subsidiary is fully developed it will enter into such areas of insurance because in an area such as motor insurance for which rates are still increasing substantially year by year it is very important to inject a measure of competitiveness in the years ahead.
The increase in limits was referred to. It was certainly interesting when it was increased to £100 million. It may seem excessive to increase that limit up to £300 million, but it is to be welcomed. I hope that the progress that those two companies have made to date will continue.
Minister for Trade, Commerce and Tourism (Mr. Kelly): I would like to thank the Senators for their interventions and also to thank those Senators who welcomed me personally. I am not sure if I understand Senator Hillery correctly in his request for an interval to tease out section 1. Is he going to seek a space of a week between this Stage and the next Stage?
Mr. Kelly: I have no strong objection to that. I did not anticipate that it would be sought. I will have to see what the position is in regard to availability. It may in fact turn out to be more than a week. However, I do not think we can object to a request for an interval.
Both Senator Hillery and Senator Higgins referred to the success of the Irish Life Assurance Company Limited. One of the important dimensions of their new operation in their acquisition of the controlling interest in the Church and General company is that Church and General have a very strong Continent-based element. Twenty per cent of that company is owned by the L'Assurance Genérale in France which is a very powerful and well connected group there. The view of the Irish Life company is that this contact will give them a foothold on the Continent and enable them to do that which continental companies are seeking to do here.
One of the implications of the European Economic Community always was — it is only now beginning to bite — the free movement of services as well as the free movement of goods, and Irish insurance companies are now facing much stiffer competition on their own soil from foreign-based companies than was formerly the case. I have been inquiring as to whether they cannot retaliate because there is no use in wringing our hands and whingeing about competition on our doorstep being intensified. The whole purpose of the Common Market is to give us the very same opportunity to get out and put our foot in the doorsteps of the householders of western Europe. I have had not entirely happy replies in regard to the degree which Irish companies are doing that. I think some of them, because it is a territory which literally, geographically and linguistically is unfamiliar to them, in which management techniques and so on would require to be learned from the ground up, have not been as adventurous as some of the foreign companies have been in establishing a foothold here. I hope that will change because, needless to say, premium income earned by an Irish company abroad is just the very same from the  point of view of promoting national wealth as the export of manufactured goods. We can perceive here an area in which what appears to be a chronic trade gap, in the strict sense of the word, can be closed with help.
Senator Fallon made an interesting speech. He appeared to be willing to wound but afraid to strike, or perhaps it was the other way round. He did not put into words what I suspect is in the back of his mind. I would like to drag out from under the table and place on the table what I think is the subject in his mind and to say a few frank words about it. He adverted to the fact that Church and General are in motor business, even if still only in a small way, and that Church and General since they are now moving into the control of two removes of the State should accept a certain responsibility to the people in as much as the people are their owners. I hope I am not doing the Senator an injustice in paraphrasing his ideas in this way. If I am I will certainly yield to him if he would like to correct me. I think he meant — and I hope he did not literally mean this — that the Church and General end of this insurance complex, simply because they were incapable, if only at two removes, of being described as a State body, should now regard themselves as under some obligation to provide a social service in the field of insurance by taking on risks which ordinary commercial companies would not take on. I am not the Minister who owns the 90 per cent of the shares in Irish Life and I am not in a position to give orders even though I am responsible for insurance, but I would not expect to see the subsidiary of Irish Life run on any criteria except the same commercial criteria which have brought Irish Life to such a measure of success, as every Senator here has acknowledged.
Though I fully acknowledge, understand and sympathise with the difficulties of young drivers, what is not understood about motor insurance is the nature of the thing. The nature of motor insurance is that it relieves you of the civil liability which otherwise rests squarely on your shoulders and rests on your shoulders to  the last penny in your pocket, to the extent that your house and everything else can be taken from you to satisfy a liability which you may have incurred by your carelessness if you cause a severe injury or damage of that scale. People do not realise — perhaps young people least of all and it is very understandable if they do not — that when they take a vehicle on the road they are doing something which if they are careful will not cause any harm to anybody but which if it does cause serious injury will involve them in a gigantic degree of civil liability running into, depending on the injury, hundreds of thousands of pounds. The effect of motor insurance is to free them of that liability. It will not free them of criminal liability, naturally, if there was a criminal element in their driving. It will free them of civil liability and there is no use obscuring the fact that that is an enormously valuable amenity.
I know that Senator Fallon did not speak in any way in a polemical tone and I do not mean to reply to him in that tone. He is an expert on the subject and it is quite obvious that he knows, and is in the way of knowing, far more about it than most Members of the House. It is a service which is so valuable that it is just not reasonable to speak about it as though the cost of it should be something which one should not feel. Having said that I repeat that I have every sympathy with the situation of the driver against whom insurance companies for commercial reasons, because actuarially or statistically they belong to a high risk category in the company's experience, find it difficult to get themselves insured. What is the alternative? The alternative is either to provide in some shape or form a subsidised insurance for them which means that their insurance premiums will be carried by their neighbours, or else to keep them off the roads altogether. There is no third option that I can see. You simply cannot direct the company, whether it is partly State-owned or not, to accept risks at a level which it knows are going to be loss-making, because if that is borne out by events, it means that those losses are going to be carried by the  other policy holders. This is not the first time I have expressed that opinion.
I had never heard Senator Fallon speak before. I was very interested in his speech and I hope that we may meet again to discuss the matter. I was going to suggest to him, because his views on this subject are so interesting and so well-informed, that he might offer to meet the newly formed committee on motor insurance premiums which I set up ten days ago. I am not sure exactly what their pattern of work is. Very shortly they will begin to invite representations and to get the best possible advice and views. I am certain that Senator Fallon's experience and opinions would be of interest and value to them.
It is possible that what I have been saying is, in some degree, misguided and I am perfectly willing to accept correction from the committee, or an individual who knows more about it than I do. I really hope that Senator Fallon and anybody else who can contribute to an improvement in the situation without breaching the commercial considerations under which companies must be allowed to operate, and without burdening us with a further financial millstone which would be subject to all kinds of political pressure, will come forward and give the benefit of their advice to the committee.
Senator Whitaker asked why there was a principle, as I said in opening, that the same company could not carry on both life and non-life business. This principle appeared to have become the norm in the European dimension. I must admit that I could not see the reason either and I asked the gentlemen in my Department if they could explain the reason to me. Senator Whitaker, with his experience and his flair for these matters of course, by instinct put his finger on the reason, which is the correct reason. The separation of life from non-life business in individual companies is actually enshrined not in the 1938 but in an even earlier Act, that of 1936. The reason is that the policyholders on the life side will not be in any danger, or have any reason to suspect any danger of having their funds raided so to speak, to pay for unsuspected  or unforeseen high losses arising in regard to risks on the non-life side. I also asked, when being briefed about this, if it would not be possible to guard against this in some simpler way than not allowing the company concerned to get into the field at all. The impression from the advice I received was that it might be possible all right and that in some countries, in fact, the same company is allowed to do both kinds of business but that two funds are maintained. I have no strong feelings about it. I had the very same puzzlement which Senator Whitaker expressed but it does not really arise as a snag at the moment because all we are doing here is in effect to remove the barrier so far as it concerns the acquisition by this largely State-owned company of a subsidiary engaged in non-life business.
I ought not to have left the question of disabled drivers and insurance brokers. Since arriving in office I have, in fact, made representations to the standing committee of the joint committee which the insurance companies operate and asked them to delete, wherever possible, the kind of loadings which they applied formerly to disabled drivers and I have succeeded. It was very largely with the help and encouragement of the Department that we have succeeded in getting the companies to agree to remove these loadings against disabled drivers who have a clear no-claims record, provided that their disability is not of a progressive nature. That, unhappily, is not always the case. Unfortunately, many disabilities are progressive. The fact that an individual is fit to be accepted, in this sense of a physical risk, in one year unhappily does not necessarily mean that he or she will be the same kind of risk five years hence. What I have just told the House is not to be taken as meaning that all loading against accident-free disabled drivers is gone. That is not the case. If the disability is a progressive one, unfortunately, the companies understandably cannot offer that facility.
The question of insurance brokers was raised by Senator Lanigan who asked whether there was any intention of requiring them to be bonded. My understanding  is that a huge majority of insurance brokers are absolutely reputable. At the same time, I did advert in my opening speech to a larger insurance Bill which is in course of preparation as fast as the resources of my Department can get it ready. They are doing many other things simultaneously. In the context of this larger Bill, I certainly will be looking at the question of taking powers in the field of insurance intermediaries. I certainly will not do that, I can assure Senator Fallon and any other interested Senators, without consultation with the interests involved. I have no intention of setting up any apparatus of unnecessary, superfluous, or merely busybody control. It is an area however in which we will be thinking about some form of control, not necessarily that which Senator Lanigan was advocating, but some sort of control.
Senator Stanuton mentioned the legal anomaly which we are removing in regard to the involvement of Irish banks in guaranteeing loans from the European Investment Bank. It would be simplest if I explained the nature of that anomaly when I come to deal with that part of the section on Committee Stage. Senator Leonard mentioned the motor insurance business of the Church and General Insurance Company. It is true that it is a small part of the total motor business of the State but in the last two years I understand their motor business has roughly doubled in volume. That, of course, is attributable in part to the regrettable rise in the cost of insurance premiums and also to an absolute rise in the volume of the business which they have been doing. I hope that I have dealt, more or less, with the main points which took the form of questions raised by Members of the House and that they will agree a Second Reading for this Bill.
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