Source: https://api.parliament.uk/historic-hansard/lords/1975/jun/26/policyholders-protection-bill-hl
Timestamp: 2019-04-19 20:20:11+00:00

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§ The noble Lord said: My Lords, the Amendment that stands in the names of my noble friends and myself is rather lengthy, but we make no apology for introducing it at this Third Reading. The House has had before it the Policyholders Protection Bill and I think the House has demonstrated its capacity for 1571 detailed consideration in the manner it has dealt with this Bill. Yet, even at this late stage, there ate a number of aspects of the Bill which are deserving of reconsideration, and it is for that reason that we put down this Amendment. It is an Amendment to a lengthy new clause introduced by the Government at the Report stage, and was set down one day before that stage. My noble friend and I put down an Amendment at that time, but we felt that there was need for further consideration and we agreed to its withdrawal in order that further consideration and further discussions should take place. My noble friends and I, in putting down these Amendments, have allowed this House and the Government Front Bench to have detailed consideration of all the points that we wish to introduce. We have subjected all our arguments to the most detailed scrutiny. I emphasise that because I recognise that in dealing with a Bill of this description, which is highly technical, it is more than likely that the difficulties of the technicalities can, if they are not fully appreciated, obscure a decision that could make for inequity.
§ We withdrew the Amendment on the previous occasion and the one which now stands before the House is almost identical. But since then the Life Offices Association, and the Associated Scottish Life Offices—the trade associations which represent the life assurance companies—have indicated their support for the argument which we are advancing. In addition, the trade unions which represent the insurance employees have also indicated their support for our point of view. Paragraph (d) in this Amendment has the same effect as subsection (8) in the Bill, but paragraphs (a), (b) and (c) are new. Paragraphs (a) and (b) are similar to Clause 12 and paragraph (c) is similar to Clause 11 of the Bill. Clauses 11 and 12 of the Bill apply on the liquidation of a life assurance company, and my Amendments would make similar provisions apply on the rescue of a failed life assurance company.
§ In order to explain this Amendment, it is necessary for me to review briefly the history of the original Clause 16, which was strongly opposed in this House both at Second Reading and at the Committee stage. It was opposed by the industry and 1572 by the unions, because it merely empowered and did not oblige the Board to mount rescues. It was anticipated that the pressure for rescues would be so great that they would become inevitable in every future case of an insurance company failure. The clause was rejected at the Committee stage. At the Report stage, the Government introduced the present clause which is similar to the old one, but with the important difference that subsection (8) of the present clause provides that the Board shall not incur expenditure to facilitate a rescue if it appears to them that it would cost them less to allow the company to go into full liquidation and incur the cost of operating the guarantee arrangements. Nobody can find serious objection to that. It is the implications of that decision that I want to deal with.
§ In the case of general insurance—that is, insurance other than long-term insurance—it is not possible to conceive of any circumstances where it would appear to the Board that a rescue would cost them less than liquidation. Therefore, the terms of subsection (8) apply only to life assurance companies, for the reason which the Front Bench know quite well and which anyone connected with the insurance industry will also know. Circumstances could make it appear that rescue would be cheaper, even with no reduction in the policies. Once a life insurance company has been rescued, there is no way of telling whether liquidation would have been cheaper.
§ The rescue of a failed life assurance company without reduction of benefit, when it appears to the Board that it would be cheaper, might seem a satisfactory solution. I have already emphasised that. The policyholders would suffer no loss, and the policyholders in other companies would pay less than if the company had gone into full liquidation. But the benefit of the preservation of the tax reliefs and the avoidance of the high expenses of liquidation would have gone almost entirely to the policyholders of the failed office, who would have received 100 per cent, guarantee instead of 90 per cent. guarantee. In my view, and in the view of my noble friends and of the life assurance industry, a fairer arrangement would be for the policy benefits in the failed company to be scaled clown to 90 per cent., and for excessive benefits also to be scaled down on the same basis as 1573 indicated in Clause 12 of the Government's Bill. This would be part of the arrangements under which the Board provided financial assistance in order to arrange a rescue. Financial assistance from the company which would be called upon to contribute would be less.
§ Let me give an example. If the assets of a failed company, including the present value of the future tax reliefs, were estimated to cover 85 per cent. of the liabilities—and it would have to be a very bad insolvency to be worse than that—then the cost of the rescue, with policies scaled down to 90 per cent., would be equal to 5 per cent. of the original liability; whereas the cost of a straight rescue without this scaling down would be 15 per cent., or three times as much. So the operation of the Bill as drafted could involve the insurance companies in contributions three times greater than they should be, based upon truly equitable considerations.
§ There is no doubt that a rescue is the best way of dealing with the situation. It preserves the tax reliefs, saves the wasteful expense of liquidation and enables the policies to be continued. I know that the industry would welcome rescues as a legitimate mechanism, and I do not think it would be found wanting in giving every assistance. But the industry, and the trade union representing the men who are working in the industry, object to rescues where the benefits of the failed company are not scaled down. They consider it unfair to the policyholders in sound companies who have to meet the cost of the levy. The basic principle of a guarantee scheme is that if a levy has to be raised at the expense of policyholders in other companies, then the policy benefits in the failed company should be reduced to 90 per cent. and the excessive life assurance benefits should also be reduced. I want to emphasise that the principle is already accepted by the Government.
§ The Amendments to the new clause which have been set down achieved this end by providing that the Board shall not incur expenditure to facilitate the rescue of a failed life assurance company, unless the policy benefits are scaled down to 90 per cent., and the accepted benefits are appropriately scaled down 1574 further on exactly the same basis as provided for in Clause 12. In simple terms it would mean just this; the policyholders in the failed company would receive the same benefits on a rescue as under the guarantee in liquidation. In my opinion, that would be far more equitable. If we do not accept this Amendment, 100 per cent. rescues would tend to become the arrangement if a fringe life assurance company failed. This would mean in practice that the protection scheme would provide a 90 per cent. guarantee on personal general insurance policies (hut not life assurance) at the expense of the proprietors of the general insurance companies, but a 100 per cent. guarantee in a life assurance company where the policyholders of the successful company were making the contribution. There would be a ridiculous distinction between the two classes of insurance.
§ Where you have life assurance is where you find most of the small savers. Those associated with life assurance companies—the people who take out small policies—will be the people who are called upon to make contributions. Clause 16, as it stands, will be in practice quite inapplicable to general insurance. It has all the objections of the old Clause 16 so far as life assurance is concerned and therefore needs the essential safeguard which is provided by this Amendment, and then the present Clause 16 will, in my view, become acceptable to all concerned. Some people may argue that at this time it is wrong to hold up the passage of the Bill. I do not think so. I think it is the duty of this House to give consideration to every aspect of the Bill, and if there is any element of injustice in it we should attempt to rectify it here, and not merely express the hope that that may be done in another place.
§ I realise that the Amendment is technically complicated, but it establishes a simple point that whether the guarantee scheme in relation to a failed company concerned with life assurance operates after the company has gone into liquidation or follows an arrangement by which the company is rescued, if the policyholders in other life assurance companies have to be levied, then the benefits guaranteed to the policyholders in the failed company should be the same in 1575 each case; namely, 90 per cent. of the contractual benefits, with excessive benefits scaled down. There is nothing revolutionary in this Amendment. It tries to introduce the element of equity and, indeed, it incorporates principles which are already accepted by the Government in other parts of the Bill. I am sure that, after consideration by your Lordships, the point met by this Amendment will be accepted. I beg to move.
My Lords, my noble friend has moved a long Amendment, which he himself describes as being highly technical. I am, as your Lordships will realise, not a technician in this matter. Therefore for the sake of clarity I should like to state the Government's view on resisting the clause as drafted by my noble friend. The Government introduced the new Clause 16 to take into account the discussion in your Lordships' House. Certain objections have been raised to it, which turn on two ideas which we must be careful to keep separate in our minds.
The first objection is that the clause could result in the assets of sound companies being levied to achieve a situation in which the policyholders of a company in difficulties received payment at a level of 100 per cent. At first blush, this seems a most sound objection, and it has been raised by my noble friend; but let us think the matter through. I think we would all agree that the aim is to secure the protection offered by the Bill at the lowest cost to the levy. This is the objective of subsection (8) of this clause. In any particular case difficulties and delays may be involved in court proceedings, with heavy administrative expenditure from the levy and a diminution of the company's assets. Therefore it may not appear to the Board that it would cost them less to take this road, and they therefore ought to have at least the power to consider instead a cheap and rapid rescue, even at the level of 100 per cent. Where it appears to the Board that benefits under long-term policies may be excessive, they will have to take this into account in deciding what will cost them less. To that extent, 100 per cent. rescues are improbable.
It is easy to criticise all the Amendments that have been put down. How- 1576 ever I can fully appreciate the argument that inevitable reduction to 90 per cent. might make policyholders and intermediaries think twice about certain policies. But the logical conclusion to the argument against Clause 16 is that such a reduction should take place even if it costs the levy more in the end. I reject this argument as a matter of policy, and I believe it finds little favour in the insurance industry as a whole. The second and distinct objection to Clause 16 is that in fact it does not achieve the effect of minimising calls on the levy.
I am glad that discussion of Clause 16 has led to a more general realisation of the need for a rescue provision, especially in the case of life business. I think it is generally agreed that the costs of liquidation, and such disadvantages as the inability to carry forward tax losses, can make this a more expensive road to follow. The best course would often be to secure a reduction in benefits and then to run off the business. It has been suggested that leaving aside the comparison in the situation after liquidation, it would be cheaper, more or less by definition, to rescue before liquidation with reduced benefits than without reduced benefits, and Clause 16 does not require the Board to opt for the reduced benefits.
This argument rests on the assumption that a reduction in benefits can be rapidly and readily achieved; but this is not so. It might not be possible to obtain the court's sanction to a reduction of benefits, thus forcing the company to go into liquidation. Even if the court's decision was favourable, by the time it had been reached the extra expense incurred and the deterioration of the company in financial difficulties might have made the rescue operation more expensive than an earlier rescue at 100 per cent. would have been.
Perhaps I might express the argument more clearly by describing chronologically the likely action of the Board under the clause as drafted. If a company is in provisional liquidation or in one of the other situations described in subsection (1) of Clause 16, the Board may consider the possibility of arranging for its rescue. They will first compare the cost of an immediate rescue at 100 per cent. with the cost of protecting policyholders in a liquidation. If the rescue is likely to be 1577 more expensive, they will obviously not be empowered to undertake it. But the Board may then consider whether it would be practicable to apply for a reduction of benefits to 90 per cent., or to some other level. They will also compare the cost of a rescue on those terms with the cost of protecting policyholders in a liquidation and, if the rescue is likely to be cheaper, they may make a rescue conditional upon such a reduction being obtained from the court.
Alternatively, the Board may, at the first stage of their deliberations, decide that a 100 per cent. rescue will be cheaper than a liquidation. Even if that is their judgment, the Board will still consider the possibility of obtaining a reduction of benefits. If it seems likely that the court will quickly agree to a reduction, and that a rescue on these terms is the cheapest course open to them, the Board will clearly seek a reduction with a view to securing such a rescue. But it is by no means certain that such a reduction would be obtainable, or that a rescue on such terms would be the cheapest course. The expense of the court proceedings and the deterioration of the company while they are taking place, might perhaps have the effect of making a rescue at 90 per cent. more expensive than an earlier one at 100 per cent. Moreover, there is the possibility of the court's sanction to a reduction not being obtained. If that were to happen there would be no alternative but for the company to go into liquidation—which would, ex hypothesi, be more expensive to the Board than a rescue at 100 per cent. in the first place would have been.
In order to avoid landing themselves in such a paradoxical situation, therefore, I am sure your Lordships will agree that the Board need to have some discretion. If they judge that an appropriate reduction could not be obtained, or that the delay would make a 90 per cent. rescue more expensive, they should, in the interests of cheapness, be allowed to choose an immediate rescue without reduction of benefits. If my noble friend's Amendment were accepted the Board would be denied that option.
We are perhaps dealing here with a temporary situation. Recent experiences show the need to review the whole of the system for winding up insurance com- 1578 panies and, as was explained by my noble friend at Report stage, this review is under way. In the meantime, I hope noble Lords will agree that the activities of the Board must take into account the winding-up system as it now exists. It may be that Clause 16 does not yet make it quite clear that the Board must always take into account the need to minimise calls on the levy. For the reason I have given, I think the idea is illusory that the Board would choose 100 per cent. rescue rather than 90 per cent. rescue when the 90 per cent. rescue was automatically cheaper. However, when laying a statutory duty on the Board it is difficult to see how "cheapness" can be defined except in terms of the Board's statutory duty in liquidation.
The Government are certainly prepared, however, to clarify the need for the Board to be guided by the need to minimise calls on the levy. The most appropriate way for this to be done would probably be in guidance given under Clause 2 after consultation with the Board. I apologise for the somewhat inordinate length of my reply, but, as my noble friend has said, this is technically a difficult matter and I have to give a closely-reasoned answer to my noble friend. I believe the Government's view is correct and I would ask my noble friend not to bring about the situation where the best is the enemy of the good, and to consider carefully the Government's reasons for rejecting his Amendment.
My Lords, I should like, I hope for the last time, to declare an interest as a director of a small insurance company and an underwriting member of Lloyd's. We have heard two carefully prepared speeches on a highly technical subject and I dare say that the rest of your Lordships feel as I do, that this is a matter of extreme complexity and one which it is almost impossible to grasp on a Third Reading Amendment. Were we in Committee it would be that much easier to do. However, this clause has given rise to a great deal of difficulty in the course of the passage of the Bill. As the noble Lord, Lord Peddle, said, it was in its initial form intensely disliked by all of us all round the House. The Government removed 1579 provisions from the Bill and have introduced a new Clause 16 which we accepted on the Report stage.
It is important to realise that the new Clause 16 which is now in the Bill contains some very considerable concessions to the insurance industry. In the first place, the Secretary of State is in no way involved; it is the Board, which is in charge of its own affairs, which makes these decisions of rescue. The Board alone decides whether it should rescue a company under this clause. And we have also had put in the Bill the undertaking originally given by the Government that the majority of the Board will be drawn from the insurance industry. That is a very considerable safeguard towards ensuring that this clause is properly used, in the right way in the right circumstances; and also of course, as the noble Lord, Lord Winterbottom, made perfectly clear, only when it is cheaper and costs less to the levy.
Having said that, I must say that I have considerable sympathy in principle with the Amendment proposed by the noble Lord, Lord Peddie. The reduction of excessive benefits is something which is in tune with the rest of the Bill, and the fact that benefits should be scaled down to 90 per cent. is also in tune with the rest of the Bill. My difficulty is that the noble Lord, Lord Winterbottom, in speaking for the Government has raised a number of highly technical objections to this Amendment most of which I find it rather difficult to follow. He certainly made the point that what the noble Lord, Lord Peddie, was proposing might cost more and certainly does not minimise the burden on those who have to pay the levy. He also made the point that there could be delays and difficulties involved with having to go to the court in order to reduce the benefits.
My view is that the noble Lord, Lord Peddle, would be wise not to press the Amendment at this present stage if the noble Lord, Lord Winterbottom, would give him some assurance that this matter can be returned to in another place. After all, this Bill has started in this House; it has not yet been to another place. This is a very complicated subject and I hope that the noble Lord, Lord Peddie, having made a very strong point, and one which I hope Lord Winterbottom will see is 1580 further considered, will at this stage of the Bill in this House be prepared to withdraw the Amendment. If he were not, I think I should have to advise my noble friends to abstain because I should not like at this stage and with this amount of knowledge to come down on either side.
My Lords, I should like to urge noble Lords in all quarters of the House to support the Amendment of the noble Lord, Lord Peddie. After all, this is not a Party political matter. These Amendments are supported on the one hand by the Co-operative Party and on the other hand by the Daily Telegraph. The noble Lord, Lord Winterbottom, has cited a number of technical objections to Amendment No. 1 which may very well be valid. But let us not forget that when this Bill leaves this House it will go to another place and, on the assumption that it is given a Second Reading, it will be thoroughly scrutinised in Committee and such technical defects as are found will then be eliminated; and, when the Bill returns to this House, naturally your Lordships will accept the Commons Amendments. It is most important that this House this afternoon records its support for the principle of these Amendments.
In particular, on Lord Peddie's second Amendment, but also on his third which is consequential to the second, and the first, the noble Lord, Lord Aberdare, said that Clause 16 had been extensively redrafted to suit the insurance industry. With respect, our concern should be more for the policyholders rather than the industry as a whole. In a nutshell, the effect of this Amendment would be to establish, in the case of an insurance company's having to be rescued, that those who had recklessly, or at any rate carelessly, taken out unsound policies, possibly tempted by excessively high returns, would be called upon to sacrifice a portion of their guaranteed benefits to the tune of 10 per cent. before policyholders in conservatively-run, soundly-run companies had indirectly to dip into their pockets to provide for the rescue. For that reason I suggest that this Amendment ought to be supported.
My Lords, with the permission of the House I would 1581 reply to what has been said. I am grateful to the noble Lord, Lord Aberdare, for his constructive attitude towards the Government's views. I agree with him completely that a complex interchange such as we have had must need consideration by experts. Since the Bill has to go to another place, experts will have an opportunity to read what my noble friend Lord Peddie has said and what I have said and see whether there is conflict or whether the two views can be reconciled. Of course, I would not dare to suggest to another place the course they might take. But I will draw our discussion today to the attention of my right honourable friend the Secretary of State who is responsible for this Bill so that he can consider what my noble friend has said and consider whether in his view the arguments of my noble friend or the Government's present views prevail. That, I am certain, will happen automatically. It is for this reason that I hope your Lordships will give time for those who are outside the Chamber today to consider the two arguments that have been forward on this important matter.
My Lords, the last words of my noble friend were that they should be given time to consider the arguments. Over the months there has been time to consider the arguments; the matter has been argued time and time again, so it is quite ridiculous to make the plea that we should defer a decision in this House, because in the future there will be time to consider it.
I appreciated very much indeed what the noble Lord, Lord Aberdare, had to say. He remarks that already there have been considerable concessions. That is true, but we are dealing with an area in which no concession has been given. He says that he has considerable sympathy with the principle behind our arguments, but the principle is the most important thing that we have to consider and I ask the House to consider the principle which is involved.
If there are variations of any kind, there is still time for further consideration in another place in terms of drafting. But if the principle is accepted—and the noble Lord, Lord Aberdare, says that he accepts the principle—then he should give tangible support to the point of view that we have expressed. I regret to say that 1582 my noble friend has not answered the points that we have raised. He has put up a most effective smoke screen and probably has endeavoured to make the whole question even more complicated and technical than it is. My noble friend spoke about whether it would be cheaper to rescue or to allow a company to go into liquidation. What we are concerned about is when a rescue is undertaken and the Board decides that it is cheaper to effect a rescue. The Amendment which we are suggesting imposes no further obligation on the Board to do things that would increase the cost; what we are seeking to do is to decrease the cost.
My Lords, is the noble Lord correct in saying that one would have to go to the court in the case of the rest of the Bill? I thought it was just a question of the amount of the levy that would be paid to the policyholder.
No, my Lords. It is clearly indicated in Clause 12 that there is a possibility of scaling down the benefits, based upon an actuarial recommendation, if in the opinion of the actuary those benefits have been too high. My argument is that if there is a scaling down there, then there can also he a scaling down through application to the court. However, the point is this. Does anybody seriously believe that in circumstances where a rescue will be undertaken and the rescue conducted out of contributions made by other insurance companies, any 1583 court in the land, realising that the alternatives are either insolvency or rescue and that one of the conditions of the rescue is that the benefits should be reduced to 90 per cent., would reject that application? And can any noble Lord believe that that argument could be the major justification for rejecting this Amendment?
§ apply to the general insurance companies, and that the benefits should be scaled down to 90 per cent. and, in consequence, the contribution that would be made or would be called upon to be made by life assurance companies and the policyholders would be proportionately reduced.
§ I have no intention of going over the arguments again. Without any question of doubt, justice is on our side, it has full full support from the industry, it has full support from the trade unions and I hope that it will have the full support of this House.
§ Their Lordships divided: Contents, 23; Not-Contents, 39.
Aylestone, L. Hankey, L. Rathcreedan, L.
Bacon, B. Hanworth, V. Saint Oswald, L.
Barnby, L. Loudoun, C. Stamp, L.
Clancarty, E. Lyons of Brighton, L. Thurlow, L.
Colyton, L. Maybray-King, L. Wilson of Radcliffe, L.
Cooper of Stockton Heath, L. Monson, L. Wynne-Jones, L.
Douglas of Barloch, L. Noel-Buxton, L.
Blyton, L. Henderson, L. Platt, L.
Brockway, L. Hughes, L. Ritchie-Calder, L.
Bruce of Donington, L. Jacques, L. [Teller.] Samuel, V.
Burntwood, L. Janner, L. Segal, L.
Castle, L. Jessel, L. Stedman, B.
Champion, L. Leatherland, L. Stewart of Alvechurch, B.
Crowther-Hunt, L. Lee of Asheridge, B. Strabolgi, L.
Davies of Leek, L. Llewelyn-Davies of Hastoe, B. Strange, L.
Donaldson of Kingsbridge, L. Longford, E. Summerskill, B.
Elwyn-Jones, L. (L. Chancellor.) Melchett, L. [Teller.] Taylor of Mansfield, L.
Falkland, V. Milford, L. Wells-Pestell, L.
Gardiner, L. Pannell, L. Winterbottom, L.
Hale, L. Phillips, B. Wootton of Abinger, B.
§ The noble Lord said: My Lords, with this Amendment I will also speak to Amendments Nos. 3 and 4. In Amendment No. 2 we are dealing with recovery from intermediaries, and the Amendments have similarities with those that were tabled in Committee and at Report stage. They apply only to long-term—that is, life assurance—business and, again, the Amendment is supported by the Life Officers' Association, Associated Scottish Life Offices and the trade unions.
§ The principle behind this new clause is simply that if the Board has to incur 1585 expenditure in connection with a failed life assurance company, the intermediaries who received substantial commissions from the company before it failed shall be required to make a reasonable contribution by way of partial recovery of commissions, before the policyholders in unconnected companies are called upon. What is reasonable is usually difficult to define, but we consider it should be up to one-half of the long-term new business commissions received in the year before the failure, plus up to one-quarter of such commissions in the previous year. That is a most modest basis of recovery. The new clause also provides that no recovery shall be made unless the Board actually incurs expenditure in connection with a failed company; that no recovery shall be made unless half the commissions received by an intermediary during the year before the failure, plus the one-quarter of the commissions received during the year before that, amount to £10,000. A comment was made on a previous occasion about the difficulty of claiming back small amounts. Here it will be £10,000, which will make it identifiable as it will be easy to recognise who were involved.
§ Furthermore—and this is a very important point—"commission" here means purely commissions received with appropriation of new long-term policies. Therefore, it would only apply to those intermediaries who placed a very substantial amount of new long long term business with the company that had failed. As I said on a previous occasion, it is well known that in all the cases of failed companies the commissions that had been paid out were substantial and were considered by some people to be one of the contributory factors making for their failure. There is no doubt that unduly high rates of commission influence brokers in some cases, though not all. This has not been nut forward as a penalty to be applied to brokers who have been associated with failed companies, but rather on the grounds of equity that such persons who received commissions of the character I have described should make their own contributions. Where they received substantial commissions from the failed company, they should pay their share before the policyholders in other insurance companies were levied.
§ I repeat that as amounts of £10,000 are involved there will be no difficulty of identification. I need not press the point any further, because this is an Amendment which I think is quite easy to understand. It merely emphasises the point that those intermediaries who received substantial commissions from failed companies before a company went broke, should at least make some contribution in the same way as other companies make one in the form of a levy. I beg to move.
My Lords, I should like to support the noble Lord, Lord Peddie, in this series of Amendments. I think the case is a very strong one. Certainly, there have been instances in the past where brokers may have made quite a considerable amount of money in brokerage commissions from a company which then failed, and if under the new Bill they are to escape scotfree in regard to finding funds to compensate policyholders that seems most inequitable. The noble Lord has explained that it is only a partial recovery, and that it is limited to sums of not less than £10,000. I hope that the noble Lord who is speaking for the Government will accept the principle, or what lies behind the Amendment.
I would again prefer it if the noble Lord, Lord Peddie, did not divide the House on these clauses. To my mind, he should be satisfied provided the noble Lord, Lord Winterbottom, can accept that this point should be included in the Bill in some form, in the way the Government can best see their way to do so. For my money, if the noble Lord, Lord Winterbottom, is able to give an undertaking to include something of this kind, which will make it possible to recover sums from brokers in the event of a failed company, then I hope that the noble Lord, Lord Peddie, will accept that assurance and will not press his Amendment. But, as I say, I feel it is a very worth while Amendment.
My Lords, may I support what the noble Lord, Lord Aberdare, has just said? On the last occasion, I hoped that the noble Lord, Lord Peddie, would be satisfied with the assurance which the noble Lord, Lord Winterbottom, gave, that at least the subject would be considered carefully 1587 before the Bill goes to another place. I recognised that he felt there was a strong question of principle, and that the assurance was not enough. Questions of principle are very difficult when it comes to their practical application. One has the right to cross at a zebra crossing, but one may lose one's life in doing it, and that sometimes makes one hesitate to exercise a principle which is no doubt one's right. But this is something different, and I very much hope that the noble Lord, Lord Winterbottom, will be able to go just that yard further than he did last time. I hope he will be able to say, in effect, that this is an element which should be part of the eventual Bill, and that he will study it in that light.
My Lords, will the noble Lord, Lord Peddle, with whose Amendment I am in complete agreement, agree that life insurance practice is as follows? On the original premium a company will pay a very high brokerage, in some cases I believe up to 70 per cent. of the premium; that is a business acquisition premium. It then comes down in the second year very substantially, and in subsequent years it sometimes reduces to as little as 2½ per cent. This point ought to be made for the benefit of your Lordships. I hope the noble Lord agrees with me.
Secondly, I agree very much that this provision would act as a very strong incentive to broking houses or agents to make absolutely certain—and as the noble Lord, Lord Aldington, said in Committee, this is one of the duties of broking houses or agents—that the company with whom they place the risk is of the utmost financial probity. I should have thought that if we could accept this Amendment—or, if the noble Lord does not like the wording, a Government Amendment along these lines—it would go a very long way to reducing the number of insurance companies which could get into difficulties. It was well known in the City that the Vehicle and General was in "ropey" order for quite a long time before it went bankrupt. An insurance broking house with which I was, and am, connected refused to do business with them precisely on those grounds. If other insurance brokers or agents had known they might be asked for the return of some of their commission it is possible we would not have 1588 had that trouble, with the scramble for premium income at high brokerage rates and the failure of the Vehicle and General.
My Lords, perhaps I may intervene on this point. I ought to declare a minor interest in that I am an underwriting member of Lloyd's. I would beg the noble Lord, Lord Peddie, not to press this Amendment, because a very important question of dividends and commissions has arisen. I think he and the House will appreciate that the recipients, be they substantial shareholders—and I think he called them proprietors—brokers or other intermediaries, will have paid very substantial tax on these receipts. There may be a question of whether or not this tax should be repaid by the Inland Revenue to the Board, and this is worthy of further study. With that in mind, I should like to ask the noble Lord not to press the Amendment. It is something on which perhaps the noble Lord, Lord Winterbottom, could give us some guidance. This could push up the total receipts available to the Board by as much as 40 or 50 per cent., and I think the noble Lord, Lord Peddie, will admit that that is a substantial amount.
My Lords, I should like to declare an interest which is very relevant to this Amendment; that is, that I am an insurance broker specialising in life assurance and pensions. But notwithstanding that fact, I should like to support this Amendment. I think we are all aware that there have been companies which have got into difficulties when higher than average commission has been paid, which has been an incentive to certain brokers to place business. But even if that were not so, this Amendment would provide a proper deterrent and would be something to encourage brokers to think very carefully about where they place business. These matters ought to be decided by professional ethics, and one hopes that this will increasingly be so. I am glad to see in today's papers that four broking organisations are getting together in order to discuss the registration of brokers, and to put certain proposals before the Government for possible implementation. Nevertheless, it is desirable that there should be this additional incentive—if I may use that word—to honest dealing, 1589 and I support the proposal which the noble Lord, Lord Peddie, has put before us.
My Lords, I am grateful to my noble friend for the substantial changes he has already made in the Amendment which he moved on this subject at Committee stage. But I regret to say that we still find the proposal full of difficulties, both of principle and practice. Indeed, one of the changes which the noble Lord has made might be considered a change for the worse, since it gives the Board an additional element of discretion as to whether or not they make recoveries from intermediaries. This goes against the views of noble Lords. who have in general been seeking to have the Board's sphere of action defined as closely as possible in the Bill. It seems to us wrong that the Board should be given the discretion to exercise selectively what is really a punitive power. Indeed, I believe that suitable people might be reluctant to serve on the Board in such conditions. We remain of the opinion that the proposal would to some degree be unfair on intermediaries and, indirectly perhaps, even on policyholders themselves.
A large part of the commissions received by intermediaries are in respect of expenditure incurred by them in the course of rendering their services; it thus seems unduly harsh to provide for the recovery of a flat rate of a half or a quarter of commissions and not just of the profit element. Moreover, in practice the proposal would simply lead to intermediaries protecting themselves against the risk of a call being made on them by raising their rates of commission: the cost would therefore ultimately be borne by the policyholders. As to the possibility that the proposal might give brokers an incentive to exercise more care, we do not think a provision of this kind is the right way of going about achieving strengthened regulation of the broking profession. I said in Committee that the Government are well aware of the need to take a closer look at the operations of intermediaries, and that the Secretary of State had written to the President of the Corporation of Insurance Brokers inviting their suggestions.
My Lords, I did not quite catch that. Do I take it that the noble Lord is making a positive statement that something will be introduced in another place in line with what we are now proposing?
My Lords, that is correct, provided that practical proposals which commanded a broad measure of support from the interests involved were to be put forward. Machinery clearly now exists to formulate these proposals, and one would hope that they would be put forward sufficiently quickly to be incorporated in the stages of this Bill when it reaches another place. It is for this reason that I hope my noble friend will withdraw his Amendment which has won such considerable support from many quarters of the House.
My Lords, in view of the rather disappointing reply of the noble Lord, Lord Winterbottom, I rise to ask the House to support Lord Peddie's third Amendment, described yesterday by the distinguished City Editor of the Daily Telegraph as an admirable Amendment making insurance brokers and other intermediaries liable for at least some of the losses suffered by people persuaded by them to insure with companies that subsequently fail. It may be that there are technical objections to this Amendment, although I suspect that they are fewer than those raised in regard to the last Amendment. I believe that some of them are red herrings.
1591 The element of discretion referred to by the noble Lord, Lord Winter-bottom, is surely a sensible provision, in that it enables the Board not to incur expenditure on pursuing small claims against brokers. As for the point raised by the noble Lord, Lord Lyell, I think it is right to say that the Life Offices Association believe that any repayments made by brokers can legitimately be set off against profits in subsequent years, and therefore that disposes of the tax problem. Again this is a question of principle. The principle is probably an even simpler one than in the case of the previous Amendment; it is that in the event of an insurance company failure the guilty shall pay before the innocent are called upon to pay. For that reason I hope that the noble Lord will press his Amendment.
My Lords, I hope that when the Government come to examine this matter they will consider the effect of the principle of this Amendment in other spheres. I think of commodity markets, the Stock Exchange, and all other varieties of monetary transactions. It is an extremely bad precedent that you can go bankrupt and your creditors can claw back commissions from people with whom you have been dealing, perhaps many years before.
My Lords, I thank noble Lords for the degree of support that they have extended to the Amendment put down by my noble friends and myself, and particularly for that coming from the noble Lord opposite. He declared himself to be a broker operating in this field and yet went out of his way to applaud the Amendment. He indicated his support for it and his recognition that it made a valuable contribution towards the end we all seek.
It was my intention to reply in rather vigorous terms to some of the comments made by my noble friend Lord Winter-bottom; but all is forgiven because I have taken note of the point he made, and which I sought permission to emphasise. I understand that he says that this matter will be dealt with in another place, the points that are incorporated in our Amendment will be dealt with in another place, and that the Government will make themselves available for any 1592 recommendation towards that end. In other words, the principle is accepted; it rests with us to put forward the proposals that will meet that principle and the needs of Government. I take it that that is correct?
My Lords, with the permission of the House I should like to clarify what I said. What I did say was very close to my noble friend's interpretation. I said that if practical proposals which commanded a broad measure of support from the interests involved were to be put forward, the Government would certainly be prepared to consider them. That assumes two things: first, that the Working Party which has been set up would be able to obtain proposals which commanded a broad measure of support from the brokerage industry; secondly, that the Working Party would report in sufficient time for the Government to be able to analyse the proposals.
My Lords, I am sorry, but we are getting a little confused. My noble friend is making reference to a Working Party that is to consider this matter and then report. Apparently it has just been set up. When are they going to report?
My Lords, I am afraid that I cannot say. Their appointment was foreshadowed at the Committee stage. The appointment has now taken place. I have not seen their remit, but I am certain that the problems are not so complex that they are not able to express a broad measure of agreement within a timescale compatible with the passage of this Bill. I cannot give firm undertakings that they will because I am not in control of the Working Party, but the Government will in fact consider any measures, any proposals which command a broad measure of support from the interest involved. That is what I said.
My Lords, before the noble Lord, Lord Peddie, continues, my I ask whether it is likely that this Working Party could possibly report before the end of this Session, if before the end of this Session the Bill will have been passed by another place?
§ report in time, I think that I should be failing in my duty if I did not press this matter. I hope that this House will reinforce this principle so that when the Bill goes to another place we shall have given a clear indication of our belief in this principle relating to intermediaries.
§ Their Lordships divided: Contents 86; Not-Contents, 38.
Aberdare, L. Erskine of Rerrick, L. Nugent of Guildford, L.
Amherst of Hackney, L. Evans of Hungershall, L. O'Neill of the Maine, L.
Auckland, L. Falkland, V. Onslow, E.
Aylestone, L. Falmouth, V. Peddie, L.
Bacon, B. Ferrers, E. Penrhyn, L.
Balfour of Inchrye, L. Fisher of Rednal, B. [Teller.] Rankeillour, L.
Banks, L. Fortescue, E. Rathcreedan, L.
Barnby, L. Fraser of Kilmorack, L. Roberthall, L.
Beaumont of Whitley, L. Gladwyn, L. St. Aldwyn, E.
Belhaven and Stenton, L. Goschen, V. St. Helens, L.
Belstead, L. Grimston of Westbury, L St. Just, L.
Berkeley, B. Hailsham of Saint Marylebone, L. Sandys, L.
Byers, L. Hankey, L. Stamp, L.
Caccia, L. Harcourt, V. Strange, L.
Campbell of Croy, L. Harmar-Nicholls, L. Strathcona and Mount Royal, L.
Cathcart, E. Home of the Hirsel, L. Strathspey, L.
Chesham, L. Hylton-Foster, B. Sudeley, L.
Colyton, L. Lloyd of Kilgerran, L. Swansea, L.
Cooper of Stockton Heath, L. Long, V. Tanlaw, L.
Cottesloe, L. Loudoun, C. Teviot, L.
Daventry, V. Luke, L. Vickers, B.
Denham, L. Lyell, L. Vivian, L.
Deramore, L. Lyons of Brighton, L. Wakefield of Kendal, L.
Drumalbyn, L. Mancroft, L. Wigoder, L.
Effingham, E. Monson, L. Young, B.
Elton, L. Norwich, V. Young, B.
Annan, L. Hall, V. Platt, L.
Blyton, L. Hawke, L. Popplewell, L.
Brockway, L. Henderson, L. Sainsbury, L.
Bruce of Donington, L. Hughes, L. Samuel, V.
Buckinghamshire, E. Inchyra, L. Segal, L.
Castle, L. Jacques, L. [Teller.] Snow, L.
Champion, L. Janner, L. Strabolgi, L.
Davies of Leek, L. Leatherland, L. Taylor of Mansfield, L.
Donaldson of Kingsbridge, L. Llewelyn-Davies of Hastoe, B. Wallace of Coslany, L.
Elwyn-Jones, L. (L. Chancellor.) Melchett, L. [Teller.] Winterbottom, L.
Morris of Grasmere, L. Wootton of Abinger, B.
Gardiner, L. Phillips, B. Wynne-Jones, L.
My Lords, I beg to move Amendment No. 3 formally.
§ " —(1) In this section an intermediary of a company in liquidation is a person not in the employ of the company who at any time during the two years which ended with the beginning of the liquidation received from the company any commission or other remuneration, by whatever name called, in consideration of the procuration, or assistance towards the procuration, of long term business.
§ (2) Subject to the following provisions of this section and to Schedule (Additional provisions with respect to recoveries from intermediaries) to this Act, the Board shall be entitled to recover from each intermediary a sum calculated by reference to an amount equal to one-half of the commission or other remuneration, by whatever name called, received in consideration of the procuration, or assistance towards the procuration, of long term business by that intermediary from the company during the year which ended with the beginning of the liquidation of the company plus one-quarter of such commission or other remuneration, by whatever name called, received during the year which ended ore year prior to the beginning of the liquidation provided that such amount is not less than £10,000; and such amount, provided that it is not less than £10,000, is hereafter in this Act referred to, in relation to any intermediary, as income of the intermediary liable to be recovered.
§ (3) if the expenditure incurred by the Board in respect of long term business in connection with the company in liquidation exceeds the total income of all intermediaries liable to be recovered, then the Board shall be entitled to recover the whole of such income, but if the expenditure so incurred by the Board is less than such income then the Board shall be entitled to recover from each intermediary only that proportion of his income liable to be recovered as the long term business expenditure of the Board in connection with the company in liquidation bears to the total income of all intermediaries liable to be recovered.
My Lords, I beg to move Amendment No. 4 formally.
§ 1. The Board shall recover the whole or such proportion of the total income of all 1596 intermediaries liable to be recovered as it is entitled to recover under section (Recovery from intermediaries) above by sending a notice of recovery to every intermediary who may in the opinion of the Board have had income liable to be recovered.
§ 2. A notice under paragraph 1 above shall state the amount which in the opinion of the Board is income liable to be recovered, the proportion of such income which is recoverable in accordance with section (Recovery from intermediaries) above, and the amount of money which is hence recoverable by the Board.
§ 3. A notice under paragraph 1 above may be sent by post, and a letter containing such a notice shall be deemed to be properly addressed if it is addressed to the person to whom it is sent at his last known address.
§ 4. A person to whom a notice under paragraph 1 above is sent shall pay to the Board within one month of the date of the notice the amount of money which is specified in the notice as recoverable by the Board.
My Lords, I beg to move that this Bill do now pass. Perhaps your Lordships will forgive me if I say a few final words and give a brief summary of some of the changes that have been made in the Bill since it first arrived before your Lordships' House. The essentials of the protection scheme remain as they appeared in the Bill as originally drafted. The scheme will be administered by the Policyholders Protection Board established under the Bill. The Board will finance their activities out of levies on insurance companies and their duties will be to protect policyholders of an insurance company in liquidation. Only United Kingdom policies will be protected and Lloyd's, marine, aviation and transport insurance and reinsurance will be excluded. Claims under compulsory insurance policies will be met in full. Otherwise, in the case of general business private policyholders only will be protected, to the extent of 90 per cent. of the benefits. In the case of long-term business all policyholders will be protected and the protection will also be 90 per cent., except where the benefits are excessive. Finally, the Board will have a discretionary power to arrange for the continuance of a company's business, though the circumstances in 1597 which they may exercise this power are now more strictly defined.
Having described again the basis of the protection, I shall briefly state some of the more significant changes made in the Bill. As your Lordships noted and have commented on favourably today, the structure of the Board was once a matter of concern to your Lordships, but the Bill as now drafted provides that of the five people appointed to the Board, at least three should be directors, chief executives or managers of authorised insurance companies, and at least one shall appear to the Secretary of State to be qualified to represent the interests of policyholders.
Perhaps not surprisingly your Lordships were concerned about the extent to which, under the Bill as originally drafted, powers of legislation were delegated to the Secretary of State. I confess that I found some of the fears expressed a little exaggerated. The powers were included to allow the Board a measure of flexibility in a very complex field, and certainly with no sinister intent. But it is right that Parliament should be jealous of its position. In view of this, we examined rigorously the circumstances in which the various powers might be used. As a result of this examination, we concluded that in some cases the possibility of using the powers was so remote that they could be dispensed with; and in other cases, where the power was purely for the benefit of the Board, it was right that the Secretary of State should exercise it only after consulting them.
The following changes have therefore been made. The powers to extend the Bill by order to cover Lloyd's or to marine, aviation, and transport insurance or reinsurance, have been deleted. We have also removed the Secretary of State's powers under the old Clause 14 to vary the duties of the Board. The Secretary of State may give guidance to the Board under Clause 2 only after first consulting the Board, and the Secretary of State's powers to make regulations under any provisions of the Bill may be exercised after only consultation with the Board.
Apart from the delegated legislation question, perhaps the greatest controversy has arisen over the rescue provisions of Clause 16 which we have discussed today. 1598 My noble friend Lord Beswick made it clear on Second Reading that this was a secondary feature of the Bill, and that the powers were purely discretionary. At the same time, it was an important clause, particularly in relation to life companies, because a rescue might sometimes be in the interests both of policyholders and of the industry as a whole. After the clause was deleted on Committee, we sought to redraft it, making more explicit the circumstances in which the Board might use their rescue powers; and the new clause, drafted in consultation with the insurance industry, was accepted by the House on Report.
Your Lordships will remember that there are three major changes from the original clause. The clause will no longer come into operation on a reference by the Secretary of State. Instead, the Board may use their powers under this clause only if a provisional liquidator has been appointed, or in certain similar cases specified in subsection (1). In this way, any possibility that the Board might be led to make over-free use of their rescue powers will be avoided. The clause now contains the explicit proviso that the Board may not exercise their powers to arrange for the rescue of a company where it appears to them that it would cost less to allow the company to go into liquidation, and to protect policyholders as required by their duties. We had assumed that, in any case, the Board would have regard to this factor; but I think your Lordships will agree that it is more satisfactory to have the point spelt out unequivocally in the Bill. The restrictions on benefit to shareholders, and to anyone involved in the circumstances giving rise to the company's financial difficulties, have been made even tighter than they were originally. The Board may not use their powers if any such persons, "would benefit to any material extent ".
I think the House will agree that we have gone a very long way to incorporate in the Bill the suggestions made by noble Lords on both sides of the House. The Government are grateful to noble Lords for the constructive attitude they have taken during our long debates on this subject. It is true that we have not felt it practicable to take up some of the more extensive proposals made by my noble friend Lord Peddie, but I for one value very much the contribution 1599 he has made to our debates, and I can assure him that the Government's approach to the general question of insurance supervision has much in common with his own. We do not consider that this Bill is the right vehicle for some of his ideas, but we shall have them very much in mind in our application of the 1974 Act.
The revised version of the Bill has been arrived at through an extensive process of consultation, and has, I believe, the general support of the insurance industry. I commend it to the House for that reason, and for its intrinsic merit. It will provide improved security for millions of ordinary people throughout the country; a purpose for which every member of this House, I know, will have sympathy. I beg to move.
My Lords, other business is to follow, so I do not intend to make a long "Fourth Reading" speech, but I wish to echo what the noble Lord said. This Bill is now much improved, thanks to the efforts of your Lordships who have devoted considerable attention to it. I thank the noble Lord for his efforts, and through him the noble Lord, Lord Beswick. Both noble Lords have been very helpful and most flexible in looking at the various Amendments we put forward. I also wish to express my gratitude to my noble friends Lord Belstead and Lord Lyell, who have helped me in dealing with the Bill. We all hope that there will be no further failures of insurance companies, but in the event that there are the Bill will certainly provide considerable protection for policyholders.
My Lords, I recall that on Second Reading there was an almost unanimous disapproval of the principle of the Bill, yet now we are asked to send the Bill to another place with that same principle intact. It surprises me that we should now be listening to appreciative remarks about the present condition of the Bill. If the principle of the Bill was wrong at the time of Second Reading, it is wrong now. In my opinion the Government ought to consider, before the Bill goes to another place, what they are going 1600 to do with it. I should have thought that the Bill has been so altered in this House that it can no longer give satisfaction to the Government, and it can scarcely give satisfaction to a large section of the insurance industry. Is this how we are to deal with this Bill through our Parliamentary process?
I had a surprise this morning when I met a man who had just returned from conducting insurance business in Canada and the United States. He said that the very fact of this Bill going through Parliament at present was not a reassurance to overseas confidence in the British insurance industry, but rather that it disturbed that confidence, on the ground that it probably indicated that there was more wrong with the British insurance industry than had been supposed, that the insurance industry itself had been incapable of putting its own house in order and that the Government had to do that for it. That surprised me, but it was an opinion expressed by someone whose judgment I respect. If that is so, it is perhaps not a very reassuring consequence of passing legislation of this kind through Parliament, but that is a matter for the Government.
But, my Lords, what is worrying about the whole process of the Bill is how it can be changed in this way, without a shred of evidence having been produced throughout our debates. We have acted only on opinions, and I still believe that it would have been far more sensible, with a complicated Bill of this kind, to have referred it to a Select Committee especially where it was intended to make considerable Amendments to it. I conclude by saying that much of the mythology which we absorbed in another place about the capacity and ability of this House as a revising Chamber has been dispelled in my mind. It has been a one-man band between my noble friend Lord Peddie and the Government Front Bench and very little else has been contributed to the debate on the Bill. Where the basis for making the changes comes from, I do not know.
All I can say is that I felt unable in the last few Divisions to take part in the further proceedings on the Bill because I have a profound discontent at the way in which the whole Bill was handled. I feel that we dealt with complicated 1601 matters affecting a vast industry of great importance to the country in a manner which I do not think redounds very much to the credit of our Parliamentary proceedings.
My Lords, as has already been said, the Bill has come before us today in a very different form from that in which it originally appeared. As one of the newcomers to the debates in this House, I should like to say that the impression made on me as a result of the progress of the Bill has been the opposite of that made on the noble Lord, Lord Houghton. I have felt that here was an occasion when the House was taking legislation and moulding it in a way that, perhaps, one does not often see happen in legislative assemblies. I should like on behalf of my noble friends to thank the Government for the cooperative way in which these discussions have been approached and which has enabled so many Amendments to be carried by general agreement. I am glad that the powers of the Secretary of State have been restricted and powers to give guidance to the Board qualified. I welcome the fact that the insurance industry has now the majority of representatives on the Board and particularly that the policyholders are specifically represented. The controversial rescue proposals remain, but are greatly modified and now operate only at the instance of the Board, to the composition of which I have referred.
The noble Lord, Lord Houghton, was correct in saying that the principle of the Bill as it originally came to us is retained, that is, the principle of the levy; although the practice is greatly modified. I am not altogether happy about that, but we must rely very much on prevention and on the regulations under the 1974 Act. While I have great sympathy with the efforts of the noble Lord, Lord Peddie, in the earlier stages to have the Bill amended so that it would deal with prevention as well as with actual collapse, nevertheless it seems right to me that the matter should be dealt with utimately as two separate issues and that prevention should not be dealt with in two Acts. That would have led to confusion. In conclusion, I hope that the proposals for prevention in the regulations will be sufficient to ensure that the provisions of the Bill do not have to be operated.
My Lords, those of us who are both Members of this House and also actively engaged in the field of insurance—and I am one of them—will know the great difficulties there are for any Government bringing in legislation surrounding this great industry. In many respects one is never right so far as all the parties to the business are concerned; but I think that, as a result of the long deliberations on this Bill in your Lordships' House, considerable progress has been made to increase confidence in the insurance industry which at one time was being rather suspected. I should like particularly to wish success to the members of the Board which has been set up, because they will be very largely responsible for operating this Bill and, indeed, all the current legislation on the insurance industry. It may be that we shall need further consolidating measures on this, but I think that, even though the Bill still has shortcomings, this has been an example of Members of this House on all sides who have knowledge and experience of the industry putting their wits together and achieving what is the purpose of this House in a matter of this kind: to be a very sound revising Chamber. I, for one, wish the Bill well.
My Lords, I feel constrained to say a few words in view of the comments of the noble Lord, Lord Houghton. I am connected in a small way with an insurance company and I have been so for some years. I am conscious of the fact, having served in one section or another of Parliament with the noble Lord, Lord Houghton, that his words carry weight outside the confines of the Chamber where he utters them. I am rather sad that he thought to add his authority to the comments made to him by his friend (in whom he said he had confidence) who had interpreted this measure as meaning that the insurance companies of this country were weak and unable to honour their obligations. That is a terrible thing even to suggest for one moment in this country when the invisible exports so valuable to us come from that source—and particularly when I do not think there is one iota of evidence for suggesting that is so. Indeed, the very fact that the Government have thought fit, with the co-operation in this case of the Opposition, to 1603 anticipate problems that may hit not only the insurance companies of this country but of the world—and that they anticipated that in order to ensure that the great reputation we have built up over the centuries will continue with some certainty—is a measure of strength. I do not think it warranted the comments that came from the noble Lord, Lord Houghton, with his past great service as a Minister in Government and with his reputation in this field outside.
Nor could I understand, coming from him as an experienced Parliamentarian, why he felt it wrong that there should be criticism on Second Reading followed by some compliments being paid when the measure was examined in detail and with care. It does not need me to tell him that it is an accepted fact that politics is the art of the possible; and that what you aim at, despite divergences of views which are real and wide at the beginning is the point where all who have to operate these things in the future can reach some common ground.
I must say that I have many reservations as to the timing and necessity; but I believe that the thought and care given to it and the result that came out is in the best traditions of Parliamentary working, and I should like to say from my unimportant niche in the insurance world that in a world where many things are uncertain, the strength and ability of the British insurance companies to meet their obligations has never been surer than it is today.

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