CLAUSE 42.—(Amendment of Assurance Companies Act, 1909.) (Hansard, 10 July 1930)

§ The SOLICITOR-GENERAL
I beg to move, in page 39, line 23, to leave out paragraph (a), and to insert instead thereof the words:

"(a) If the company does not also carry on assurance business of some other class, the reference in sub-section (1) of section two of that Act to the sum of twenty thousand pounds shall be construed as a reference to the sum of fifteen thousand pounds;

(b) If the company also carries on assurance business of some other class the reference in sub-section (4) of the said section two to a sum of twenty thousand pounds shall, as respects the motor vehicle insurance business, be construed as a reference to a sum of fifteen thousand pounds, and, notwithstanding anything in the said Act relieving a company from making a deposit in respect of any class of insurance business where it has made a deposit in respect of any other class of assurance business, the total sum to be deposited under the said sub-section (4) shall in no case be less than thirty-five thousand pounds."

I should explain that this Clause is put in in order to make quite clear the position of an assurance company with regard to deposits. It will be remembered that there was some discussion in Committee as to whether the Bill made perfectly clear to everyone the exact deposits that were to be made. If one looks at this Clause with reference to the Assurance Act of 1909, one finds that the matter is made perfectly clear. I think the interests concerned are quite satisfied as to the meaning and intention of the Clause.

§ Mr. PHILIP OLIVER
I would like a further explanation of the Clause. I understand that the Amendment is moved in order to make it clear that the additional £15,000 deposit has to be paid by any assurance company that desires to take up this compulsory insurance. If that is so, it seems to me that a certain amount of explanation is required. This is a considerable departure from anything which has so far been done in our insurance law. In the Act of 1909 there are 740 five different kinds of insurance, life, fire, accident, employers' liability and bond investment. Under a later Act there is industrial insurance. For each of these different kinds of insurance a deposit of £20,000 is payable with the single exception of fire and accident. In this case we are not adding a new kind of insurance at all. We are simply stepping in as the State and saying that people must take out certain policies. Why, then, are we placing this additional burden upon insurance companies, who were already doing their work and have already paid their deposits? There are a number of smallish insurance companies that might find this deposit a difficulty. It may mean calling up shares. That may be very desirable, but is it necessary? Most of the insurance companies, though they are small, as far As I can see, are in a sound position, and if they get more premiums their position will become sounder and they will be able to meet the claims brought against them. So far as I can see in no case where there has been an expansion of insurance has a deposit ever been demanded of the companies who are already in the business. I can quite understand that any new insurance company that comes along could be quite rightly asked to put down a deposit of £15,000, but this Clause is a rather remarkable innovation.

§ The SOLICITOR-GENERAL
I think that on consideration it will be clearly obvious to the hon. Member that some special considerations must apply to a system of compulsory insurance which is for the benefit, not merely of the person effecting the insurance but also of the third parties. It is one thing to say that, in the case of a person who is effecting a policy of insurance for himself, such and such a deposit is sufficient but this is a different matter. These companies are embarking upon what we are classifying as an additional class of insurance by reference to the Act of 1909 as to motor vehicle insurance and we thought it right, and I believe I am correct in saying that the insurance interests agreed that an additional deposit of £15,000 should be required in respect of that insurance. Obviously under a third party risk of that kind there might be a serious accident involving a number of lives which would result in something like the whole margin 741 of £15,000 being claimed. I should like to assure the House that that is the one consideration which weighed with us in this matter.