HC Deb 19 February 1935 vol 298 cc160-3
17. Sir ARTHUR MICHAEL SAMUEL

asked the President of the Board of Trade whether, in view of the losses which have fallen upon the motor-car owners by reason of the recent insolvency of a motor insurance company which had become an authorised insurer under the Road Traffic Act, 1930, by depositing £15,000, he will take legislative action to require that the deposit of an authorised motor insurer shall be adjusted annually so as to be commensurate with the insurer's liability to policy holders; and will he also seek power to obtain annually from every authorised motor insurer a certificate of solvency?

The PRESIDENT of the BOARD of TRADE (Mr. Runciman)

Serious practical difficulties would arise if companies were required to make deposits commensurate with their liabilities and in this way to immobilise a substantial proportion of their working capital. Whilst companies would thus be seriously handicapped in the conduct of their business, the suggested requirement could not be justified by reference to the position of the policy holders and other claimants in the case of the great majority of insurance companies. The suggestion made in the last part of my hon. Friend's question has been noted.

Sir A. M. SAMUEL

What protection mow is given to policy holders if under the 1930 Act the£15,000 is shown to be obviously insufficient to protect them against an authorised insurer undertaking a larger liability than is covered by his assets? Is the right hon. Gentleman aware of the grave danger to which the public are exposed by the methods of authorisation to issue insurance policies?

Mr. RUNCIMAN

Yes, I am well aware that there are risks where a company is undertaking risks which are outside the full range of its powers, but I should not care to answer such a question as the hon. Baronet has put without notice.

Sir A. M. SAMUEL

Is the right hon. Gentleman prepared to allow existing policy holders to continue under this risk?

Mr. RUNCIMAN

If the hon. Baronet could suggest action which would be feasible and would not interfere with the working of these companies on a proper basis, I should be very glad to consider it.

Mr. R HYS DAVIES

Has the right hon. Gentleman at any time compared the amounts that have to be deposited by these companies and by industrial insurance companies, and is he satisfied that the deposits in the former case are substantial enough to meet the claims upon them?

Mr. GRAHAM WHITE

Having regard to the fact that the deposit is inadequate for the protection of the insurers, will the right hon. Gentleman give his attention to the possibility of instituting a more rigorous and more frequent form of audit so that he may himself be able to control the situation, which he clearly cannot do at present?

Mr. RUNCIMAN

That is one of the questions that are under review at present. In my opinion, it is probably a more hopeful suggestion.

Mr. GLEDHILL

Will the right hon. Gentleman expedite the review?

22. Mr. RHYS DAVIES

asked the President of the Board of Trade whether he will consider initiating legislation to prevent in future the results to persons insuring against risks exemplified recently in connection with the Anglian Insurance Company?

Mr. RUNCIMAN

The Assurance Companies (Winding-up) Act was passed as recently as 1933 in order to enable the Board of Trade to take action in cases such as the hon. Member has in mind. The Board have already taken action in two cases and will not fail to take action in future cases where, on the information available, there is reason to believe that a company coming within the scope of the Act is insolvent. As I stated last week, I shall continue to watch the situation and I shall not hesitate to ask Parliament for further powers if at any time this appears desirable and practicable.

Mr. DAVIES

May we take it for granted, therefore, that the right hon. Gentleman has found out already that the Companies Act gives him power to intervene when it is too late; and will he be good enough to consider, in addition to the suggestion made to him a moment or two ago that there should be a more frequent audit of the accounts of these companies, a suggestion that the Board of Trade should require a more frequent actuarial calculation of the assets and liabilities of the companies?

Mr. RUNCIMAN

This, of course, would certainly be involved in the audit question.

Mr. THORNE

Can the right hon. Gentleman say what is the position of people who were receiving compensation at the time this company went into liquidation? Have they any remedy at all?

Mr. RUNCIMAN

If specific cases were put to me I should be very glad to prepare an answer, but I should not care to answer the case without consideration.

Mr. THORNE

I have had one anyhow.