§ As from the expiration of the period of two years beginning with the day on which this Act is passed. section 5(1)(a) of the principal Act (which, as amended by this Act, imposes on an insurance company to which that Act applies which carries on industrial assurance buiness or ordinary long-term insurance business the requirement that it shall, once in every five years or at such shorter intervals as may be prescribed by the deed of settlement of the company, or by its regulations or byelaws, cause an investigation to be made into its financial condition, including a valuation of its liabilities, by an actuary) shall have effect with the substitution, for the reference to five years, of a reference to three years.—[Mr. Darling.]
§ Brought up, and read the First time.
833§ The Minister of State, Board of Trade (Mr. George Darling)I beg to move, TE at the Clause be read a Second time.
The effect of this Clause is to reduce the maximum interval which is permitted between actuarial valuations on long-term insurance business from five years as at present in the Insurance Companies Act to three years. This is putting into legislative form the actual practice of the vast majority of insurance companies which, I understand, voluntarily undertake this actuarial valuation at three-yearly intervals.
The hon. Member for City of Chester (M r. Temple) will correct me if I am wring, but I imagine that this is a very prudent course to take. We think it necessary to provide a more frequent check on the solvency of insurance corn-parties carrying on life and other long-term insurance business.
§ Mr. John M. Temple (City of Chester)I craw the attention of the House at the outset to the fact that this is the first of four new Clauses concerned with insurance. None of these Clauses, so far as I know, has been referred to in any way whatever throughout the whole of the debates on the Bill. For the first time we are presented with an entirely new concept of control of insurance at the very last stage of a Bill which has been to another place and been through a Standing Committee of this House. Now we are presented with four new Clauses which practically speaking, indeed absolutely under our rules, are unamendable.
This is a very severe criticism of the Government. I am afraid that I have to inform the Minister of State that I shall be quarrelling with him considerably, on this stage of the Bill. I know of his very charming manner, but one or two things have come to my attention in recent days which have made me not too receptive to some of the things than he put across in Committee. Nevertheless, that has nothing to do with this Clause.
The right hon. Gentleman said that it was prudent now for life insurance companies to make revaluations at triennial intervals rather than at the usual quinquennial interval. I readily admit that many life insurance companies have moved from quinquennial to triennial and 834 sometimes to annual valuations, but the right hon. Gentleman used the word "prudent". I emphasise that it is prudent to make annual valuations when a Labour Government are in office because no one knows what variation of interest rates are to take place under a Labour Government. This tremendous uncertainty about the value of currencies which has been introduced by the present party in power and these variations of interest rates which have been very violent have made it very prudent indeed for insurance companies to revalue the whole of their life funds at more frequent intervals.
One of the questions I press on the right hon. Gentleman to answer is: what consultations took place on this matter? I do not know of any consultations, because it was only recently that I knew of the Government's proposal in this respect. I am in fairly close touch with organisations in the insurance world. Has there been any trouble in the life offices? So far as I know, there has not. So far as I know British life assurance has stood, shall I say, in the A.1 class at Lloyd's for many years and I know of no trouble. Is it because there are hints of trouble in the insurance world that this Clause has been brought in?
I would say that it is indeed ironic that the present Administration should seek to bring in triennial revaluations of life assurance funds when they have entirely failed themselves to revalue all the properties throughout this country on a quinquennial basis for rating purposes. It just shows the ability and resourcefulness of private enterprise as opposed to Governmental controlled business. It is a pretty substantial job, the revaluation of life funds.
I do not know whether the Ministry has consulted; therefore, I do not know whether there are sufficient actuaries to carry out these triennial revaluations. It is a very tough job indeed. I gather from the insurance interests that they are willing and ready to co-operate with the Government. That just shows the spirit of private enterprise in getting over difficulties manufactured by the present Government.
I personally would like explanations from the right hon. Gentleman as to the consultations which have been going on because it does seem extraordinary that 835 at this very late stage we should be presented with this Clause, which, as I say, is unamendable. When the ensuing Clauses come along I shall have some specific comments to make about them, but this Clause, I think, is unexceptionable with regard to its draftsmanship and so possibly it does commend itself in that way to the House.
Nevertheless, it does show the ability of private enterprise to cope with new situations and adapt itself as it goes on, whereas Governments at the present time are quite incapable of carrying out even quinquennial revaluations for rating purposes throughout the country.
§ Mr. DarlingThe answer to the hon. Gentleman is that the Life Offices' Association was consulted about this and approved what we are doing.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.