Insurance

HC Deb 20 June 1994 vol 245 cc84-95 7.42 pm

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton)

I beg to move, That the draft Insurance Companies (Third Insurance Directives) Regulations 1994, which were laid before this House on 24th May, be approved. As with the previous measure, I am bringing before the House another useful piece of legislation. This, I am often told, is not characteristic of the Government's policies generally, in which case we may be breaking the mould today.

The directives that the regulations implement will be of significant benefit to the people of this country. We in the United Kingdom are fortunate, in that the system of prudential supervision in insurance which is established by the directives reflects our own system of supervision, based on freedom with disclosure. The directives in effect export our regulatory system to other member states, many of which have operated more restrictive systems than we do. One of the most important benefits of the directives—the easing of such restrictions in other member states, and hence the opening of their markets to us—does not therefore appear in the draft regulations that are before the House for approval tonight.

Having said that, I should explain that the directives do not harmonise the rules operated by supervisory authorities throughout the European Community, apart from a basic minimum. They rely instead on mutual recognition, which is much the best way of performing these functions. As such, they are consistent with the principle of subsidiarity.

The regulations are to be made under powers in the European Communities Act 1972 and mainly amend the insurance Companies Act 1982. Consequential amendments are made to the Financial Services Act 1986. They relate to the prudential supervision of life and non-life insurance—although in the case of Lloyd's some similar changes will be required to the byelaws.

If I were to attempt to give the House a detailed and blow-by-blow account of the purpose of each regulation, we should probably be here all night. Instead, I have provided the House with notes on the regulations, copies of which are available from the Library. I hope that hon. Members have found those useful. That leaves me free to highlight the more important provisions of the directives, and the implementing regulations, and to offer comment on what I see as the benefits that the directives bring to insurers and consumers throughout the Community.

The third insurance directives established the so-called "single passport" principle for insurance companies. That principle has already been adopted for banks and building societies. It will mean that any insurance company with its head office in a member state of the European Community may carry on direct insurance business through a branch in another member state, or provide direct insurance from one member state into another, on the basis of the authorisation that it receives from the supervisory authority in the state in which its head office is situated. For these purposes, that is called the home state. The immediate benefit of those arrangements for United Kingdom insurers is that, instead of having to comply with the often quite onerous supervisory requirements of each member state where they have a branch, they will only need to submit one return to the Secretary of State in respect of all their business. Similarly, United Kingdom branches of companies with head offices in other member states will no longer have to submit returns to the Secretary of State. Another benefit is that companies will no longer have to submit their proposed premium rates and policy conditions for prior approval by the supervisory authorities in the member states where they intend to market their insurance products.

The single passport will not extend to companies whose business is restricted to reinsurance business, to certain small mutual companies that are below a specified threshold or to companies whose head office is outside the European Community.

For companies whose head offices are in the European Free Trade Association states of Austria, Iceland, Norway and Sweden, and for life insurance companies whose head office is in Finland, the authority of the single passport will be valid throughout the 17 states in the European Economic Area once those states and the European Community have ratified the extension of the EEA agreement. This will require a further set of regulations in due course.

Companies that do not get the single passport will still be able to benefit from other changes in the regulations that I have made recently—notably, the ability to take into account the value of rights under new financial instruments such as derivatives and stock-lending transactions in valuing the assets that they must hold to cover their insurance liabilities.

The single passport procedures are set out in schedules 6 and 7 to the third directives regulations. Even in a single market, it is important for supervisory authorities to know which companies are carrying on business in their countries and for the companies themselves to know what laws will apply to them. The regulations therefore require that an EC company wishing to use its passport in the United Kingdom must be recognised. This means that the company's home state authorities must notify the Secretary of State of its intention to carry on direct insurance business through a branch in the United Kingdom, or to provide direct insurance into the United Kingdom, and supply the Secretary of State with certain prescribed information about its proposed business, its authorisation and its solvency. Similarly, a United Kingdom company must supply to the Secretary of State information about its proposed activities, which the Secretary of State will forward to the relevant authorities in the target member state.

A consequential amendment to the Financial Services Act will ensure that an EC company will be automatically treated as authorised under that Act in the same way as United Kingdom authorised insurers already are.

A fundamental requirement in the directives is that member States shall take all steps necessary to ensure that the competent authorities have the powers and means necessary for the supervision of the business of insurance undertakings with head offices within their territories…and for the purpose of seeing that they are implemented". They must also take into account the need to ensure the sound and prudent management of an insurance undertaking".

Mr. Nick Hawkins (Blackpool, South)

Does my hon. Friend agree that it will be absolutely essential for the high standard and prudent supervision of insurance companies that Ministers in other member states can reassure British Ministers of the high standards of supervisory regulation and compliance? Otherwise there will be a danger of lower standards in those countries coming into this country by the back door.

Mr. Hamilton

I understand the fears of my hon. Friend the Member for Blackpool, South (Mr. Hawkins), although they may be misplaced. The Commission will certainly take its policing role very seriously, as will the Government. I am perfectly satisfied that no dangers will arise as a result of our exporting our system of supervision into other parts of the European Community; in fact, that offers great opportunities for our insurance businesses to break into markets which, if not entirely closed to them, have at least placed many obstacles in their path. On the whole, this liberalising measure will be of great benefit not only to European consumers of insurance services but to British business consumers because of the extra competition which it brings. I do not underestimate the fears that my hon. Friend the Member for Blackpool, South has expressed. We will certainly be vigilant to ensure that the interests of the public are fully protected in the opening up of new markets that I have described.

Sir Teddy Taylor (Southend, East)

Can my hon. Friend say clearly and objectively that the directives will ensure free trade for British-based insurance firms seeking to do business in life and non-life insurance? On the two previous occasions on which we have had directives that apparently secured free trade, we found, on inquiry, that all kinds of restrictions operated—between mass risks and large risks and also on the initiator of inquiries on life business. Will British-based companies really now have total freedom to seek life and non-life business on the continent—subject, of course, to the derogations obtained by Germany and Denmark?

Mr. Hamilton

My understanding is that the directives will open up the European market in the way that I have described. As the internal market Minister and deregulation Minister in our Government, I am very anxious to take advantage of those opportunities. I cannot guarantee that there may not be attempts to inhibit the working of the market. However, I can assure my hon. Friend—with whom I share many prejudices in this respect—that I will be particularly keen to ensure that the opportunities that I have mentioned are not in any way minimised. If any obstacles are placed before our companies to prevent them from developing in the way that I hope, the British Government will be foremost in seeking to use a crowbar to prise open those markets that may be partially closed to us.

The directives require member states to ensure that insurance companies are soundly and prudently managed —the point which my hon. Friend the Member for Blackpool, South raised. I have listed criteria for sound and prudent management in schedule 1 to the draft regulations. Although the criteria are not, for the most part, new, by bringing them together, I have given them a better focus and proper weight. I have also introduced additional powers enabling the Secretary of State to investigate companies and obtain documents for the purpose of ensuring that the criteria are complied with. Failure to comply with any of the criteria will be a ground for intervention by the Secretary of State.

I have also introduced provisions that will enable the Secretary of State to assist a supervisory authority in another member state to exercise its functions in relation to the United Kingdom branch of an insurance company under its supervision—for example, by facilitating or assisting in an on-the-spot investigation, or by preventing a company from disposing of or otherwise dealing in any assets that it maintains in the United Kingdom.

In addition, I have introduced changes to the powers of the Secretary of State in relation to the authorisation of insurance companies. One new and important provision that I should mention is the power to suspend a company's authorisation in urgent cases—regulation 11. Although the Secretary of State already has a power to withdraw a company's authorisation, the new power will permit a more flexible approach. Companies will be able to make representations against the suspension and if, in the event, the concerns of the Secretary of State that gave rise to the suspension are unfounded, the suspension will be lifted without the need for the company to reapply for authorisation. Thus, the new power should be in the interests of policyholders and companies alike.

We emphasised in the consultative document published last December, and I emphasise again now, that these are reserve powers which I do not expect the Secretary of State to have to use unless genuinely necessary. In the vast majority of cases, United Kingdom insurers are soundly and prudently managed and in practice the provisions should have no effect on them.

A further requirement of the directives is that a person must obtain the approval of the relevant supervisory authority each time he increases his shareholding or voting power in an insurance company above one of several specified thresholds. To implement that, I have introduced the concept of "shareholder controllers", defined in terms of the percentage of the shares or voting rights that a controller holds. A person becomes a shareholder controller if he acquires a holding of 10 per cent. or more of the shares in the company, or is able to exercise 10 per cent. or more of the voting power at a general meeting of the company. Subsequent notifiable thresholds are at 20 per cent., 33 per cent., 50 per cent. and at the point at which the person becomes a majority shareholder controller. Notification and the approval of the Secretary of State is required on each occasion on which control is increased above those thresholds. Notification of decreases below the thresholds is also required.

Another important obligation in the directives, which is already placed on banking supervisory authorities, requires supervisory authorities not to divulge information that they have received in confidence in the course of exercising their functions without the consent of the originator; however, information may be disclosed to certain authorities without prior consent if the disclosure would assist that authority to discharge specified functions. Those permitted disclosures are listed in schedule 2 to the draft regulations.

The provisions on transfers of insurance contracts from one company to another have been revised. Under the principle of home state control, responsibility for authorising a transfer between two companies with their head offices in the EC rests solely with the home state, but is subject to the consent of other member states that have an interest. The rules are, however, unchanged in other cases. I have found it clearest to set out all the transfer rules in a new schedule to the Insurance Companies Act 1982 —schedule 3 to the draft regulations.

The changes brought about by the directives have provided an opportunity to review the assets that a company may value as cover for its liabilities. In line with developments in other financial services sectors, the directives recognise the increasing use of derivative contracts such as options, futures and contracts for differences, and also stock-lending transactions.

In response to requests from the insurance industry, I have, to a limited extent, deregulated the current provisions to give insurers new freedom to count the value of rights under such contracts as admissible, subject to conditions. Those conditions should go a long way towards ensuring that the severe losses that we read about from time to time, which result from inappropriate use of derivatives, do not happen in the insurance sector.

I have taken account of comments made in response to the consultative document about the proposed new treatment of debts. The regulations that I have made recently have been framed to meet those concerns.

I have also introduced changes to the rules on determination of liabilities to reflect the provisions of the directives.

The directives introduce new rules relating to the make-up of an insurer's required margin of solvency. Companies may take into account cumulative preference share capital and subordinated loan capital, known as "hybrid capital", up to prescribed percentages of that margin. I have not made provision in the regulations for the new rules on subordinated loan capital, as, for the time being, I intend to consider the proposed use of these instruments by companies on a case-by-case basis.

The measures should assist insurance companies, especially mutuals, to raise new capital and to compete effectively with other financial services sectors, while ensuring that their assets and liabilities continue to be prudently valued.

In due course, I intend to consult on further possible deregulation, for example in relation to the form and content of the annual return that insurance companies are required to submit.

A new requirement of the directives is that prospective policyholders should receive certain information about the contract before they enter into it. In the case of life assurance, some information must also be provided to policyholders during the term of the contract. United Kingdom life companies are already used to providing some prescribed information in relation to life policies that are investment contracts and thus covered by rules made under the Financial Services Act. The new requirements of the third life directive are not materially different.

An additional requirement, however, is that some information must now be given during the term of the contract. Some concern has been expressed by insurers, particularly about the requirement for annual disclosure of bonuses. While this is current practice in most cases, some contracts will be newly affected. I have therefore taken insurers' concerns into account in implementing the requirement, so as to minimise the cost of compliance. Nevertheless, I believe that it is important for consumers properly to understand the important aspects of their insurance policies, especially before they commit themselves. The regulations balance that objective with what I recognise is a burden on business.

Finally, on the scope of the regulations, I should mention the two new certificates that I am requiring. First, the directives require member states to require every insurance undertaking to have sound administrative procedures and adequate internal control mechanisms". Although many companies do have fully adequate systems, others need to make improvements. Moreover, systems need to be progressively updated to ensure that they remain adequate.

In response to our original proposal to implement this requirement, companies expressed concern that an inappropriate form of certificate would lead to an escalation of audit costs, well beyond what could be justified by the benefits flowing from improved systems. In the regulations that I made recently I have reduced the requirement to a certificate listing the published guidance with which a company's systems comply.

I propose also that, from 1 January 1996, directors should be required to certify the general adequacy of the financial control systems that they have to meet the various regulatory requirements. I need to consult further on the form of such a certificate and will bring forward regulations in due course. This advance notice should prove adequate to allow those companies who need to make improvements to do so in good time.

The third life directive requires life companies to ensure that premiums for new business are sufficient, subject to certain conditions, to meet their commitments to policyholders. In addition to introducing that principle into the legislation, I am requiring the appointed actuary to certify the adequacy of the company's premium rates. It will be important to be able to confirm, in response to any inquiries that we may receive, that a company's rates are adequate, and the certificate should serve to provide that confirmation.

All member states are drafting comprehensive regulations along the lines of those that I have laid before Parliament. Some member states will implement the directives on time, as we will by the approval of these regulations; others, alas, will be late, although for some the delay may only be a matter of a few weeks.

Nevertheless, to ensure that there is no gap in regulation of United Kingdom branches of companies with their head offices in a member state that has not implemented on time, I have included a transitional provision that will allow the Secretary of State to continue to regulate such branches until such time as those states have fully or substantially implemented the directives.

The House has fully supported the single market generally and, in relation to these regulations, the single market for insurance in particular. As I said at the start, the directives reflect closely the United Kingdom system of supervision. With the abolition of prior approval of premium rates and policy wordings, and the reduced annual compliance returns, insurers will have more freedom to operate in the single market and offer the highly innovative and competitive products that they have been able to develop in the United Kingdom over the years. Although in practice there will be no big bang on 1 July, United Kingdom insurers have a lot to offer policyholders in the EC and, before long, the EEA.

Mr. Hawkins

Will my hon. Friend simply bear in mind—as he has sought to do—the fact that one of the difficulties for United Kingdom insurers competing with other investment products that are not insurance policies is that, even under the regulations to implement the third life directive, UK insurers will be required to produce ever more information, and we do not have an equivalent requirement for regulations to be provided by banks and buildings societies competing with insurers in the provision of investment products? Will my hon. Friend continue to look, as he has in drafting the Government's response to that directive, at the burdens of regulation on UK insurers?

Mr. Hamilton

I need not assure my hon. Friend that deregulation and the burdens that the Government can impose on businesses are at the top of my agenda. Naturally, we must strike a balance—as the Foreign Secretary often says—but the Government may pay attention to differing interests, and the protection of policyholders is vital. We must be certain that when we require firms to fill in forms and provide information to Government, that information is worth collecting and the costs that we impose are justified by the benefits to the public. I assure my hon. Friend that that technique has run throughout my consideration of how we might implement the directives. I am currently looking at a variety of ways in which we can reduce the bureaucratic form-filling burden imposed on insurance companies without prejudicing the wider interests of policyholders and others.

From time to time, particularly with the recent improvements in technology, it will be possible for us to streamline our processes of information obtaining, retrieval and use. I hope that, in time, the costs to insurance companies of the regulatory requirements that the Government impose will diminish. Compared to the current costs of operating elsewhere in the European Community, the highly deregulatory regime that will now be introduced will substantially reduce the costs of British firms. Because they have operated in a much freer, more flexible market in Britain over the years, they should be more nimble of foot and, perhaps, more surefooted in the development of innovative products than their potential competitors across the Channel. A combination of those two things should provide many profitable business opportunities for our companies.

I hope that these regulations will help United Kingdom insurers to remain strong and competitive in Europe through the introduction of home state control, and I commend them to the House.

8.4 pm

Mr. Stuart Bell (Middlesbrough)

There will be heartfelt relief in the financial centres of Europe that, on 1 July 1994 when the directives come into force, they will not have the effect of "Big Bang". We are all grateful to know that, as one Big Bang in the City of London in a lifetime is enough for us all.

The Minister's speech was interesting as he spoke about future regulation in relation to how derivatives affect the insurance sector. I am glad to hear that the Government are concerned about the derivatives market, which is a mystery to us all. Output options and share options can be hedged against different currencies and I surmise that the present fall in the stock market is indirectly caused by margin calls on derivative contracts in the United States. It is important to put on record on the Floor of the House our overall concern about the future of the derivatives market.

My response to the Minister's speech follows on from his winding-up of our previous debate on the second directive. Those of us who have been through the first and second directives are now happy to be at the third one. When the Minister introduced the second directive, he said that the Government attached high priority to the completion of the single market in insurance. The second directive and the regulations that we are discussing represent a small but useful step. The Minister said that he looked forward to bringing before the House regulations to implement the third directive, which would grant a single passport to European Community insurers and make the single market a reality.

It is always a pleasure to follow the Minister and equally pleasant to speak on this directive without repeating the same speech as I made on the second directive. In creating a single passport for insurers, we are mirroring directives already in effect for banks and building societies. That fact might strike a chord with the hon. Member for Blackpool, South (Mr. Hawkins). It is now possible for three strands of our financial market—banks, building societies and insurers—to do business in other member states on the basis of the authorisation that they receive in their head office's member state. That will encourage, rather than detract from, the concept of bancassurance.

Over the past few years, we have seen how markets have been changing in that respect. Banks have set up their own life assurance companies; building societies have entered into alliance with life offices; building societies want to become banks; and a bank has even wanted to become a building society—or rather, take over a building society. As the directives flow together, we may see the continuation of the trend towards bancassurance. So, too, will the trend within the global economy of national insurance companies joining forces with continental insurance companies to get the best out of the single market through the directives.

We welcome the news that Commercial Union has sought to avail itself of the advantages of the single market by buying into France. It will obviate its need to enter the market of its own accord with its celebrated initials, CU, which have an entirely different connotation in France. Its acquisition of the whole of Abeille Assurance, the whole of the existing life assurance company, Abeille Vie, and 50 per cent. of the new life assurance business coming through AFER, the French savings association, show the advantages of the single market.

The Minister said that the House has generally supported the single market in the years since the Single European Act 1986. Certain sectors of the House have misunderstood it, but it has received a friendly welcome overall. In the dynamic modern economy that is to deliver opportunity to all its people—not merely to a limited number—as advocated by my hon. Friend the Member for Sedgefield (Mr. Blair), we have no hostility to bancassurance.

Mr. Hawkins

The hon. Gentleman has drawn our attention to a specific company's recent acquisition of a French company, but I am sure that he would wish to take the opportunity of joining me in congratulating a range of UK insurance companies which, for many years, have developed interests on the far side of the channel. Several life companies, including one that I used to work for but in which I have no continuing interest, have for many years had extremely detailed links with, and in some cases ownership of, continental insurance companies and/or savings institutions.

Mr. Bell

I am grateful for the intervention of the hon. Gentleman and for the fact that companies in Germany, Italy and France have involved themselves in our country and have bought into insurance companies here. There is therefore a two-way traffic as a result of the single market and we see that, in an ancient phrase but one which is nevertheless useful, we take in each other's washing when it comes to insurance and we both benefit from the free market.

On the bancassurances, we wish gently to point out to the Government and the Minister that we must worry a little about the consequence of the horizontal mergers or takeovers where the result of such takeovers is that the financial markets are dominated by no more than six or seven of the largest producers and distributors of financial products. Although we have all agreed on the Floor of the House that it is important that the single market should be continued and balanced and that we should all benefit from it, it does not yet offer the celebrated level playing field.

Many insurance companies seeking to make a major move into continental Europe have to be sure of the route that they are taking. Acquisition is one route; going it alone is another. The essential element of a successful penetration of the continental European insurance market is access to distribution—not unlike in our own market. Many of the major broker networks are tied in to existing insurance companies and banks are increasingly moving into the insurance business, so new entrants find it extremely difficult to establish a major foothold.

In relation to the earlier intervention of the hon. Member for Blackpool, South, aided and supported indirectly by the hon. Member for Southend, East (Sir T. Taylor), there are other elements to the so-called level playing field. Protection—that pariah to the free market—can also raise its head and may be written into the single market through differing tax regimes. They may reduce the ease with which insurance products can be transported across borders. They may indirectly protect the home market for the local insurance player. Local legal requirements, as regards policy wording and the form of cover that insurers need to provide, are but one further complication that insurers attempting to move into the new market must confront.

Notwithstanding the single market, therefore, the home team, as with most home teams, will continue to have an advantage simply because it is the home team. The footballing cogniscenti are no doubt widespread in the Chamber tonight—we are, after all, no doubt watching the world cup, as my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) said from a sedentary position. In terms of the level playing field, it is rather like Yeovil Town playing Sunderland at home in the FA cup. [Interruption.] The hon. Member for Leeds, North-East (Mr. Kirkhope) tut-tuts from a sedentary position, but I am sure that as a Whip he wants us all to get home early tonight and would not wish to prolong my speech by provoking me into extending it.

The directives before the House amend mainly, as the Minister said, the Insurance Companies Act 1982 and they also make consequential changes, which were the words that he used, to the effect of the Financial Services Act 1986. We can see that the home member state shall be solely responsible for the control of an insurance company's financial position, including compliance with solvency margins, technical provisions and matching requirements.

I notice that I have mentioned the phrase, "solvency margins" and the Minister said that those directives would have some impact on byelaws at Lloyd's of London. This is the time of year when we are told that we should be worrying about the solvency margins of Lloyd's. This is the time that we are told that Lloyd's may be in a meltdown situation. This is the time that accountants begin to worry whether Lloyd's is in full compliance with its solvency margins. I am always reassured to know that Lloyd's has about £6 billion of assets and that it can meet its solvency margins many times over, but it is right to reflect on the anxieties that are felt and there is no better place to reflect them than the Floor of the House of Commons.

Lloyd's is an important—an integral—part of our insurance market. It is an integral part of the City of London. We wish the Lloyd's management well in their endeavours to put the past behind them and to get on with the future, but it is right to place on record many of the anxieties.

I was discussing the supervisory requirements in the directives and the ways in which they will affect the regulation of insurance companies whose head office is in our jurisdiction. We are all aware, and I think that we would all agree, that the Government have made a dog's breakfast of their regulatory regime. Yet that is the regime that should govern the substance of the directives. Is it self-regulation? Is it independent regulation? Is it statutory regulation, all regulation being underpinned by the Financial Services Act 1986, which is being amended tonight? Or is the subject too perplexing? Even the City of London had become divided.

Those people who will do business in our country under the directives will know that when it comes to their margin requirements they will look to the Department of Trade and Industry and its 90 or so insurers' supervisors, but to whom should they look to regulate their package of products and the marketing of those products?

We have the Personal Investment Authority. The proposal to establish the PIA has been in the ether for about three years and it has managed to spend about £6 million even before it opens for business. My hon. Friend the Member for Edinburgh, Central (Mr. Darling) said that it might now be appropriate for the Chancellor of the Exchequer to introduce legislation putting in place direct regulation, which would have the advantage that those continental European insurance companies wishing to set up here under those directives might know how they will be regulated. I can only repeat the words of my hon. Friend the Member for Edinburgh, Central in the debate on private pensions: The time has come for us to recognise that direct regulation is necessary. By direct regulation, I mean regulation by the SIB which would be answerable to Parliament."—[Official Report, 30 March 1994; Vol. 240, c. 1027.] Reverting to the subject of the PIA, it is my view, and that of Her Majesty's Opposition, that it has yet to satisfy many of its would-be members that it knows the difference between aims and methods, training and competence, costs and standards, public interest and commercial interest, whether they have a prospectus or a game plan, a consultative document or an indicative document—in short, that it knows what it is doing. The question whether the Department of Trade and Industry should be responsible for insurance supervision or whether that supervision should be part of the work of an overarching statutory organisation is perhaps a debate for another day.

If I may quote my hon. Friend the Member for Sedgefield again—we are all anxious to have it on record that we are quoting him left, right and centre at this time— We have to set out a new economic agenda for what will be very shortly a new millennium". There will have to be a full debate on statutory regulation of the City of London. That will be a part of a new economic agenda as to the appropriate way of regulating our insurance industry, within an overarching framework of statutory regulation.

Mr. Hawkins

Will the hon. Gentleman consider, when calling for statutory regulation, that the much-vaunted statutory regulation of the Securities and Exchange Commission in the United States did not stop a large number of extremely complex, and costly to consumers, frauds happening in the USA? He might wish to consider whether statutory regulation, as opposed to the Securities and Investments Board here, would therefore be any answer.

Mr. Bell

I am happy to inform the hon. Gentleman that, in the first instance, we would not propose a full SEC. As for the second, it was through the SEC that the whistle was blown on the Guinness affair. The statutory regulation had a serious consequence in that context. It also would have ensured that there would be no prospect of the sort of catastrophe that has occurred at Lloyd's in the past few years.

As you are in the Chair, Mr. Deputy Speaker—as alert as ever—I do not intend to wander too far from the subject of the directives. We are grateful to the Minister for keeping his promise of 12 January 1993. We are glad to see that all member states are introducing the enabling legislation and that France, Portugal, the Netherlands and possibly Denmark and Germany expect to implement the regulations by 1 July. We noted the Minister's hope that other states would follow. We can only say that the mills of God grind slowly but they grind exceedingly small, even in terms of regulation through the European Community—or the European Union. Other member states will follow in the next two to three months.

It has long been the ambition of the much-maligned European Commission to make it possible for insurance companies established in any member state to provide services freely throughout the European Union. It has long been the Commission's ambition for insurers to be subject to similar controls in each of the member states where they might wish to open offices. It has long been its ambition for policyholders to have a wider choice of insurers, and to be able to cover their risks—wherever they are situated within the Union—through the insurer of their choice. For the United Kingdom, those ambitions have come closer tonight.

Question put and agreed to.

Resolved, That the draft Insurance Companies (Third Insurance Directives) Regulations 1994, which were laid before this House on 24th May, be approved.—[Mr. Kirkhope.]

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1. EUROPEAN COMMUNITY DOCUMENTS 15 words
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1. VOCATIONAL TRAINING: LEONARDO DA VINCI PROGRAMME 104 words
2. STATUTORY INSTRUMENTS, &C.
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1. NORTHERN IRELAND 42 words
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2. INDUSTRIAL TRIBUNALS 92 words
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3. AGRICULTURE 55 words
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3. MEMBERS' INTERESTS 35 words
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4. LIAISON 20 words