HL Deb 17 November 1992 vol 540 cc548-50

4.6 p.m.

Baroness Denton of Wakefield rose to move, That the draft regulations laid before the House on 2nd November be approved [9th Report from the Joint Committee].

The noble Baroness said: My Lords, the principal purpose of these regulations is to implement Council directive 90/618/EEC of 8th November 1990 into United Kingdom law. This directive brings motor liability insurance within the framework of Community law which enables insurance companies to conclude contracts with policyholders in other member states. This is generally referred to as "the freedom of services". Previously, third party motor liability insurance has been excluded from the scope of Community law on freedom of services. This directive, and a parallel directive on freedom of services in life assurance, also contain provisions intended to improve access for EC insurance companies in non-Community markets. For convenience, the regulations implement these provisions together. These regulations also make a number of technical amendments and improvements to existing insurance law.

I do not propose to describe all the draft regulations in detail, though I shall be happy to explain any of them more fully if that would be helpful to noble Lords. However, I shall refer briefly to some of their more important aspects. The present regulations extend the scope of Part IIIA of the Insurance Companies Act 1982 to companies writing motor liability insurance. This part of the Act applies to insurance companies operating under the freedom of services. However, as a counterpart to the liberalisation of motor insurance, the regulations also insert new measures laid down by the directive to safeguard the interests of the victims of road accidents. EC insurers selling motor liability insurance in the UK must join the Motor Insurers' Bureau and must also appoint a representative resident in the UK to handle claims made against the insurance company.

The directives enable the Commission to open negotiations to improve market access for Community insurance companies in non-Community countries. They provide for further action to be taken at national level if these negotiations are unsuccessful and Community insurers suffer discrimination.

These provisions are quite separate from the provisions on motor insurance. They are reserve powers which are designed to encourage liberalisation in third countries rather than to protect the EC market. We very much hope that, in the context of the GATT Uruguay Round, there will be an agreement on trade in services under which all parties make acceptable commitments to liberalisation. The Community has said that it would not invoke these provisions in respect of other signatories to such an agreement.

The Government attach a high priority to the completion of the single market in insurance so that both our insurance industry and consumers may enjoy the new opportunities that it offers. We look forward particularly to the significant benefits that will flow from the entry into force of the third directive on insurance. The present regulations represent a small but necessary step in that direction and I commend them to the House.

Moved, That the draft regulations laid before the House on 2nd November be approved [9th Report from the Joint Committee].—(Baroness Denton of Wakefield.)

Lord Williams of Elvel

My Lords, I must first of all apologise to the House and to the noble Baroness for not being in my place when she moved this Motion. She did me the kindness of sending the draft orders to me before they were moved so, as I told her beforehand, I have had an opportunity to look at them. So far as we are concerned, they fulfil the directives which are in place, and as such we have to accept that they must go through.

I have only one question for the noble Baroness, which is about Regulation 15. I am not sure whether the noble Baroness can give me an answer on this as it is a rather complicated question. Regulation 15 applies to Lloyd's. I was wondering whether that meant that there would be an amendment consequential on this to the Lloyd's Act? I am not sure quite how that will work. Other than that, I can only say to the noble Baroness that we welcome these regulations and believe that they are a step forward in the single market for financial services, which we have joined with the Government in trying to promote.

Baroness Denton of Wakefield

My Lords, regulations should not be taken to imply any inadequacy in self-regulation at Lloyd's. The regulatory function at Lloyd's is now clearly separated from business leadership. I hope that will reassure the noble Lord.

On Question, Motion agreed to.