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Thursday, 10 June 1915

Senator TURLEY (QUEENSLAND) - For a little while.

Senator KEATING - Naturally, of course, will come again the question of amendments.

Senator de Largie - But the amendments will be made by only one Parliament, not by six, as hitherto.

Senator KEATING - Ye3; and that is where we have an advantage in a unifying codification. As Senator de Largie points out, any amendments subsequently will be amendments by this Parliament; whereas, if several systems of law in regard to insurance were to prevail, they would be continually amended in different States, and,- in many instances, in different directions. Realizing as I do, and as, I think, all of us do, the advantages of a codification of the law on certain subjects, such as insurance, bankruptcy, banking, and other matters, I think that this Bill is open to very sen. ous criticism. Clause 131 gives power to the Governor-General to make regulations. It has been the experience of all of us to hear from time to time, with regard to certain measures, objections raised to the power to make regulations being so extensive. That criticism has been offered, and not at all times, I think, justifiably, because it is almost impossible to lay down, in an Act provision for every contingency which is likely to arise. It is very difficult even to lay down provisions in regard to administration which, must at times be very minute. But, notwithstanding that, there has always been a disposition on the part of the Senate generally to resent the encroachment on the legislative power of Parliament. Although that criticism has been repeatedly levelled at measures submitted here, the measures, I think, invariably contained! in a corresponding clause the subjects in respect to which, in particular, the power to make regulations should be exercised. Singularly enough, in clause 131 of this Bill no such particularity prevails. It simply reads -

The Governor-General may make regulations, not inconsistent with this Act, prescribing all matters and things which by this Act are required or permitted to be prescribed, or which arc necessary or convenient to be prescribed for giving effect to or carrying out this Act.

That power is absolute and unlimited. In all previous legislation we have particularized the matters in respect to which such regulations might be made; but, notwithstanding that fact, we have always been accustomed to hear criticism of the power as being given unthinkingly and too freely by the Senate. I want honorable senators to understand that in clause 131 they are asked to confer on the GovernorGeneral a more extensive, a more unrestrained, power of making regulations than I believe he has under any Statute we have passed. I may be wrong when I express that belief, but I draw attention to the fact that, in the generality of cases, we have prescribed the matters in particular in respect to which regulations might be made. And, notwithstanding that we have done that, we have unhesitatingly and reluctantly, times without number, passed a provision enabling the Governor-General to make regulations, and in particular in regard to specific matters.

Senator DE LARGIE (WESTERN AUSTRALIA) - But the Bill also provides for companies to have the right to be heard by the Commissioner before he puts any regulations into practice.

Senator KEATING - Yes; I intend to deal with that point. What I am drawing the attention of the Senate to now is that clause 131 confers on the GovernorGeneral a power without any limitation. Our general practice with regard to Statutes has been to particularize the matters in respect to which regulations under the Statutes might be made, and, to some extent, therefore, we limited the authority to make regulations. We are now asked to give the power without a limit. If the Senate sees fit to do that, of course it will be all right ; but I hope that it will be understood that I am drawing attention to a departure from our practice, so that we shall not legislate on the matter with our eyes unopened. One may gather from reading the Bill that there are various matters in respect to which regulations will be required to be prescribed. Senator de Largie has referred to a provision that companies may be heard, and if one turns to clause 24, it will be seen that provision is made for increasing the deposit of a company where the securities deposited have depreciated. The second paragraph of the clause reads -

A notice under this section shall not be issued until after the Commissioner has given an opportunity to the company to be heard in connexion with the matter.

The phrase " to be heard " is somewhat novel, and how. the Commissioner will give a company an opportunity "to be heard," I presume, will be prescribed by regulations. It is not said here, but T think it is a natural assumption that the regulations will prescribe the way in which the Commissioner will enable a company to be heard. " To be heard " is, I think, a phrase in legislation which will be novel to most of us. We know what the intention is; we know what the purpose is; but the provision in itself does not achieve the purpose in its entirety, so that we shall have to depend upon regulations. Again, a similar phrase is used in clause 53, the marginal note of which is " Proposal and policy forms to be submitted for approval." Sub-clause 3 reads -

The Commissioner shall not decide wholly or partly against any form until he has given the company an opportunity of being heard by him on the matter.

How, where, and within what time the company may " be heard *' will, it is to be assumed, be prescribed by regulations. There is nothing specific here saying that " regulations shall be prescribed," nor does it say that "the company shall be heard by the Commissioner in the manner prescribed."

Senator de Largie - Any regulations will have to be made in accordance with the Act.

Senator KEATING - Exactly ; but our practice in analogous cases would be to say that the company shall have an opportunity of being heard " in the manner prescribed." That, in itself, would, under our Acts Interpretation Act, mean that regulations would have to fill up what our legislation has dealt with generally.

Senator Millen - In addition to a special clause applying to regulations, is there not, in most of our Bills, a covering clause that the power to make regulations shall be exercised not inconsistently with the Act?

Senator KEATING - Yes. I think that the provision generally runs that the Governor-General shall have power to make regulations not inconsistent with the Act, setting out with particularity the matters.

Senator de Largie - That covers the lot?

Senator KEATING - Yes. Sometimes in legislation the provision does not give a general power, but prescribes particular matters in respect to which regulations might be made. I am drawing attention to what seems to me to be a departure from a practice, and one which even, as I have said, we have followed with some hesitation and some reluctance.

Senator de Largie - Do you mean a practice of verbiage?

Senator KEATING - No. I mean a practice of giving power to the GovernorGeneral to make regulations. We have always given the power a little haltingly, even though the subject-matters of the regulations were prescribed in the measure itself. But now we are asked to give the power without any limitation, and I draw attention to that circumstance accordingly. The Bill contains several provisions which, I think, will commend themselves to honorable senators and to others who are particularly interested in insurance. My allusion to the occurrence of the phrase " to be heard " reminds me that clause 18 contains a provision with regard to notice. I think it is almost a novel provision. The clause reads -

Any notice which is by this Act required to be sent to a policy-holder may be addressed and sent to .the person to whom notices respecting the policy are usually sent, and any notice so addressed and sent shall be deemed and taken to be notice to the policy-holder.

I think there is an advantage in a provision of that kind. I do. not wish to enter into a discussion of the merits or the demerits of the clause, as that is a matter which should be dealt with in Committee. I believe it is almost invariably the practice to provide by legislation that when a party is to be bound by a notice sent to him, except in the case of the personal service of, say, the process of a Court, the sending of the notice must be done by post. It will be obvious to anybody that to personally address a notice to somebody and to send it to him does not in all cases insure that he will receive it. The messenger himself may make a mistake; he may deliver it to the wrong person, or he may lose it, and may not inform the sender that it has been lost; in fact, a variety of things may happen. I think that we may very fairly draw attention to the (provision at this stage, so that later we may consider the advisableness of not holding a person bound by a notice said to be sent to him unless the notice has been not only addressed to him, but posted to him.

Senator Needham - Do you think that sending a notice by post averts that danger ?'

Senator KEATING - It does to some extent.

Senator de Largie - In the case of sending a notice to a person, is there not a custom in law or a number of methods usually recognised ?

Senator KEATING - There are different methods. In some States a notice is deemed to have been received by a man if it has been sent through the post in a prepaid letter to his last known address.: In some cases; such as Court process, actual personal service is required, and the server must make an affidavit that he has done so, while the matter is still fresh in his memory - within three days in some instances. In other cases it may be personally delivered at his address or to some person apparently above the age of sixteen years. Generally speaking, I think it is desirable to do something a little more rigid than to simply say, "To be put into an envelope, and addressed to him, and sent to .him," because that leaves a variety of ways of sending a notice. Although this seems an individual matter which might be dealt with better in Committee, still it is one to which I draw attention now because my remarks may occasion some consideration by the Minister, and he may be inclined to tighten up the provision, because it has for its object to bind the person to whom the notice is going. We should insure as far as we reasonably can that he does actually receive the notice. It might apply to and bind any individual in the community at a particular time, and it is a very haphazard method to say, " I put it into an envelope and sent it by a messenger." The provision with regard to deposits in connexion with companies deserves consideration. The amounts specified by the Bill are very substantial. I do not quarrel with them; out honorable senators should consider that they will disqualify very small companies. The Bill contains a provision giving a certain amount of elasticity to this clause, enabling the Commissioner to vary the amount to a certain extent, but the general policy of the measure is indicated by the amounts required to be deposited, and that general policy, if adhered to with any rigidity, would prevent the formation and establishment of small companies. Senator Senior. - And close up a number of good but small mutual companies already carrying on.

Senator KEATING - Provision is made for small companies already in existence. We should insure that legitimate small companies, that have been carrying on in the Commonwealth satisfactorily to those who deal with them and the community generally, will be protected. We should do nothing unwarrantable to prejudice the formation of small companies.

Senator de Largie - But we do not want too many mushroom companies.

Senator KEATING - We do not want to facilitate the growth of irresponsible companies, nor do we want to centre insurance business too much in the hands of the very large companies. We know that there have been some very successful small insurance companies, most reasonable in their dealings with the public, and of great assistance to the community generally. We should bear these facts in mind when dealing with the deposit question. When the Minister was speaking, he was asked if the company making the deposit would be entitled to interest on it, I notice that clause 33 provides that the Treasurer may from time to time, at the request and in the name of the company, invest in Government securities of the Commonwealth or of a State any money deposited with him by the company, and the company shall be entitled to the interest accruing from the investment. That is a very reasonable provision. We must also consider in Committee what the position will be when companies are amalgamated or absorbed. If there is a complete amalgamation of two companies or a complete absorption of one company by another, when both have lodged their respective deposits with the Treasurer, will the two deposits still remain with the Treasurer?

Senator Senior - Clause 31 provides for that.

Senator KEATING - Clause 31 enables a company to withdraw any security or money deposited in excess of requirements. If an amalgamated company withdrew the amount in excess there would remain with the Treasurer a security only so far as one company was concerned. In that case, would the amalgamated company be entitled, in seeking to do business with the public, to use the name of both companies, or of only one? Many members of the public might consider that they were dealing with a company which, as a matter of fact, had entirely disappeared. That is a matter we should guard against. Mention has been made of the amalgamation of the Australian Widows, the Citizens, and another company. If all the names could be used as the style of the new organization, some member of the public might deal with it, believing that he was dealing with the Australian Widows, and - of course I am only assuming a case - he might find afterwards that the Australian Widows had been completely absorbed, and the security put up by it withdrawn. The whole position in this regard should be made quite clear, and the right to use all or any of the names of the amalgamated companies when deposits have been withdrawn should be defined. The Bill contains provisions illustrating what I regard as its desirable modernizing tendency. One of these is clause 59, dealing with the materiality of certain conditions. That expresses in law what has been decided from time to time by the Courts in concrete cases, and establishes the accepted law of the land as to whether conditions are or are not material. Another desirable provision is that where an increase is to be made in the premium a proper notification to that effect shall be forwarded on a certain coloured slip to the policy-holder. Another commendable provision in clause 59 is the power given to the Court in certain circumstances to reduce the liability in regard to certain contracts. A very beneficial provision deals with the question of the acceptance of age, and another with warranties, asserting in statute form what has been declared to be the law by Courts in specific cases. Clause 81 restrains any combination amongst companies from charging unreasonable or unjust rates. I entirely agree with the principle and object of the clause, which applies to fire insurance business only, but one of the difficulties will be to ascertain what rates are reasonable and just. The problem is similar to that of fixing prices. Clause 80 sets out that the rates in respect of fire insurance shall be reasonable and just, and prohibits every such 'rate as is unreasonable or unjust. How is it to be determined whether a rate is reasonable or just?

Senator de Largie - I suppose that is one of the powers of the Commissioner.

Senator KEATING - The Commissioner has power to regulate to a certain extent industrial rates, but I see no such authority conferred upon him with regard to fire rates. It must be remembered that fire rates differ from life rates in that they often vary by reason of locality or other circumstances, such as the presence or absence of facilities for fire prevention and fire extinction. A rate which may be reasonable in a locality which has no fire brigade may be most unreasonable in a more populous neighbourhood. There is also, as Senator de Largie reminds me, a great difference between a brick and wooden building area. If the Commissioner is competent to approve of the maximum rates for industrial insurance, we may, perhaps, repose the same confidence in him in regard to fire rates, but it must not be forgotten that these inevitably fluctuate according to a variety of circumstances. The mention of industrial insurance reminds me of another matter to which attention has been drawn. Under clause 69 provision is made for the forfeiture of an industrial policy in certain circumstances. If certain notice is given, and default is made, the policy is forfeited. But in clause 67 it is provided that ordinary life policies shall not lapse on the nonpayment' of premiums. I realize the great difference between ordinary life and industrial insurance, but I think it is possible for us to make a provision with regard to industrial insurance analogous to that in clause 67 relating to life insurance.

Senator Guy - The term "industrial" is used because of the fact that members of the industrial classes take out such policies.

Senator KEATING - That is so. In connexion with industrial insurance the premiums are payable at shorter intervals than are ordinary premiums. Clause 67 provides -

In the event of any premium due on any policy remaining unpaid for a longer period than thirty days the company may charge compound interest thereon at a rate not exceeding the rate prescribed, and the policy shall not lapse until the premiums due and unpaid, together with the interest charged thereon, are equal to the reserve value of the policy. For this purpose the reserve value of the policy shall be computed on the assumption that all premiums up to the time have been duly paid.

I think that an industrial policy may lapse very much more easily than an ordinary policy. In drawing attentionto this matter, I hope that we shall be able to give some consideration to the possibility of protecting an industrial policy a little more than is provided for in the Bill.

Senator Guy - Is that a new provision in the law?

Senator KEATING -Not wholly. I think that it is operative in some of the States. If we can save an ordinarypolicy from lapsing by a provision of this character, we ought certainly to make some effort to save an industrial policy, It may be that we cannot save it to the same extent,but there ought to be some reserve power which would enable it to survive, even after default has been made in payment.

Senator Guy - That class of policyholders ought to he protected.

Senator KEATING - They require protection more than does any other class. The amounts paid by way of premium are usually small, although they are very important to these policy-holders. It often happens that, however well disposed policy-holders may be, they find that they cannot meet the premiums just when they fall due. I call attention to this clause merely for the purpose of suggesting that we may be able to confer uponthese policy-holders some measure of protection. I am glad to see clause 94 in the Bill, because it re-affirms a provision which is contained in the Bankruptcy Bill. That provision did not appear in the measure in question when it was first submitted to this Chamber, but in Committee we unanimously decided to protect the interests of the assured under" a life policy from creditors in bankruptcy. I drew attention to the matter, and the Minister offered no objection to my proposal, with the result that we included life policies among the assets of bankrupts, which are protected. The provision contained in clause 94 is one which is operative in several of the States, and I hope that we shall be unanimous in respect of it. Then I wish to call attention to clause 91, which relates to cover notes. It provides -

A cover note issued by a company in respect of a proposal shall run for a period not less than that for which the amount paid to the company represents premium in respect of the sum specified in the proposal.

As I understand the position, cover notes are frequently issued without any payment being made at all. In that case, if the risk eventuated, there would be, under this provision, no responsibility on the part of the company giving the cover note.

Senator Bakhap - Has thehonorable senator heard of a case which was tried in Victoria, in which it was held that the cover note afforded no protection, because nothing had been paid by the assured?

Senator KEATING - That is so; there is no consideration in respect of a cover note. Where no money has passed, if an assurance company chooses to repudiate its obligation in respect of la cover note, doubtless the Courts would decide in the way that he suggests. But that is not the practice. I know that when I have been absent from my own State in Melbourne the fire insurance company with which I am insured has more than once sent me a cover note, and I have subsequently forwardedit my cheque. I would certainly consider that such a cover note protected me against a risk before the company actually received the cheque. No self-respecting life assurance office would insist upon its legal position in a case of that sort.

Senator Guy - Does that apply wholly to fire assurance offices?

Senator KEATING - To fire insurance offices.

Senator Bakhap - The matter was contested here.

Senator KEATING - If a case were contested in such circumstances, the company could easily establish the fact that no contract existed. Let us assume, for a moment, that a man insures his premises for £1,000, and that his premium falls due on 1st June. He overlooks the payment, and the company issues a cover note to protect him until the 1st July. One of the considerations which it receives by so doing is that it may secure a. renewal of his policy, instead of the individual, perhaps, taking out a new policy with another company. If a fire occurred during the month of June, the company could say to him, " Our contract with you terminated on 31st May. You did not pay the premium when it fell due, and, therefore, we have accepted no legal liability." Butr in practice, no company of standing would dream of contesting a case like that unless of course it suspected incendiarism, or fraud which it could not actually prove. In such circumstances it could, of course, successfully contest the claim on the ground that no money had passed.

Senator Russell - The Australian Mutual Provident Society allows the assured thirty days' grace. Is not that practically the same thing?

Senator KEATING - It is analogous. If we pass the clause, whenever a cover note is issued it will be necessary for some money to pass - say, one-twelfth of the annual premium in the case of one month's cover. But, as a matter of fact, cover notes are usually issued without any payment. There is only one other clause to which I desire to direct attention, namely, clause 123. It sets out the persons who may act as actuaries, and as the other associations are expressly mentioned, I should like one or two of our Australian institutions to be designated in it. The clause reads -

A person shall not act as an actuary responsible for the valuation of the liabilities or assets of a company unless he is a Fellow of the Institute of Actuaries of Great Britain and Ireland, or a Fellow of the Faculty of. Actuaries in Scotland, or some other institution approved by the Commissioner, or unless he has satisfied the Commissioner that he possesses sufficient knowledge and experience to qualify him to certify to the accuracy of valuation returns.

I would suggest that, before we deal with that clause in Committee, the Government should ascertain the Institute of Actuaries which is of the highest standing in Australia, so that it may be expressly designated in the provision.

Senator de Largie - Is there an Australian Institute?

Senator KEATING - Yes. Recently I saw in the newspapers the names of certain persons who had passed their examinations for it.

Senator de Largie - They were accountants ; that is different.

Senator KEATING - I would suggest that the Minister should ascertain the corresponding bodies in Australia, so that at least one of them may be specially mentioned in the clause. Obviously, the words "or some other institution approved by the Commissioner" are intended to apply to one or more institutions in Australia. Then the measure, when read abroad, will show that we are not solely dependent . upon actuaries trained or accredited outside of Australia.

Debate (on motion by Senator Senior) adjourned.

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