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Wednesday, 9 March 1932

Mr BLAKELEY (Darling) .- This bill will be welcomed by the people of Australia, and the members of my party will not oppose it. I regret that the Government has incorporated in the measure only a small portion of the two other comprehensive insurance bills that were introduced in the Senate, the provisions of which protected policy-holders in mutual and other insurance companies. Ever since federation the Commonwealth Government has enjoyed the power to introduce legislation of this nature, although it has no power to interfere with State insurance. Yet. we have reached the year 1932 before the Commonwealth Government really has begun to legislate in this field, and then only in regard to one of the lesser important phases of insurance. With the exception of New South Wales, the whole of the Australian States already have legislation providing that insurance companies shall lodge deposits with their governments for the protection of policyholders. As investors and policy-holders in that State know to their regret, New South Wales has lagged behind in this respect. There have been tragic failures of insurance companies in New South Wales in recent years, including the liquidation of the Property Insurance Company, the Australian Federal Life and General Insurance Company, in which was incorported the People's Prudential, Commonwealth Traders, and other associated companies, the Community General Insurance Company, and others of a mushroom nature. Notwithstanding the fact that it possessed the necessary power to do so, the Commonwealth Government took no action to protect the people of New South Wales, nor did the State legislature come to their rescue. That territory has thereforebeen a happy hunting groundfor go-getters and the spieler-type of company promotors. On the other hand, Tasmania introduced protective insurance legislation in 1874, while South Australia fol lowed suit in 1882, Western Australia in 1S89, and Queensland in 1901. The States provide that the following deposits shall be lodged by insurance companies : -

Under this legislation the Commonwealth Government proposes that the deposit shall be £40,000 for general insurance, and £50,000 for life insurance, while the amount to be lodged by companies which have their head-quarters outside the British Empire is £60,000. Notwithstanding the comparatively small deposits required by some of the States, the aggregation of the deposits represents a respectable sum. The following are the particulars : -


I am unable to obtain information as to whether the States will have to hand back to the insurance company the margin of difference between the deposits specified by their legislation and those stated by this measure. I have endeavoured, too, to ascertain from the States the amounts that they hold in cash and securities, but only three have had the courtesy to reply. In fairness to those that have failed to do so, I acknowledge that there may be some difficulty in obtaining the information readily, and that it may be forwarded to me later. I am not a States righter. Rather am I a federalist. For that reason I welcome federal action in this matter, but I am reluctant to give approval to any legisla-

J/r. Blakeley. tion which will, by its operations, call upon the States to relinquish cash or securities which would embarrass them. I have learned unofficially that the provisions of this measure will not operate harshly in that regard, and I hope that my information, is correct. In committee I shall ask the Assistant Treasurer to give honorable members an assurance in that regard.

The great trouble about insurance is that it has encouraged a number pf people to fleece the public, and men who have been engaged as canvassers on commission, have decided to form insurance companies of their own. The whole thing was so easy. A flashily-furnished suite of rooms and the assistance of glib tongues was ail that was necessary. Capital was not an essential. Those gogetters scoured the country looking for business, glibly assuring potential clients of the stability of their company. They even entered the realm of third party motor insurance. The result was a tragedy to the policy-holders. I remember that, only a few years ago, a number of members in this chamber were left lamenting when a mushroom concern collapsed. Throughout Australia, and par.ticularly in New South Wales, investors have been robbed of considerable sums of money. That, would not be so bad, because, after all, those who have money to invest in insurance companies are in a different position from persons who are endeavouring, by paying small regular instalments, to provide for their families. It is with this class of persons that I am mainly concerned in connexion with this legislation.

The great pity is . that this Government has seen fit to present now only a small portion of the legislation that was twice passed by the Senate. I mention, incidentally, that on each occasion the Government that permitted the introduction of that legislation fell almost immediately. I hope that the hoodoo will continue. The legislation which the last two Governments proposed to introduce in this chamber dealt with all phases of insurance. It embodied - registration ; winding up of companies; transfers and amalgamations; provision for security of insured persons in connexion with deposits by companies, statutory funds, statements, returns, investigations, policies and protection of policies; payment of policy money; registrations, assignments and mortgages of policies, audit and children's insurance. Perhaps the most important clause in the bill of 1929, which I hope the Government will lose no time in introducing, was that which provided that before any canvasser or gogetter could even advertise, make application for subscriptions, or issue prospectuses, permission must be obtained from the Commonwealth Treasurer. In 1908, a Commonwealth royal commission was appointed to inquire into insurance, and after considerable investigation reported as follows : -

Owing to the nature of the legislative enactments of the several States of the Commonwealth relative to the conduct of life insurance business, and the fact that these have all had a common basis, viz., the English acts of 1870 to 1872, there does not exist in Australia the same degree or convenience and want of equity from variations in State legislation that are to be found in America; but even here the diversity is of such an extent that the enactment of a uniform federal law superseding the existing State legislation would represent a distinct gain to the companies transacting life insurance business in Australia, and, indirectly, to their policy-holders since under it the present necessity for lodging separate deposits and returns of revenue, expenditure, assets, liabilities, &c, with the separate State governments would be obviated, the deposits and returns lodged with the Commonwealth Government, applying to the whole of Australia.

An opinion which held good in 1908 holds good to-day. One wonders at the lack of interest shown by various Commonwealth Governments since that time in dealing with this important social service. Although it may be said that the last Government showed no great haste to deal with insurance, we must concede that it was continually dealing with matters of urgent public importance, in an endeavour to prevent a financial crash in this country. Nevertheless, we did facilitate the introduction of insurance legislation in the Senate, and made provision for its introduction in this chamber. Most of the general and life insurance business in Australia is in the hands of the mutual companies, and there are interesting particulars available showing the great necessity for the governments of this country to protect the large number of policy-holders, most of whom are of the working class. I have a return showing that in the ordinary departments of mutual societies there are 676,310 policies, the sum assured being £234,429. In other societies and companies there are 225,304 policies, the sum assured being £59,855. In the industrial department of mutual societies there are 1,127,472 policies, the sum assured being £53,559, and in other societies and companies, there are 471,159 policies, the sum assured being £16,371. Any legislation that we pass must provide adequate protection for approximately 2,400,000 policy-holders. Even in those States where deposits are lodged the protection is not adequate'. In New South Wales there is absolutely no protection. I, therefore, welcome the bill, but urge the Government to take the earliest opportunity to bring down to this chamber the remainder of the original bill. I am sure that the Government would be afforded every facility by honorable members to pass a comprehensive insurance measure which would enable the Commonwealth Parliament to exercise a power given to it under the Constitution, and thus bring about the federalization of insurance.

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