Address by Mr. Noel Treacy, T.D., Minister for Science, Technology and Commerce at Irish Brokers Association Dinner, Berkeley Court Hotel, Dublin 17th November, 1999 at 9pm

I would like to thank the IBA and its Officers for their kind invitation and for the opportunity to address you all here this evening.

I am well aware of the very important role which the IBA plays in representing its many members views on insurance matters generally. The consultative process between our Department and representative bodies such as yourselves is a very important input into the formulation of national policy on insurance issues and in the implementation of such policy in an objective and balanced way with the maximum level of agreement in order to serve the common good.

I want to briefly touch on some of the more salient topics of the past year and what lies ahead.

Provision for the regulation of insurance intermediaries was first introduced into law by Part IV of the Insurance Act, of 1989. This provided for a relatively simple system of self-regulation by the insurance industry. The Investment Intermediaries, Act, of 1995 introduced more detailed procedures for the regulation of investment intermediaries with regulatory responsibility allocated to the Central Bank of Ireland.

In my opinion, self-regulation of insurance intermediaries has proved inadequate and is inappropriate to an area of fundamental importance to consumer welfare. I do not need to remind you all of the occasions over the past decade, and in more recent times, when the deficiencies of this system were seriously exposed, not only at the expense of the consumer but also at the expense of the positively responsible broker. The reputation of your industry is paramount if you are to continue to enjoy the confidence and custom of your clients and I believe that a robust regulatory regime is of mutual benefit to all brokers and all of their clients alike.

The Insurance Bill, of 1999 will provide for the allocation of responsibility for the authorisation and supervision of insurance intermediaries to the Central Bank and the requisite amendments to both the Insurance Act, of 1989 and the Investment Intermediaries Act, of 1995. As you know, we are also including provisions for the legislative framework necessary to facilitate the introduction of insurance transparency Regulations.

In drafting the Bill, we have also taken the opportunity to update existing provisions for offences and penalties and to enhance the powers of "Authorised Officers" under the Insurance Acts and Regulations. On the initiative of the insurance industry itself, we are also making provision to allow regulations to be made for the authorisation and supervision of reinsurance undertakings.

I believe that the extensive regulatory powers available to the Central Bank under the Investment Intermediaries Act, of 1995 are more comprehensive and better suited to the task in hand than the minimal provisions under Part IV of the Insurance Act, of 1989. The benefit of this regulatory arrangement becomes self-evident, given the creation of more complex financial instruments, increasing similarities between many insurance and investment products and the fact that a great number of intermediaries are engaged simultaneously in both industries. The legislation will also open up opportunities for insurance intermediaries to offer new products to their clients which they had been unable to offer in the past.

The Bill is currently awaiting final clearance in the Attorney General's Office and I am confident, barring any unforeseen delay, that I will be in position to publish it and bring it before the Oireachtas between now and Christmas.

Yes, sometimes even Ministers have to make decisions!

I intend to introduce regulations on insurance transparency as soon as practicable following the enactment of the proposed Insurance Bill. With the help of both the industry and yourselves, I would hope that we can introduce practical and unencumbered measures to everybody's mutual advantage. Incidentally, this is an area where I believe market intervention is necessary in order to generate welfare gains for the insurance consumer whose purchase of insurance products and freedom of choice is affected by inadequate or lack of information. Insurance consumers will take advantage of information disclosure to make rational and informed decisions. Improved access to information will render the insurance market more competitive and efficient and, most importantly, mandatory disclosure will assist in reducing fraud and mis-representation.

I should point out, however, that while these irregularities were sufficient to cause concern for consumers and warranted a general review of procedures, the prudential supervision systems operated by the various State regulators were never brought into question and Ireland's international reputation for financial regulation retains its very high rating around the world.

The report of the Advisory Group established by the Government to draw up proposals for the structure of the new regulatory authority was published in June of this year with a view to promoting the maximum level of public debate on its recommendations before the Government made its final decision. As you can imagine, this has generated no little controversy amongst the various interest groups, the media and the general public, all of which will be borne in mind by our Government when it sits down to decide on the location and structure of the new regulator later this year.

The central plank of the strategy to emerge from the Government's deliberations will be to ensure that Ireland should continue to have a financial regulatory system of the highest quality and international standing which will be of mutual benefit to this very important industry and the wide range of clients that it serves.

The insurance industry is an important part of our modern and developing economy. Businesses and consumers need access to insurance products which provide protection to them from unforeseen events. It is critical in my view that the industry thus serves their needs. It is also imperative that we have a regulatory environment which balances the needs of both the consumer and the industry and serves the national interest.

I hope that we can work together to achieve this objective. On that note, I will finish. Thank you for listening to me and enjoy the rest of the evening.