Oireachtas Joint and Select Committees

Wednesday, 10 October 2012

Joint Oireachtas Committee on Finance, Public Expenditure and Reform

Quinn Insurance and Insurance Compensation Fund: Discussion

2:30 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

When news broke early in August of the dramatic increase in the potential call on the Insurance Compensation Fund of up to €1.6 billion, I wrote to the committee inviting our guests to come before us and take questions. I welcome the witnesses and thank them for being here.

Administrators were appointed to QIL in April 2010. In April 2011, when the sale to Liberty Mutual was approved, it was estimated that the call on the fund would be about €600 million. In September 2012, the Minister for Finance came before the Oireachtas and said the estimated call was €738 million. The Minister gave that figure in good faith. In December 2012, the administrators informed the High Court that the estimate was €755 million and at the end of July 2012, the estimate given to the High Court was, "anything up to €1.65 billion". The original estimate was given one year into the administrators' work. It was not a back-of-the-envelope exercise. It was a considered estimate given when the administrators had been in situ for one year. That estimate has increased almost threefold since that time.

For whatever reason, there was a catastrophic miscalculation of the potential losses. Given that ordinary policy holders will be paying this levy for quite some time, they are entitled to know how the administrators could have got it so wrong. In the first year, the administrators estimated a call on the fund of €600 million, and that has increased almost threefold since then. How could they have got it so wrong?

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