Mr. Bernard Byrne:

An insurance scheme has an obvious appeal in satisfying many of the prudential requirements at which people are looking. It also has an appeal from a consumer protection point of view. Three elements need to be borne in mind on the other side. First, such arrangements generally operate in a repossessions market in which there is very quick execution between somebody defaulting and a house repossession and a realisation of a loss taking place. Therefore, the insurer is able to understand what the loss is and provide insurance. It is less structured and less used to a market like the Irish market, in which a solution is worked through over a long period of time, in effect, in the absence of a loss event. It is not that it could not happen, but it is certainly not designed in that way. Second, there is a price to it and that price factors in the risk involved. Rather than getting rid of the risk, one is simply moving the point of risk. Third, under the current construct, these arrangements generally tend in effect to have a go-back-to-borrower clause. The insurer might pay up, but it will seek recovery from the borrower.

I suggest these three thoughts should be specifically borne in mind. Someone should examine how any such arrangement would work in the Irish market. Many markets end up with some government arrangement as part of the mix.