Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

With regard to competition, I have already mentioned that we are paying the price for the cheap policies that were on the market for a number of years. They were so cheap as to prevent the companies issuing them from being viable. Quinn Insurance is the most recent example of a company that went under because it did not have the necessary reserves. As a result of that, we are all paying the extra levies I mentioned. There is a 2% levy and a 3% stamp duty in place to cover the costs arising. One of these levies raises approximately €40 million per annum and comprises a percentage of every insurance premium. The legislation requires that a fund of €200 million be built up, which will then be held in reserve on the State's behalf and can be used if another insurance company goes bust so as to avoid having to introduce a new levy every time an insurance company goes bust. It will take a couple of years to build up that fund. As we speak, every policyholder in Ireland is paying for the cheap policies that were available earlier because the reserves were not there when needed. We have now had to introduce levies to build up a fund to prevent that happening again.

On cash flow, I do not have a clear answer but I will come back to the Deputy on the issue. Generally, these companies invest in Government bonds because they are looking for stability. They obviously have to hold a significant amount in reserve because the industry is regulated. They must always maintain some cash to meet current claims. I will seek further information on that issue as part of my ongoing work in my role in the Department.