Mr. Ronan Hession:

Broadly speaking, when one speaks about insurance, one is speaking about a European regulatory framework. As I outlined to Deputy Pearse Doherty, a complete overhaul is taking place. From January 2016, that will become effective and should make the system much stronger. We have also enhanced our domestic regulator, the Central Bank. The Central Bank has done its own review internally of its own procedures and is stepping up the management information it requires from insurers, especially looking at brokers and more on-site inspections of brokers.

The Central Bank tends to do risk-based supervision. Brokers, being quite small by comparison, up to now were possibly not as high-risk. They have tried to correct for that. Setanta was operating about 230 brokers, so it was a sizeable company in terms of the market. They are paying greater scrutiny in that respect.

There is a need to ensure the regulatory system is fully kitted out to deal with this type of problem. It will still be a European system and will rely on good co-operation. The good co-operation exists and there is no reason to suggest there is a breakdown.

In this case, looking at how the problems at Setanta came to a head, it goes back to September 2013 when the Central Bank asked a straight question of the Maltese whether Setanta was solvent. The Maltese came back with the solvency certificate to say it was meeting its minimum requirements. The bank brought it a step further, did a sample of claims from the office in Blanchardstown and raised the question of the level of reserving. That was challenged by the Setanta directors at the time, and in fairness to the Maltese, they got Grant Thornton Malta, I think, the auditors of Setanta, to do a review. They came back and said it was a little bit short on reserving but not materially so. The bank pressed further and got an independent assessment, and at that stage, coming up to December 2013, a more serious question was emerging. There was a level of persistence from the Central Bank, and in spite of the objections from the directors, the Maltese and the Central Bank kept pressing to get the answer. It was from there that the first direction came in January, I think on 16 or 24 January, to stop writing new business. There was then a period of months where the Maltese were pressing the Setanta directors to raise capital. There were a couple of bidders in the frame who dropped out about 11 April, roughly a week before the company was liquidated.

It is always important to ensure there is connectivity around a system. The system in insurance is global so if there is not co-operation between supervisors, it cannot work. In this case, a quite detailed report was given to the committee last July from the Maltese regulator which sets out those steps and brings out the level of interaction that can happen in a case like this.