Seán Fleming (Laois-Offaly, Fianna Fail)

I am pleased to speak on the Insurance (Amendment) Bill 2011. Notwithstanding the importance of the Bill, I echo previous comments regarding the guillotining of the debate on Second and Report Stages. Amendments must be submitted before the debate on Second Stage has even commenced. This does not give Members the opportunity to hear the Minister's response on Second Stage. We must complete the passage of the Bill tonight. This is not a good way to pass legislation. The Minister may think it is but no one else does. He may wish to make a case as to why the guillotine is important but no one will believe him. It is important that what we are doing here has some level of political credibility.

I take a slightly longer term view of this legislation. My simple comment is, "Here we so again". I remember the debacles of the PMPA and of the ICI and AIB. The Insurance Compensation Fund was introduced to deal with the liquidation of an insurance company called Equitable Life. The problem of insurance companies making bad investment decisions, underpricing their policies or running a bad business is not new. We had to introduce legislation in the 1960s to deal with it. We did the same thing with PMPA but we learned no lessons.

People who were involved in AIB at the time of the ICI debacle have much to answer for regarding where we are today. I am not playing party politics but we know who was Taoiseach at the time of the ICI-AIB debacle. We set the seeds then for the lack of regulation of the banking sector. Much of ICI's business was outside Ireland. AIB came to the Government and said it would go under, with a systemic impact on the financial situation of the State, if a levy was not introduced. The Government folded like a pack of cards. I accept that the problem had to be dealt with, but not a single person in AIB paid a cost for it. No one lost his job, was disciplined or sidestepped. No board member resigned. The Oireachtas told the biggest bank in the country that no matter what mistakes it made the national Parliament would bail it out and, above all, there would be no repercussions for the bank for any action taken in future years.

That led to an arrogance in the financial institutions which ultimately led to the arrogance we saw in Anglo Irish Bank, which is why we are here today. Had that generation of senior bankers known that if they got things wrong they would suffer and would not automatically be bailed out with a blank cheque from the Exchequer, we would not be here today. They would not have taken the chances they did.

Bad commercial decisions were made at that time, but we are now in a worse situation. We are here today to bail out the gambling debts of Seán Quinn and we are asking the people of Ireland to do that. If we saw this in a James Bond film we would not be able to fathom what was happening. There is a big insurance company and a big bank, Anglo Irish Bank. Seánie FitzPatrick, of Anglo Irish Bank, is a gambler by definition, because he gambled the future of the bank on bad financial and property decisions. One of his big customers, Sean Quinn, is another gambler and he gambled on his insurance company. He used some of the reserves of that company, which were needed to pay claims, to help buy shares in the bank which he was trying to take over. It is as if a gambler in a casino wants to take over the house, and the house, which is Anglo Irish Bank, advances the gambler some loans so he can take over the house. The whole thing collapsed because money was going around in circles and there was no substance to back up the original transactions.

Anglo Irish Bank collapsed and Quinn Insurance has collapsed as a result. The Quinn empire has been severely damaged and the Irish people are being brought in once again to bail it out. One may speak about the Irish public, the Irish taxpayers or the Irish insured public. They are all one and the same. The levy covers motor insurance, which all car owners are legally obliged to have. Anyone who has motor insurance in Ireland will be obliged to pay the levy. They will have no choice. Every person who has a car will contribute towards paying these gambling debts. This is what many people find obscene.

The problems in Anglo Irish Bank have existed for a period of time. However, we now know more about Anglo than we did two years ago. If the facts as we know them now had been known two years ago we might have taken a different course of action.

I have sympathy for the staff of Quinn Insurance, but no member of the Government parties, if jobs were threatened in his or her constituency, would ever ask the Irish public to stump up €500,000 per person to keep those jobs. This bailout will cost the Irish public €720 million to save the 1,500 jobs in Quinn Insurance. We want to keep the insurance market alive, maintain competition and protect as many jobs as possible, but this Bill is not only about protecting jobs. Protecting jobs is only one aspect of the overall situation and it is being used to bludgeon this Bill through the House. We are being told that if we do not accept the guillotining of the debate we will cause people to lose jobs. No Government Deputy would ask for €500,000 per job to be invested in any project in order to keep jobs alive. The Government should not overplay this argument because people will see it is not the full picture.

If there is a shortfall in Quinn Insurance in the future, the joint venture company of Liberty Mutual Direct Insurance in the United States will not be caught for any of those liabilities, because they will be capped. While this might be a good deal, there is no basis to assume it is so. I cannot say whether this deal in respect of the joint venture, which was struck on behalf of Irish taxpayers who own Anglo Irish Bank which is running Quinn Insurance, is a good deal because the financial transactions have not been made known to us. While it might be a good deal, I have no reason to believe it is. It is because of this lack of information that Fianna Fáil has a problem with this legislation.

Also, there is no sunset clause in respect of when the fund will come to an end. Prior to the summer recess, the Government introduced a pension levy of 2.5% on pension funds. This week we are being asked to support the introduction of a 2% insurance levy. What levy might the Government introduce next week, next month or next year? Every other month a new levy is being introduced. There has been much talk of competitiveness in the Irish economy. Those two measures fly in the face of that. The Government says it does not want to touch income tax rates in the forthcoming budget. Based on its performance to date, it will probably, while continuing to state it will not be touching tax, introduce further levies. The Government has been consistent in this respect, namely, it has raided pensions in order to get €2 billion and is introducing, by way of this legislation, an insurance levy to meet the cost of the insurance compensation fund.

We do not know at this stage if the €700 million will be sufficient. Will we be back here in five years amending this legislation to increase the levy from 2% to 3% because the amount required was underestimated and is €900 or will the Irish taxpayer be left to pick up the balance? None of this has been made clear in the legislation. Essentially, this is a stealth tax to deal with this issue. Time should be provided for a full Committee Stage debate on the details of the joint venture with Liberty Mutual Direct Insurance Company.

As it stands, this legislation has had to be amended because it is not in compliance with EU legislation. The Bill proposes to amend the Insurance Act 1989 which covers the risks of policyholders of Irish authorised companies to one which covers all insured risk in the State, except for specific risks. Many insurance companies in Ireland are only branch operations. What is covered and not covered in this legislation will lead to legal challenges. Section 3(c) provides that access to this fund is confined to firms that conduct a large percentage of their overall business in Ireland, namely, 70% averaged over the three years before the appointment of the administrator. I would like the list of companies covered by this to be made available to us today. When we brought in the bank guarantee scheme, we knew which banks were participating. I want to know the names of the companies that will be eligible to receive funding from the insurance compensation fund if a need arises. That list needs to be made available to us. Also, we need an explanation in regard to why the figure of 70% was chosen. Was it chosen to suit one or two particular companies?

While I understand the urgency of passing this legislation, Fianna Fáil has major problems with it as presented today.

See this speech in context