Michael Noonan (Limerick City, Fine Gael)

I thank all the Deputies who contributed to the debate on the Bill. It was a fairly good debate. After his complimentary remarks about myself I am sorry that Deputy Healy-Rae will not be voting for the Bill but I might convince him to do so in the next ten minutes.

I can appreciate the concern many Deputies have that at a time when it is hard enough for many families to make ends meet there will be another imposition on their car and house insurance and that they will have to pay an additional 2% on their premiums but it is incorrect to state that the proceeds of the levy going into the insurance compensation fund will be transferred either to the Quinn family, the Quinn group or anything to do with the Quinns.

The money is put in to cover insurance claims that others of the Deputy's constituents would not get paid for if we did not provide for it by way of a levy. We are talking about the Deputy's neighbour who has a car crash and breaks his leg and cannot work for three months, his neighbour who has a fire in the house, the neighbour whose home is flooded or the neighbour who booked his dream holiday only to arrive in Bulgaria and find the apartment block was not built, and he has travel insurance to cover him. That is where the money is going. It is going to cover outstanding claims that Quinn Insurance had insured against and because Quinn Insurance became insolvent, those claims could not be met if we did not put money into the insurance fund to cover them.

The alternative was to let Quinn Insurance go bust and if it went bust not only would the insurance claims pending not be honoured but all the neighbours the Deputy spoke about would be driving around without insurance or would be off the road because the day it would go down, many people insured with Quinn would no longer be insured, and some of them would find it hard enough to get alternative insurance because we know that the Quinn group had a record of insuring young drivers at modest enough premiums compared to what the competition was doing in the market.

The primary purpose of what we are doing is not to save the jobs in Quinn Insurance. That was done as soon as the Liberty Group decided to put private sector money into Quinn Insurance and guarantee that the 1,600 jobs, all the way from the Border counties down to Blanchardstown, would be secured. It agreed also that it would continue to trade in the country as an insurance company with a view to expanding its market, not restricting it.

The Bill has been attacked on a false premise to many degrees.

The benefits are that people who were insured with Quinn and would not have their claims honoured will now have them honoured, and those who would no longer be insured if the company went out of business will continue to be insured. It also means the State is not carrying the full burden, because the Liberty Group is coming in. It is directed by a man from the same part of the country where the Quinn Group operated. He is an Irish American who originated in Armagh and he has been very successful in the insurance business in the United States, and he is coming in. The alternatives are that the company goes broke, there is no insurance for Quinn policyholders, no settlements, 1,600 people out of work, and a really bad situation. That is why we are acting. I know it is not ideal, and we could talk about the Quinn Group and all the rest of it, but the solution that is being brought forward achieves quite a lot. It ensures that people will have their claims paid, that people will continue to be insured, that 1,600 people in good jobs will continue to have them, that American investment money comes in to bolster a broke insurance company, and that it will continue to trade on a solvent basis. Indeed, the intention in the company's business plan is to expand.

I am sorry about the rush to get the Bill through, but it is being done so the final deal can be signed off between the administrators and the purchasers of the company. The matter has to be mentioned in the High Court on 4 October. We have to get it through because the question in the High Court will be whether the Dáil has made the legal provisions to allow money to be paid into the compensation fund so claims can be honoured. When the answer to that question and some associated questions is yes, matters will proceed. I wanted to put the issue in that context.

It is important to remember that the Bill is technical in nature. Its main purpose is to ensure that our domestic legislation is compatible with the third non-life insurance directive, as advised by the Attorney General. Deputies should note that the legislative amendment needs to be made immediately, as I said, to ensure it is done by 4 October. I appreciate the points Deputies made about the need for due process in dealing with legislation and I admit the situation is not ideal, but we were left in circumstances where we had to act against a fairly tight timeline. I hoped to bring the Bill to the Oireachtas in June, but I needed to get legal advice and, in particular, to consult the EU. The initial advice that I received from the EU was incomplete and we had to adjust the manner in which the Bill was drawn up when we received full advice.

A number of Deputies mentioned the need to strengthen regulation of the insurance sector or market. A number of developments have taken place in the past 18 months to do that. First, the Central Bank's staff resources in the insurance area have increased significantly, from fewer than 50 people to just over 100. Second, an authorised officer regime has been introduced that allows the Central Bank to appoint outside experts such as actuaries to go in and investigate a company on its behalf. Third, the obligation on the Central Bank to promote financial services has been removed. Those measures will help the regulation of the insurance industry and make it far more rigorous. Deputies should also be conscious of international developments on strengthening regulation of the insurance sector. The forthcoming EU solvency II directive represents the first stage of a major transformation of how the industry is regulated. The most essential features of the framework directive are the introduction of an economic and risk-based approach to the measurement of assets and liabilities and a much greater focus on quantitative issues such as governance and the role of the supervisor. Capital requirements will be determined by an evaluation of the company's level of risk using a consistent set of measurement principles, resulting in an appropriate level of capital for solvency purposes. The changes will impact on all companies in the insurance sector and are likely to take effect from 2014.

A number of Deputies asked why Liberty, an American insurer, was chosen as the preferred bidder. Members should be aware that the sale of Quinn Insurance Limited was a matter for the joint administrators. It is important to be clear that neither the Minister for Finance nor the Government had any input into the decision to select Liberty Mutual/Anglo Irish Bank as the preferred bidder. In assessing the bids for the business of Quinn Insurance Limited, the joint administrators were required to consider how the interests of policyholders could best be protected and how the company could be returned to a sound financial footing. Those were the criteria on which the decision to opt for Liberty Mutual/Anglo Irish Bank was made by the joint administrators under the powers given to them by the Insurance (No. 2) Act 1983. At the end of the sales process, there were only two companies left which were interested in buying QIL. The joint administrators concluded that the Liberty/Anglo Irish Bank proposal was the best because it protects policyholders and minimises the call on the ICF. An additional benefit of the proposal is that it protects the jobs in QIL, and it is a clean deal because the State does not have to cover tail risk. We have to introduce the legislation and the policyholders will have to pay in to the levy, but we will not cover any further tail risk.

As I said, I share Deputies' concerns about the increased call on the insurance compensation fund in the past couple of months. That is why I asked the State Claims Agency to go in and undertake a review of the processes at QIL and in particular to examine claims management and the reserving processes. In its interim report, it stated that the claims management process is operating effectively and that reserving has improved considerably since the joint administrators took over running the business, but that there is potential for improvement in some other areas. In summary, it stated that the increased call on the fund as a result of various actuarial reserving reviews was appropriate.

I thank Deputies for their contributions. I recommend the Bill to the House.

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