Michael Noonan (Limerick City, Fine Gael)

I will respond to the Deputy's first question and will then read the speaking note on the section, which may anticipate many of the Deputy's questions.

The levy will be applied to all vehicle, home or travel insurance written in the State for persons living in the State. What is being covered are the insurance claims of the Quinn Insurance group in respect of which adequate provision was not made. For example, a person insured with Quinn Insurance who had a car accident two years ago, at which time Quinn Insurance was insolvent, will be compensated by the insurance compensation fund. The levy paid into the insurance compensation fund will provide the funds out of which a person's claim will be met when settled. The levy has nothing to do with UK or Irish claims. It relates to any claim that arises from insurance written by the Quinn group of companies. The big hits in this regard are in respect of car accidents.

While it is true that this is an imposition on ordinary Irish people who will have to pay a further 2% on their insurance, we must ensure that other Irish people, equally meritorious, who have had a car accident, their house burn down or made a claim on their travel insurance get paid. That is what the insurance compensation fund is about. This has nothing to do with the wider Quinn group. There is no question of this money being used to bail out Quinn in any respect. That is not the issue. This is to provide money so that insurance claims that could not be met because Quinn Insurance was insolvent can be met by way of the insurance compensation fund.

The enabling legislation provides that, if another insurance company which has claims pending goes broke, it or the administrator of it will have access to the insurance compensation fund. Regulation of insurance has improved substantially over the past 18 months. Where previously there were only 50 people in the Central Bank regulating insurance companies there are now 100 people doing so. Also, the Central Bank no longer promotes financial services business because being the regulator at the same time as promoting the Financial Services Centre in Dublin to an insurance company was a potential conflict. As such the Central Bank has moved out of that area. It also has the power to bring in third party professionals such as actuaries to help with the regulation. It is hoped that a company like Liberty will have adequate provision and reserves to meet all claims. There is an advantage in bringing in a big American company which has a great deal of assets. It will have appropriate reserves and make appropriate provision for the business it writes. The additional regulatory regime and the fact that regulation in Ireland is working much better than it used to should provide the assurance we need that as Liberty trades in the market it will not get into the difficulties into which Quinn did.

The problem arises because Quinn Insurance did not make sufficient provision for future claims. It is as simple as that. There are rules about this in insurance regulation and they fell below the benchmarks. I dislike saying that this will never happen again but new measures have been taken to ensure it does not.

Would the Deputy like me to read the speaking note on the section?

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