Michael Noonan (Limerick City, Fine Gael)

I thank the Senators who contributed to the debate on the Bill. I am not seeking to use the guillotine. The request was to take all Stage in the House together. The time pressure on us arises from the fact that the Liberty group will conclude the purchase of the Quinn Group on 4 October. It has to go to the High Court on 4 October where certain questions will be asked. One of the principal questions will be whether it is in a position to cover claims. We all know what the insurance business is about. We all have to pay for insurance for the car and the house and we are familiar with how it works. A prudent insurance company and a solvent insurance company must provide for claims. One pays the premium, but the claims do not arise for years. When the administrator examined the Quinn books, sufficient provision had not been made for claims. That is why we are here today proposing a levy to cover claims in the system and claims that may arise in the future from persons who are covered in respect of, principally, their motor vehicles or their property by the Quinn Insurance Group.

I thank all the Senators who contributed. Certainly, I can understand Senator Thomas Byrne's dissatisfaction that the Bill is going through in one day. There is pressure to meet the 4 October deadline and I have to get it through all Stages in the House and it has to be signed by the President. It is very important, with more than 1,600 people working in Quinn Insurance and so many policyholders who, if the levy is not paid into the fund, will not have the wherewithal to meet their claims. This is an essential piece of work.

The legislation was difficult. Senator Byrne and others may recall much lobbying in the early summer, not from the Quinn Group, although it was lobbying, but from foreign insurance companies in the country. Insurance directives in Europe are complex and when we started to explore what legislation was necessary, we took advice from Europe. In the first instance, the advice we got was not full advice. It appeared at that stage that the levy would have to apply to any insurance policies written in Ireland, even if written for citizens in France or Germany. Regardless of where the risk was in Europe, it appeared as if we would have to levy everything. Members may recall large companies such as Zurich and others in the market saying they could not be levied on their French and German businesses because they were not Irish risk. It appeared that large companies would move out of Ireland, particularly out of the financial services area, because a levy would be applied which, on the face of it, looked unfair but over which we had no discretion because this appeared to be what the insurance directives were saying. This was the initial advice we received from Europe.

The Attorney General explored the advice and subsequently we found there were later amendments to the directive which allowed us to cover insurance risk written in and for Ireland, as I have described, and to exempt from the levy risk written in Ireland but for abroad. It had the effect of ensuring all those jobs in the insurance business in Ireland, specifically those attached to the financial services industry, were secure and would not be affected in any way by the imposition of the levy. By the time we had sorted all that out, we were moving towards the recess and could not bring in the legislation before the summer.

We now have a straight piece of legislation over which we can stand. It is not ideal. I would have preferred it had the Senator got the Bill a fortnight ago to peruse it and we had the Stages on different days, but this was the hand of cards we were dealt and we are doing the best we can with it. I agree it is not ideal and it is not going to be a practice. It is just that on this legislation we were forced into this position.

Senator Byrne asked where the money is coming from that the State is advancing. We are advancing €280 million into the fund because there is only €40 million in it. The annual levy of 2% will come in over the calendar year. I will advance the money from the central fund, provision for which has been made, and we will make provision for it in 2012. The money that is going into the fund will be covered by the levy subsequently. The European Audit Office says this is not expenditure but a financial transaction because money is being put in and replaced subsequently in order that it will not kick into the deficit. It is as though it is ring-fenced for that arrangement. As for the levy, we think it will work out over ten years, but it may be shorter or longer.

Senator D'Arcy, in a good contribution, asked how the levy would operate. The Central Bank is the adjudicator of whether moneys are necessary and how much. It is of the view that a 2% levy, which is the maximum under the 1964 Act, is required. However, if the claims were front-loaded and the Central Bank was of the view that they were reducing to a trickle, it could reduce the levy to, say, 1%. It is something that will have to be adjusted in the future. However, according to the administrators, we need more than €700 million. Senators can work that out over a period.

The State Claims Agency is satisfied, and has satisfied me as Minister, that the amount of money being sought now is prudent and that it is not a case of settling lightly with other people's money. We are happy with this. We were concerned because it started at a lower sum and began to creep up, so we decided to have it independently assessed. We are pretty satisfied now, in general terms, with what is happening.

I think it was Senator Byrne, or perhaps Senator D'Arcy, who asked about travel insurance. If a travel insurance policy covers a period of less than four months, it is covered by the scheme as long as the person has taken out the policy in the State, even if it is from a foreign-authorised company. Thus, if an Irish person takes out a policy in Ireland, regardless of whether the company that writes the policy is foreign or domestic, there is a four-month cover period under the scheme as proposed.

As for the collector of the levy, I presume it will be collected by the Revenue Commissioners in the normal way and passed on to the insurance compensation fund.

Senator D'Arcy asked whether 100 staff in the Central Bank were sufficient for regulating the insurance industry. That is the Central Bank's estimate of what is efficient, but it has supplemented that by adopting the power to bring in people such as actuaries or accountants from outside during periodic peak times in which it needs a particular skill. It is certainly the case that regulation has been improved dramatically.

Senator Harte has a great deal of experience in the insurance industry as he has worked as a broker. What he said about the Quinn Group was the common conversation, particularly if one met people in the insurance business. That was counteracted by the claims of the Quinn Group that there was a new business model that had dispensed with many of the overheads of traditional insurance. Nothing was ever proved until the new regulator intervened and the Quinn Group subsequently went down.

Before I sit down I should deplore the intimidation of administrative staff at Quinn Insurance that has taken place recently, perpetrated by persons unknown, although one might have a shrewd idea who they are. It took great efforts, a great deal of negotiation and the good will of an American insurance company, whose managing director was a man from Armagh who realised the importance of insurance jobs on both sides of the Border, to save the company. Much effort went into securing Quinn Insurance and ensuring it will continue as an insurance company which will grow rather than decline - that is its business plan - and that the claims of people who have taken out insurance with Quinn Insurance will be covered. More than 1,600 jobs are secure, all the way down to Blanchardstown - it is not just in the Border counties. It is deplorable that people who seem to have no great interest in the jobs of the workers would seek to intimidate workers in the way they did. There is always a risk, when one has foreign investors, that when extra-legal activities are indulged in, it will upset them. I do not want to sit down without saying that, because those actions were deplorable. I wish the Garda every success in pursuing the perpetrators.

The total call on the fund is likely to be €720 million in all. It is estimated that the levy, based on current gross premium figures, will raise €65 million per year. As there is €40 million available already, we are looking at a ten-year timeframe. We hope that, as the economy grows and expands, the premium book will also grow, in order that in five years' time significantly more than €65 million will be raised. However, that is difficult to estimate. My note states it may take up to 11 years to work our way through this. Any increase in the level of gross premiums during the period will mean that the amount can be paid more quickly, but there is no promise that this will happen under the Bill. We will be advised by the Central Bank, which is, under the law, authorised to advise on whether the fund is adequate, and we will proceed on that basis.

I thank the three Senators who contributed and thank the House for facilitating me thus far at the end of Second Stage.