Martin Mansergh (Tipperary South, Fianna Fail)
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): The Government believes competition in the insurance market is essential if consumers and businesses are to obtain good value for money. Up to about 18 months ago insurance prices had fallen significantly for a prolonged period, reflecting Government initiatives such as the establishment of the Personal Injuries Assessment Board and legislation to improve road safety, which has reduced accidents significantly, and also competition within the market, with a resulting impact on insurance prices. In more recent times, however, prices have begun to increase owing to the recessionary pressures in the economy, which is also affecting financial service providers, including the insurance industry, and other factors such as an increase in claims following the recent severe weather events during the winter as well as a fall in investment returns and the continuing stress in the financial markets.

In this context, the Government, in its revised programme for Government, made a commitment to review insurance costs to ensure the consumer is benefiting to the maximum extent possible from competition in the sector. At present, the Department of Finance is preparing this and hopes to commence the review shortly. The review will examine a number of issues dealing with the existing levels of competition within the sector, in particular the non-life insurance area and the following factors that impact on this.

One factor is size and scale of operation. The nature of the insurance industry is such that, except in specialist niche areas, scale of operation is very important. There are two main reasons for this, the first is known as the pooling effect, that is, the bigger the pool of customers or policyholders, the greater the company's ability to absorb losses when they arise as only a small number of people in the pool make claims at any one time. The second is the diversification effect - the broader the range of insurance products a company offers as well as the greater the amount of markets it operates within, the easier it is to offset losses against sectors that are growing and profitable. Another factor is the level of capital resources required.To enter a marketplace, considerable capital resources are required at the outset to satisfy the Financial Regulator's regulatory requirements. New entrant companies are required to hold even higher capital requirements than existing companies because of the higher risk associated with breaking into the new market. A further factor is the size of the market. Ireland is a relatively small market and, therefore, many companies find it difficult to establish a foothold in the marketplace, especially when there are a few very large, well-established companies here already. A further factor is the level of economic activity taking place in a marketplace. In the current economic climate there is little incentive to enter the market and aim to develop new business as existing companies are struggling to maintain their level of business. Another factor is the trend in the number of claims being made. Before entering a market it is usual for companies to get a sense of the extent of claims within the market, and whatever judgement they make will inform their views on whether and when to enter the market. The increase in the number of claims in recent years is a factor which might make a company hesitate in committing to the Irish market. A more Europe-wide phenomenon, which also could be a factor here, is the apparent reluctance by people to engage with cross-Border companies which do not have an establishment in Ireland.

Competition in the insurance sector takes place within a regulated marketplace to safeguard both the short-term and long-term interests of policyholders and third parties. Without this, there is a risk that companies entering the market would be insufficiently prepared for the challenges in the sector, involving significant risk to policyholders and others exposed to losses. To avoid this scenario, insurance companies are required to meet a series of prudential requirements which are derived from EU legislation known as Solvency 1. In the first place, insurance companies are required to hold sufficient assets to cover their insurance liabilities, that is, their expected losses. On top of this, companies are required to maintain a solvency margin that is an additional amount to cover unexpected losses or fluctuations in asset values, for example, the recent November flooding where the losses for insurance companies have been greater than they forecast at the start of the last year. Therefore, the role of the Financial Regulator is also important in ensuring the regulatory requirements in which competition takes place are complied with. The actions of the Financial Regulator in recent days provide an example of this.

Following an application by the Financial Regulator, Mr. Justice John Cooke in the High Court appointed Mr. Michael McAteer and Mr. Paul McCann from Grant Thornton to act as the two joint provisional administrators to Quinn Insurance Limited under the Insurance (No. 2) Act 1983. They have already begun their work, they have an on-site presence in the company and will oversee its actions and work with the management. The appointment was made after the court was informed that the Financial Regulator had a number of concerns, including that the insurance company had significantly breached its solvency ratios and its subsidiaries had entered a series of guarantee agreements which had reduced its assets and had failed to deliver a financial recovery plan that met the Financial Regulator's requirements aimed at restoring financial health. In other words, the Financial Regulator had concerns about the way the company was conducting its affairs and that it was not meeting the regulatory requirements. In particular, the regulator expressed concern that the company may be unable to comply with the requirements of the Insurance (No. 2) Act 1983 in that it had failed to make adequate provision for its debts, including contingent and prospective liabilities.

I am informed that, following a meeting between the Financial Regulator and the company, it was revealed that the effect of the guarantees had reduced the insurer's unencumbered assets by some €448 million and thus wiped out the company's solvency cushion. The fact that these guarantees had been in place was a matter of the gravest concern to the Financial Regulator. This raised serious governance and accountability questions about the internal control mechanisms as well as the accounting and administration procedures and practices within the company.

The Financial Regulator has commenced an investigation into these matters within Quinn Insurance that have very recently come to light and we must await the outcome of this investigation. I should also stress that it is the courts which will make the final decisions on the question of an administrator. Therefore, we must be careful not to prejudice the position regarding any matter that is sub judice. The courts will make the final determination on the relevant facts. That is the reason I must be fairly circumspect in what I say.

I recognise that the Financial Regulator has taken the action to seek the appointment of the two joint provisional administrators in the best interests of the firm's policyholders and that the appointment will allow the firm to remain open for business and to continue to be run as a going concern with a view to placing it on an ongoing and sound commercial and financial footing. This will assist in the maintenance, in the public interest, of the proper and orderly regulation and conduct of the business.

I welcome the fact that Irish policyholders of Quinn Insurance Limited can continue to renew policies, carry out new business and make claims in the normal way. Quinn Life business, which is a separate entity, is not affected by these measures.

It is important to note that at this stage, there is no requirement for additional funds from the insurance compensation fund as the administration is only of a provisional nature. If the administration is confirmed on 12 April and should the administrator subsequently need additional funds to help him with the business, there is the facility of the insurance compensation fund established under the Insurance Act 1964. This fund was used in previous insurance company administrations, for example, in PMPA in 1983 and ICI in 1985.

As regards the employment implications of the decision to appoint the administrators, the aim is to stabilise the company which in turn will help to protect employment. The administrators are there to continue the company as a going concern.

The Government remains acutely conscious that while economic activity continues to remain weak, it is imperative that we do nothing to further erode private sector employment. We are particularly conscious of the contribution of the financial services sector to employment in this country and it is the Government's objective that this sector emerges from the current downturn strong, competitive and able to withstand any future downturns.

Joe O'Toole (Independent)
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I thank Senator Donohoe for allowing me to speak ahead of him. I declare an interest in that I was very involved in the drafting of the Personal Injuries Assessment Board legislation and in its passage through the House. I am currently the vice chair of the Personal Injuries Assessment Board. I was also very active on the joint committee which inquired into insurance a couple of years ago.

I welcome the Minister of State and thank him for his important contribution. I do not intend to disagree with any of the significant points he made but wish to add to them. Since Governments made insurance a big issue - the Minister of State will recall it was an issue when he was a Member of this House - the cost of insurance reduced by almost 41% until January 2008. However, it has gone up by 17% since then. I want the Minister of State to recognise that in the context of small businesses and individuals.

Many people are gloating that Quinn Insurance appears to be in trouble. I completely support what the Financial Regulator did and was delighted to see him do it quickly. Over the past year, however, some people in the insurance industry have been thinking that the Financial Regulator and the Government have been busy with the banks and that nobody has been taking any notice of them. Prices crept up over the past year, in particular in the first six months of last year and in the first couple of months of this year. We need to look at that and protect businesses. As late as this week, a speaker at an insurance conference said cheap insurance companies tend to be failed insurance companies.

Let us be clear. Quinn Insurance is not in the same category as PMPA. PMPA went out of business because it was using premia to try to pay for claims. That is not what happened here. As the Minister of State rightly pointed out, what happened here was that for a combination reasons, the tier 1 solvency level of Quinn Insurance was breached. It is a technical and an important issue. I understand and appreciate the way Quinn Insurance responded to it but the Financial Regulator was right.

Our job must be to support Quinn Insurance in working its way through this and to maintain confidence in the industry. Quinn Insurance is a good business model, and I say that as someone who works at the edge of this business through the Personal Injuries Assessment Board. It introduced direct insurance, longer opening hours and early settlement which is now a huge part of every company's policy, and it was the first company to go on-line. It has been a trail blazer in many ways.

There is no clear indication as to which Minister is responsible for insurance. That should be made clear and I ask the Minister of State to convey that to Government. We need to keep Quinn Insurance in business and begin every speech we make, as the Financial Regulator did this week, by saying that policyholders do not need to worry because this can be done. We also need to recognise that Quinn Insurance is not like PMPA or Anglo Irish Bank. In fact, it has been a victim of and infested by the problems of Anglo Irish Bank. My colleague, Senator Wilson, and others will make the case about employment and what the company is doing. From a disinterested point of view, I would say we must ensure there is no attempt to undermine confidence in Quinn Insurance. Some 5,000 jobs are on the line, which the Minister of State mentioned.

When PMPA went bust in 1984, an insurance levy was brought in which remained in place until 1993. When ICI went bust, another levy was brought in. Both levies paid off the money owed but a 3% insurance levy is still being collected for no reason. It is purely a tax. That is adding to the cost of insurance for small businesses and individuals. Will the Government look at that as soon as possible? I will not make outrageous or outlandish demands that it be done next month but I want it to be top of the agenda.

More than anything else, I want the Minister of State to recognise that what has gone on here is manna from heaven for other insurance companies which are very happy to see Quinn Insurance in trouble. As public representatives, we must be very careful to support and even applaud the Financial Regulator for taking action but we must also recognise that Quinn Insurance is a good, solid and sound company which has made a few mistakes in terms of its solvency which can be put right and that it is in the interests of insurance policyholders and all the people involved that it remain to the fore in this industry.

At another time, I would like a longer debate on some of the other issues creating costs in insurance. For instance, Personal Injuries Assessment Board costs could be reduced if the Government looked more closely at the regulation which is allowing challenge after challenge to take place to what is probably one of the better ideas to come from Government over the past ten years. These are serious issues and I would like the Minister of State to convey our thoughts to Government and ensure it acts on what we have said.

Diarmuid Wilson (Fianna Fail)
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I welcome the Minister of State and thank him for coming to the House at such short notice to address this very important issue for the county from which I come and the entire economy. The appointment by the High Court of joint administrators to Quinn Insurance Limited came as a great shock to me and the people of County Cavan. I know Sean Quinn personally and regard him as a practical patriot whose initiative, hard work, risk taking and investment has created a working community of 7,000 people worldwide. Some 5,500 people are employed in this country and thousands of them are employed in my county of Cavan and in the surrounding counties. Quinn Insurance has centres in Enniskillen, Navan, Blanchardstown and Cork and its headquarters are in Cavan town.

The issues at stake are guarantees given by subsidiaries of Quinn Insurance Limited as securities for borrowings off the wider Quinn group. According to the Financial Regulator, this has only very recently come to light. My understanding of the facts is that the existence of the guarantees has been in the public domain since 2005 as they were filed in the company accounts. They are legal and are used widely. Quinn Insurance Limited brought the guarantees to the attention of the Financial Regulator on Wednesday, 24 March 2010, a little more than a week ago, in the context of a re-financing scheme. Quinn Insurance Limited was prepared to remove or retain them.

The Financial Regulator moved, without notice, to take High Court proceedings on 30 March 2010 to appoint provisional administrators to Quinn Insurance Limited. Given what has happened to this country in the past two years as a result of poor practice and poor regulation of the banks, I not only see the necessity for robust regulation and a strong Financial Regulator but welcome it. However, I take issue with the unfairness and injustice of a regulator, an agent of the State, moving without notice against a company which has contributed significantly to my county and the country. This action has devastating consequences for that most critical but intangible of assets, confidence. A company must enjoy confidence. In one hour, the regulator shook to the core the national and international confidence that had taken 37 years to build in a company which, even in these incredibly tough times, is on track to report quarterly profits of €50 million. Regardless of any action an administrator takes, the national and international damage to the company and its consequences for thousands of employees will not be rebuilt in one hour.

Did a company that has made such a significant contribution not at least deserve notice or fair play instead of finding itself the victim of over-compensation for the failure of the Office of the Financial Regulator to take action previously? The Regulator did not give the necessary time to work through its concerns and instead took action that damages the interests of all stakeholders, including the State. The Quinn Group has never been more profitable. The action taken by the Financial Regulator has major implications for Quinn Insurance Limited and the wider Quinn Group. Every day that passes is a disaster for the company and, by association, the overall group.

The action of the Financial Regulator has caused massive reputational damage, including overseas and especially in the United Kingdom. Sean Quinn, his family, co-directors and employees are seriously hurt by the innuendo that something untoward was taking place which is clearly not the case. The action and associated media circus have resulted in aspersions being cast on Mr. Quinn, a decent and honourable man, and his group of companies. This is grossly unfair to probably the most modest and successful entrepreneur Ireland has ever produced.

On local radio yesterday and many occasions in the past, the Minister for Agriculture, Fisheries and Food, Deputy Brendan Smith, noted the key importance of the Quinn Group, not only to County Cavan but to the entire economy. My party colleagues on Cavan County Council, councillors John Paul Feeley and Sean Smith, did likewise.

Quinn Insurance Limited did for the insurance industry what Ryanair did for air travel in Ireland. It created real competition in the sector and is now the State's second largest insurer. The company did much the same for the health insurance sector when BUPA decided to pull out of Ireland.

The Quinn Group continues to provide employment opportunities and economic development in some of the most marginalised areas of the country. Any damage caused to the group will have calamitous repercussions for County Cavan and the country. I ask the Minister for Finance to ensure the administrators do not do anything more to damage Quinn Insurance Limited and the entire Quinn Group.

Paschal Donohoe (Fine Gael)
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I welcome the Minister of State. I will make two points and ask a number of questions. If the Minister of State is unable to provide answers, I ask him to revert to me later. The message the Seanad wants to send out in the matter before us is that the employment provided by the Quinn Group and its contribution to the national economy must be maintained. In so far as it is legally possible, I ask the Government to recognise this and pass on the Seanad's view on it.

Tuesday was a dark day for everybody but it was made darker by the announcement relating to the Quinn Group. Everybody wants the issues arising between the group and the Financial Regulator to be resolved, either through the courts or discussion between the two interested parties, in a manner that results in the maintenance of a healthy and competitive insurance market and the jobs in the group that are of major importance to the country as well as the counties represented by many Senators.

While I recognise and support the legal independence of the Financial Regulator, the role it performs and the reason for its regulatory function, it is within the rights of Senators to ask the Minister of State to relay to the Regulator a number of questions concerning recent developments, particularly given the importance of the Quinn Group to the economy and insurance industry.

On an issue to which Senator Wilson briefly referred, the public statements of the Quinn Group appear to indicate a high level of profitability in the group, even in this difficult year. It has been reported today, however, that even if the Quinn Group is able to assure the Financial Regulator that the sum of €450 million in question is available - I am sure it will be able to do so - the Regulator will seek to pursue action against the group. Given that the business appears to be healthy, many of us want to know the reason the Financial Regulator proposes this course of action. What information is available to the Regulator that leads him to believe this option is appropriate?

It has also been reported today that the Financial Regulator has indicated that, at the next court hearing on 12 April, it will advocate that the Quinn Group be maintained in indefinite administration. It is important for Members, insurance policy holders and employees of the group that further information is supplied on the reason the Regulator believes indefinite administration is an appropriate course of action.

It appears from what I have read that the Quinn Group and Financial Regulator find themselves in the current position as a result of the cumulative effect of a series of actions taken since 2005. In recent years, the House has frequently discussed regulation in the banking industry. Was the Financial Regulator aware of the actions taken in 2005 that brought us to this point? How were the responsibilities of the board of the Quinn Group discharged? It is not in anyone's interests to find ourselves at this point after five years.

The Quinn Group has indicated it is considering its options in light of recent developments. I hope the group will consider refreshing or amending the business plan, which was presented to the Financial Regulator and rejected in March, in such a way as to ensure it meets the approval of the Regulator and maintains the group's presence in various markets as well as the jobs it currently provides. Members, insurance policy holders and workers want to find a way to deliver a successful resolution to the issue.

Mark Dearey (Green Party)
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I wish to outline a couple of the critical contexts in which this is happening. I will also address the substantial question of the authority of the Financial Regulator to do what it has done. I will also consider the best way of giving Quinn Insurance a fighting chance of emerging intact from the situation if faces now that this action has been taken.

The primary context to which I refer is the employment one. If this action leads to job losses, it will reverberate around County Cavan and as far as my home county of Louth. I was a member of the Border Regional Authority until a few weeks ago. As one of the key characteristics of the Border region is its weak urban fabric, it has little opportunity to build up large employment bases. The employment provided by Quinn Insurance in Cavan town is one of the few shining examples in the area. It is of regional and national significance that this business should continue in the Border region, in which there are few exemplars of wealth generation that spin out into the rest of the regional economy. We need to move warily, bearing in mind at all times the enormous implications any hastiness might have for families and the business sector in the region.

My party fully recognises that the Financial Regulator has the authority to supervise the insurance industry. We welcome that absolutely. In the light of the complete failure of lax regulation in the banking sector which is about to cost this and future generations dearly, we need to continue to uphold the authority of the Financial Regulator in these matters.

I understand Senator Wilson's stout defence of the Quinn family and the business it conducts. It is clear that the discovery of the guarantees has had a serious impact on Quinn Insurance's balance sheet which has moved into a deficit of over €200 million having had a surplus of a similar amount. It is important for the Quinn Group to be given every opportunity to demonstrate how it can manage its debts, present a plan that will lead it out of this situation and create an opportunity for Quinn Insurance get back on its feet, having paid off its debts. It is incumbent on us to ensure the group will have such an opportunity. Senator Wilson is right to say the reputational damage done will not heal in a day or a week. However, it can be healed and it is critical that this happens.

Quinn Insurance is one of just two companies to offer insurance cover to the music promotion industry, in which I work. Approximately eight or nine years ago my insurance premium was approximately four times more than it is now. Insurance was 200% higher than it is now, not 50%, as Senator O'Toole suggested. That reduction has resulted in part from the arrival of additional players in the sector. It is imperative that there continues to be competition in the insurance sector. If there is not, we will return to the bad old days when people were under-insured and got into all sorts of problems when claims were made against them. I accept that regulatory failure has fed into the situation in which the country finds itself. The effects of the situation at Anglo Irish Bank have weakened the Quinn Group's reputation and its fabric. I appreciate that Quinn Insurance has created employment and brought competition to the insurance market. However, we need to continue to uphold the authority of the Financial Regulator. We should also give the group as much space as possible to deal with these problems and emerge intact.

Ivana Bacik (Independent)
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I welcome the Minister of State. I am pleased to have an opportunity to contribute to this debate. As others said, the events of last Tuesday, 30 March, represented the catalyst for this debate. On that dark day for us all, the Minister for Finance disclosed the extent of the public debt and the amount of money that would have to be poured into Anglo Irish Bank and other banks. It was revealed not only that we had already put €4 billion into Anglo Irish Bank, but also that we would put a further €8.3 billion into it this week and a further €10 billion in the future, giving a total of €22 billion. There is enormous public anger about the bailout of Anglo Irish Bank, in particular. As many have acknowledged, although this zombie bank is not of particular systemic importance, as other banks might be, its bailout will impose a greater cost on the Exchequer than the bailout of any other bank. There is immense public anger about this.

We also received bad news on Tuesday about the appointment of administrators to Quinn Insurance. As the Minister of State said, Mr. Justice Cooke agreed on that day to an application by the Financial Regulator that two provisional administrators be appointed to Quinn Insurance Limited. Clearly, our concern must be with those who are directly employed by the company and understandably face an uncertain time. One has to stress, as the Minister of State has done, that this is a provisional administration, that the matter is sub judice, that the administrators will run the firm as a going concern and that it will remain open for business. Senators on both sides of the House are hoping the jobs of the many people employed in the firm will be protected.

I am sure other Senators, like me, have received an e-mail from an employee in Cavan who has expressed dismay at the way in which this situation has come about and her great uncertainty and fear for the future as a result of the actions of the Financial Regulator. Like other Members, I know County Cavan very well. I have many friends in Belturbet. I know the extent of poverty and disadvantage experienced by people living in Border counties during the years, although perhaps less so in recent years. For many years, throughout the 1980s and 1990s, they did not get the advantages enjoyed by people in other parts of the country. That is all part of the context of this debate.

Having said that, there is cause for less dismay about Tuesday's announcement when one bears in mind the clear need for more robust regulation of the financial services sector. The other big announcement on Tuesday, to which I have alluded, was the announcement by the Minister for Finance, Deputy Brian Lenihan, that billions of euro would be poured into Anglo Irish Bank, in particular, and other banks. That announcement was a direct result of the failure of regulatory structures, the lack of a robust regulatory system and the absence of decisive action that should have been taken by the Financial Regulator. Such action should have been taken, in the interests of allaying the fears of consumers and customers, when it became clear that banks which made profits for many years were not maintaining a sufficient asset base to remain properly solvent. This real problem was a fundamental aspect of the lead-up to the collapse of the banking system.

If we want to have a robust system of financial regulation, we will have to allow action to be taken by the Financial Regulator. I say this as a matter of general principle because we do not know what will happen in the case of Quinn Insurance. We hope it will stay afloat, its employees will remain in place and its consumers will be protected. However, we have to recognise the need for robust regulation. We must acknowledge that a sequence of events led to Tuesday's application in the High Court. There was a history of Quinn Insurance Limited failing to provide the Financial Regulator with financial recovery plans. It has been widely reported that the Financial Regulator had been trying since 2008 to require Quinn Insurance to deliver an acceptable and viable financial recovery plan. A settlement was reached with Quinn Insurance in October 2008 when the Financial Regulator found reasonable cause to suspect that regulatory requirements had been breached. Following that decision, Sean Quinn stepped down as chairman of the insurance company and there was a series of other events that ultimately led to the discovery that the Quinn Insurance Group had a black hole in its accounts and that the unencumbered assets had been reduced by €448 million. The insurance subsidiary had moved from a position where it had an excess of assets over liabilities of more than €200 million to a position where it had an excess of €200 million of liabilities over assets.

We need to bear in mind the need to maintain a robust regulatory system, while thinking of the employees and consumers of the Quinn Insurance Group.

Donie Cassidy (Fianna Fail)
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It is essential that there is competition in the insurance market. When I started an inquiry in 2003, as Chairman of the Joint Committee on Enterprise and Small Business, the cost of insurance was the second largest item of expenditure on the balance of every company and family business. The cost was unsustainable and many families and businesses were not properly insured. We put the case to the insurance industry, with all of the major players present, including brokers, IBEC, SMEs, including Mr. Pat Delaney and his team at the Small Firms Association, and asked them what we could do to help. At the time the chief executive of Hibernian Insurance said Ireland was not a safe place in which to do business. I asked the representatives at that meeting to come back and let us know what they required. When they returned, they told us they needed four Bills to change the regulations in place. For 18 months we went about our business and the Government, under three Ministers and the then Taoiseach, Deputy Bertie Ahern, brought forward those Bills which transformed the insurance industry and made Ireland a safer place in which to do business.

The setting up of the Personal Injuries Assessment Board presented the first challenge. The second was to pass the Civil Liability and Courts Act 2004 that forced everybody who made a claim to swear an affidavit in order that the "no foal, no fee" policy in which solicitors were engaging at the time would make people think before they signed the affidavit. If any part of a claim was found to be fraudulent, the costs of both sides would have to be paid by the person making the claim. This eliminated an enormous number of claims.

The third challenge was to pass the Safety, Health and Welfare at Work Act 2005. There were major developments in the construction industry and the health and safety elements that were missing at the time are now in place.

The final challenge was to allow for random substance testing to take place on the roads. This has resulted in the saving of between 100 and 150 lives each year. All of these challenges were met owing to the hard work and dedication of the joint committee under my stewardship.

The Quinn Insurance Group was exemplary in providing competition in the marketplace. It was the most efficient and most committed of insurance companies. I know that on many occasions the group within five days provided a field sergeant to visit a person who had had an accident and that two or three days afterwards the person concerned received an offer to settle the case. That eliminated huge expenditure on legal and repair bills. The reason for the group's success has been its efficiency. It is an exemplary Irish company which employs 5,500 people here, many of them in the midlands and Border areas, areas which have been finding it difficult to attract employment.

The Financial Regulator has to be complimented on what he has done. He protects policyholders and we support him fully. The Minister for Finance has congratulated him for what he is doing in the name of Ireland plc. Having an insurance policy gives us certainty. We feel certain we will be fully covered, which allows us to sleep at night. It allays the worries of employers and property owners. However, we must understand that two years ago many businesses dealing with banks or insurance companies might have thought they could have a loading of 50% paid and 50% owing. With the new valuations today, it could be 85% on one side and 15% on the other. These are exceptional trading circumstances which are unprecedented. A successful 90-year old man told me the other day that he had never seen anything like it in his lifetime.

I thank the Minister of State for coming to the House at such short notice. We intend to allow the debate to roll over and will continue to seek to help the Minister of State and his Department, the people, the Quinn Insurance Group and the Quinn family. We want them to continue the good work they are doing but they must do so within the terms of the regulations made under the 1983 Act. We will fully support them in every way we can in order to keep competition in the insurance market.

Joe O'Reilly (Fine Gael)
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The Quinn Group and Quinn Insurance are of enormous significance to County Cavan. There are 600 good jobs at Quinn Direct which contribute in so many ways to the economy of the county. There are 1,200 jobs in the Quinn operation outside the business in County Cavan. There are 5,500 people working in the Quinn operation in Ireland and 7,000 internationally. This means the Quinn Group is the largest employer in the country, outside of the public sector. It is an enormous business and of systemic importance to the economy. The Quinn family and the Quinn Group are held in the highest regard in County Cavan and have made a very significant contribution to the cultural, social and economic life of the county.

There are 1.3 million policyholders with Quinn Insurance. We must, therefore, maintain competition in the insurance industry. We cannot allow one player to have a monopoly. Every conceivable step must be made to ensure competition in the industry.

No one questions the need for robust regulation. Any student of recent events in the country would hardly question that there is such a need. However, it is a pity the Financial Regulator was not able to solve the problems in-house through negotiation, observation and working with the firm. Is the Minister of State confident that enough was done in that respect? In so far as the separation of powers allows him to do so, he should make judicious inquiries in this respect and do everything conceivable to avoid an over-reaction.

We could be moving from light touch regulation to over-regulation. I am not saying that is the case, but it is something to be avoided. The situation needs to be monitored. Senator Donohoe asked why it would be necessary for the regulator to proceed with action if the shortfall - and we must bear in mind it is only a paper shortfall - of €450 million were put in place to fulfil regulations. We appreciate the regulator's position in insisting on that. Nobody is questioning that, but it seems strange that the regulator would still see the need for action. I would like to hear the Minister of State's response to that point.

I also wish to refer to a couple of matters of which I know anecdotally. Consumers have great confidence in Quinn Insurance locally. They have a good experience in terms of how claims are dealt with, and the courtesy of the staff involved. As a local representative for that area, I have heard nothing bad at that level. I am of the view that the Quinn operation will survive, and I hope it does. It is axiomatic and necessary for our community that it does survive, but I believe it will do so because it is fundamentally in good health.

The Minister should keep a watching brief and do everything he possibly can within his remit to ensure Quinn Direct survives in good health and that normal business confidence is restored. It will take time to do that. Without equivocation, I have no problem in concurring with the sentiments of my colleague from Cavan, Senator Wilson, that jobs are critical to our community. Our Border area has suffered much from emigration over the years and we could not possibly accept any more job losses.

Paschal Mooney (Fianna Fail)
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I join colleagues on both sides of the House in welcoming the Minister of State at such short notice. I share Members' concerns about the unfolding developments in the Quinn insurance company. Can the Minster of State be more specific about the Department of Finance review? He said it was part of the programme for Government which was agreed in recent months. In light of recent developments, however, perhaps he could now put a more specific date on the review. There is an urgent need to have this review completed and placed in the public domain sooner rather than later.

In the same context, perhaps the Minister of State could elaborate on why there seems to be a Europe-wide reluctance to insure with cross-border companies. In other words, people tend to stick within their national borders when purchasing insurance cover. I would have thought that, considering the proximity of the UK and its huge market, it might have been incumbent on UK companies to be encouraged to come into this country. I temper my enthusiasm for non-Irish companies, however, with the reality that the bank crisis we are now trying to deal with at Government level started with the introduction of British-based banks. They came in here supposedly to open up competition in the mortgage market, but we have all seen what happened as a result. Many of them have now disappeared off the scene.

Both emotionally and practically, I share the concerns that have been expressed about jobs. Considering that we are now entering into the most important weekend in the Christian tradition, I have no doubt that silent prayers for the Quinn group will be offered throughout the country in the coming days. People will be looking at their mortgage commitments and education costs as well as their jobs. I do not wish to be scaremongering, but the history of administration is not conducive to expanding workforces. It tends to reduce them rather than expand them, but I hope that once the administrators undertake their work, that will not be the case. Those are the sentiments that have been echoed on all sides of the House and ultimately this is about protecting jobs.

The international reaction to the Financial Regulator's decision has raised some concerns. For example, I understand there are 90 employees of the Quinn group in the UK branch in Salford. They will obviously be concerned about their future. Today's Daily Mail reports that the UK business, which we have focused on, specialises in motor and professional indemnity insurance and is thought to have close to 400,000 customers. According to that newspaper, Quinn Direct specialised in low-cost policies for younger drivers who often signed up through price comparison sites. This is a fragile area to be involved in, especially where young drivers are concerned. Even though profit margins have traditionally been high in the small Irish market, I suggest they might lead to some concern in the UK considering the base from which they are operating. This may emerge as the administrators' work proceeds.

Another international commentary came from Lockton Risk Solutions, whose executive chairman, Neil Nimmo, warned that thousands of UK law firms could be impacted if the Law Society were to delist Quinn Insurance as an approved insurer after the company has fallen into the hands of administrators. I presume Mr. Nimmo was referring to the UK's Law Society, but perhaps the Minister of State can clarify that. If the UK business is a relatively smaller part of the wider Quinn Insurance in Ireland, then it gives the scale of what we are talking about. Mr. Nimmo is quoted as saying that almost 2,200 law firms could be left stranded by this disaster. It is an indication of the international concern being expressed. I do not want to add fuel to the fire, however. The best scenario is administration, whereas the worst scenario is liquidation or a shutdown. I appreciate that the Quinn group has issued a robust and aggressive response to the administrators' introduction, and is opposed to it.

Lockton Risk Solutions also stated that even if Quinn remains an approved insurer, questions will be asked about its ability to pay claims in future. The number of firms in the pool has risen from 150 in 2008, and with around 500 anticipated for 2010 it is likely to account for 10% to 15% of premium costs paid by the legal profession. I understand that Barclay's Bank refused to allow the Quinn Insurance group to set aside the €448 million in guarantees. If the administrator is confirmed on 12 April, it is to be hoped these questions about the future viability of the Quinn group will be answered. I am grateful to the Cathaoirleach for allowing me some extra latitude.

Paddy Burke (Fine Gael)
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I welcome the Minister of State, Deputy Mansergh, and am glad to have this opportunity to speak on this matter. It is important to have a strong insurance business in the country. I know the difficulties the Quinn group is going through at the moment, which I presume will have consequences for the insurance industry. The Quinn group is a major employer, not just in insurance but also in various other enterprises. Seán Quinn has been a great entrepreneur and he deserves credit for the tremendous amount of employment he has created in this country.

It is important to have a sound, strong insurance business sector to cover industry and small businesses as well as to provide motor insurance. The regulator has taken steps to deal with the Quinn Group; obviously, he has seen shortcomings in the insurance aspect of its business. I hope there can be a good conclusion to this. The Quinn Group has indicated it can trade out of this and I hope this is the case. It is an indigenous company and it deserves all the backing it can get. From that point of view, the insurance industry is important to the economy and to the people. It is a large employer, but that is not the most important aspect of the industry from the point of view of this debate. I hope we can strengthen our insurance commitments and business throughout the country.