Thursday, 1 April 2010
Insurance Industry: Statements (Resumed).
): I thank Senators for their concerned and passionate contributions to this debate. The next step in the process is a full High Court hearing, which will take place on 12 April. This will provide the Regulator with the opportunity to make a fuller case for the appointment of an administrator. Equally, however, it will allow Quinn Insurance to address and counter the concerns of the Regulator, and the court will have to make its decision on the evidence submitted.
The four questions asked by Senator Donohoe are essentially questions for the Regulator to answer at the full court hearing - and, indeed, as he is fully independent, to the extent he chooses. I am not in a position to tell the House exactly what was in the Regulator's mind. The events of this week underline the importance of having a strong regulatory system, but a regulator must naturally be in a position to justify fully his actions before a court. I accept the point made by Senator Wilson about the potential impact on confidence of such a serious step. The Regulator must have been fully conscious of those implications and consequences.
Senator O'Toole discussed more broadly the question of competition in insurance, and referred to the insurance levy. In fact, the insurance levy has not been in operation since 31 December 1992. There has been - and still is - a stamp duty of 2% on life insurance premiums which was introduced in 1982 and which forms part of the general stamp duty receipts, being paid into the Central Fund along with other tax receipts. However, this should not be confused with the insurance levy introduced to deal with PMPA and ICI. The Government understands the importance of maintaining employment and recognises the large contribution that has been made by the Quinn Group in recent years by providing greater competition in the insurance market. The importance of healthy competition is well understood. Of course, the company plays a particular role - I refer to all of its businesses, not just insurance - in the Border area, on both sides, but it also has importance nationwide and throughout the island. I acknowledge the systemic importance of the Quinn Group to the insurance industry, leaving aside its other activities.
Senator Mooney raised the question of the review by the Department of Finance. As I said in my opening speech, it will be starting shortly. It is difficult to specify before a review has even started precisely when it will finish, but the Senator's underlying point is that it is urgent, which I accept. The Senator also raised the important issue of the international dimension of the situation that has now arisen. With respect to UK policy holders, the position is that such policies remain valid, but the Financial Regulator has instructed that Quinn Insurance Limited not to write any new business in the UK.
The importance of competition in the insurance industry is well understood. Eight years ago - perhaps it had something to do with the worldwide effects of the terrorist attacks of 11 September 2001 - insurance costs were very high and inhibited competitiveness. As Senator O'Toole explained in some detail, many steps were taken to correct this, and there was a substantial fall in insurance premiums; however, as he pointed out, they have increased again somewhat in recent times. The Senator is correct in attributing this to the impact, among other things, of the bad weather we have had in recent months, including floods and then snow and ice. This is something on which we must keep a close eye, because all aspects of the competitiveness of the economy are extremely important in the situation we are in. We will only get out of our general financial economic difficulties through a fairly radical improvement of our competitiveness. That is the motive behind much Government policy. Like Senators, without in any way prejudicing the decisions the court may take on 12 April, I hope the service and employment provided by the Quinn Group will continue.