Tommy Broughan (Dublin North East, Labour)
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Question 59: To ask the Minister for Finance if he will report on the proposed introduction of a new industry-wide levy on all non-life insurance policy holders of between 1% and 2%; his views on this proposed new levy in view of the severe financial pressure that many households already are under and the high insurance costs; if he also will indicate if the old ICI levy is still being charged on insurance; and if he will make a statement on the matter. [9968/11]

Michael Noonan (Limerick City, Fine Gael)
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The purpose of the Insurance Compensation Fund (ICF) is to protect policy holders in the event of their insurer becoming insolvent. As the Deputy is aware, the Joint Administrators of QIL (in administration) last week announced the sale of certain QIL assets and liabilities to Liberty Mutual Direct Insurance Company Ltd, representing the best option for policy holders of QIL. The Joint Administrators also identified solvency breaches in QIL for which they have to seek assistance from the ICF. They indicated that the reason for this is the fact that QIL recorded a total loss of €706 million for the year ending December 2009, due mainly to operating losses in the UK market and a write-down in the value of assets, particularly in relation to the company's investment in Quinn Property Holdings.

In addition, they estimate that losses in 2010 will amount to €160 million, mainly reflecting UK business written immediately prior to their appointment. These losses have been incurred due to the policies and strategies pursued by the previous management. These losses are expected to lead to a call on the Insurance Compensation Fund (ICF) in the region of approximately €600m, however the approval of the High Court will first have to be obtained.

At present the ICF has reserves of €30m. Additional money can be raised by the Central Bank through the placing of a levy of up to 2% of an insurance company's aggregate income under Section 6 of the 1964 Insurance Act. In addition, under Section 5 of the same Act, I, as Minister for Finance, can if recommended by the Central Bank, advance moneys to the Fund to enable payments to be made expeditiously. These advances must be repaid to the Exchequer by the ICF. To date no request for funding has been made to me.

The Insurance Corporation of Ireland, a subsidiary of Allied Irish Bank, collapsed in 1985. It should be noted that no levy was placed on the industry after the ICI collapse as compensation to meet the company's liabilities was provided by a combination of AIB funding, commercial loans and State loans which have since been repaid.

However, a levy of 2% of gross premium income was introduced on 1 January 1984 following the collapse of PMPA in October of the preceding year. The levy was paid by all non-life insurers at this rate until 31 December 1991 and a reduced levy of 1% applied for the period 1 January 1992 to 31 December 1992, when it was discontinued as sufficient moneys had been collected to successfully complete the administration of the former PMPA.