Patrick Nulty (Dublin West, Labour)
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Question 33: To ask the Minister for Finance if he will explain the reason the levy for non-life insurance for Irish Life and Permanent customers was increased from 3% to 5% at the start of this year; and if he will make a statement on the matter. [22059/12]

Michael Noonan (Limerick City, Fine Gael)
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At the outset it is important to distinguish between the 3% stamp duty on non-life insurance premiums and the 2% insurance compensation fund (ICF) levy which was introduced on non-life insurance premiums on 1 January of this year. The former forms a part of general stamp duty receipts and is paid into the Central Fund along with other tax receipts. The latter is a levy which is being used to finance the ICF in order to meet the deficit arising from the administration of Quinn Insurance Ltd (QIL).

The ICF operates under the Insurance Act 1964. Its purpose is to protect policy holders in the event of their insurer becoming insolvent. This protection allows policyholders of QIL to receive the benefit of their policies rather than a partial settlement or a nil settlement. The responsibility for deciding whether the ICF has sufficient funds available to it at any particular time is a matter for the Central Bank. Where in the Bank's opinion the state of the Fund is such that financial support should be provided for it, it determines an appropriate contribution to be paid to it by each insurer. This is calculated as a percentage (not exceeding 2%) of the aggregate of the gross premiums paid to that insurer in respect of policies issued in respect of risks in the State. On the basis of its assessment of the Fund late last year the Central Bank concluded that a levy should be applied to industry with effect from 1 January 2012.