John McGuinness (Carlow-Kilkenny, Fianna Fail)
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To ask the Minister for Finance when he will be in a position to provide an update regarding the cost of the collapse of Quinn Insurance; if he is reviewing the operation of the insurance compensation fund; and if he will make a statement on the matter. [14047/13]

Michael Noonan (Limerick City, Fine Gael)
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At the outset the Deputy should note that the nature of insurance is such that it is not possible to provide a definitive update on the cost of the collapse of Quinn Insurance until the bulk of the claims have been paid, which is unlikely to be for several more years yet. However the Joint Administrators when presenting their 10th report to the High Court in July 2012 indicated that the potential call on the ICF could be up to 1.65bn euro. It should be noted that the Joint Administrators have recently indicated to my Department that this position remains broadly unchanged. The Joint Administrators pointed out in their report that the projected call on the ICF now includes accounting adjustments and considerable contingencies which it is hoped will not be called upon. They indicated that if they were to remove most of the accounting adjustments and use a "best estimate" calculation, then the call on the fund is likely to be in the range of 1.1bn euro to 1.3bn euro rather than the 1.65bn euro for which they have provided.

I have been advised that the Joint Administrators have undertaken a number of actions in relation to claims settlement which can reduce the ultimate claims cost. These include as part of a new enhanced governance structure the establishment of a Claims Advisory Committee (CAC) to guide and advise them and QIL management on future claims strategy and policy.

Furthermore, to protect the Exchequer interests I have ensured that the State Claims Agency is more involved in the administration process, particularly in the claims management area, which is critical to keeping the call on the ICF down to its lowest level possible. In this respect it should be noted that, at my request, Mr Ciaran Breen, Director of the State Claims Agency has been appointed as Chair of the Claims Advisory Committee.

The position in relation to the Insurance Compensation Fund (ICF) is that it operates under the Insurance Act 1964 which was amended by the Insurance (Amendment) Act in 2011. Its purpose is to protect policy holders in the event of their insurer becoming insolvent. It is an industry financed fund. However because the scheme is not pre-funded, the Act provides for the Exchequer to advance monies on the recommendation of the Central Bank in circumstances where insufficient funds have been generated by an industry levy to cover a large demand.

Under the Insurance Act 1964 the responsibility for deciding whether the ICF has sufficient funds available to it to 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 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 the Central Bank concluded that a levy should be applied to industry with effect from 1 January 2012 under section 6 of the Insurance Act 1964. This matter is kept under review by the Central Bank.