Terence Flanagan (Dublin North East, Independent)
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274. To ask the Minister for Finance the position regarding levies (details supplied); and if he will make a statement on the matter. [14174/14]

Michael Noonan (Limerick City, Fine Gael)
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The Insurance Compensation Fund (ICF) levy of 2% being applied to home, motor and commercial insurance operates under the Insurance Act 1964 and came into effect from 1 January 2012, following the appointment of administrators to Quinn Insurance Ltd (QIL) by the High Court.

Under Section 6 of the Insurance Act 1964 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 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. Funds from the levy are collected from insurers by the Revenue Commissioners and these funds are transferred on a monthly basis to the ICF. The funds from the levy have been used to allow the Quinn Insurance Limited administrators to meet the financial obligations of the administration of QIL as they arise.

The 3% stamp duty on non-life insurance premiums was introduced in 1982 and is often referred to as an insurance levy.  This Stamp Duty forms a part of general stamp duty receipts and is paid into the Central Fund along with other tax receipts. 

No decision has been made to introduce a flood levy on insurance premiums.  As the Deputy is aware, Government policy in relation to flooding aims to address the underlying problem through appropriate remedial works where this is economically feasible. The Office of Public Works is committed to alleviating the impact of flooding through the provision of defences as well as a comprehensive assessment of flood risk throughout the country and development of flood risk management plans for the areas most at risk under the National Catchment Flood Risk Assessment & Management (CFRAM) Programme. Because of cost and scale of these types of flood defence works, this approach will see benefits over the medium and long term.

The OPW and Insurance Ireland yesterday agreed on a sustainable system of information sharing in relation to completed flood alleviation schemes. The outcome of this arrangement is that the insurance industry will have a much greater understanding of the extent of the protection provided by flood defence works and will therefore be able to reflect this in the provision of flood insurance to householders in areas where works have been completed.

My Department is also undertaking a review of measures to address the availability of flood insurance cover, including the experience and proposals in other countries. In assessing these, care has to be taken that the proposed solutions do not put in place arrangements which, over time, would weaken the provision of insurance cover by the market with possible negative long-term consequences for the economy.