Noel Grealish (Galway West, Independent)
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53. To ask the Minister for Finance if he or his officials have raised the issue of Setanta Insurance at EU level; if his Department is aware of the reason the Malta Financial Services Authority did not use the option of administration instead of liquidation, as was done here in the cases of Quinn Insurance, ICI and the PMPA; and if he will make a statement on the matter. [23552/14]

Michael Noonan (Limerick City, Fine Gael)
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In my role as the Minister for Finance I have responsibility for the development of the legal framework governing financial regulation in Ireland.  The day to day responsibility for the supervision of Irish authorised financial institutions is a matter for the Central Bank of Ireland which is statutorily independent in the exercise of its regulatory and supervisory functions. 

Setanta Insurance Company Limited (Setanta) is a Maltese incorporated company which was both authorised and prudentially supervised by the Malta Financial Services Authority (MFSA). Its financial position was not supervised by the Central Bank of Ireland.  Setanta was regulated at EU level in accordance with a directive known as Solvency I which places requirements on the amount of regulatory capital European insurance companies must hold against unforeseen events. I understand that Setanta met its EU regulatory obligations and under EU law and was therefore, entitled to trade across EU borders before this development. 

The Central Bank was notified by the MFSA on 16 April that the shareholders of Setanta had resolved to wind up the company.  The effect of this was that  Setanta did not have sufficient funds to be able to honour its full obligations towards claimants, policyholders and other creditors.  Consequently Setanta was formally placed into liquidation by the MFSA on the 30 April 2014 and Mr Paul Mercieca was appointed as Liquidator.  It should be noted that the option of placing the company into administration as happened to Quinn Insurance - thus supporting the operation of the business on a going concern and safeguarding the interests of all policyholders - is not an option available under Maltese law.

My officials have been in discussions with the Central Bank of Ireland, the MFSA and with the Setanta Liquidator and I have asked them to convey my wish that every effort is made to facilitate Setanta policyholders in obtaining new motor insurance policies and in understanding their overall position.  Furthermore the Central Bank continues to have ongoing contact with the MFSA and with the Liquidator of Setanta on a range of matters.  

My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt, though it should be said that because most of the relevant legislation is EU determined there may be limits on what can be done in the short-term. Because of this however  the matter has also been raised with the European Commission and it has indicated that it will also review whether any issues raised relating to the regulatory and legislative framework require action.  In this regard, it should be noted that with the introduction of the more risk sensitive Solvency II from 1 January 2016,  there should be less likelihood of this type of situation arising in the future.

Noel Grealish (Galway West, Independent)
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54. To ask the Minister for Finance if he will meet with the Irish Brokers Association in relation to the issues surrounding the liquidation of Setanta Insurance; and if he will make a statement on the matter. [23553/14]

Michael Noonan (Limerick City, Fine Gael)
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The Irish Brokers Association (IBA) wrote to me recently regarding their concerns arising from the impact of the liquidation of Setanta Insurance Company Limited on their members and their policyholders.  They also sought a meeting with me and/or my officials to discuss these concerns.  I have asked officials from my Department to meet with the IBA at an early date and discuss these concerns and to report back to me.  I understand that arrangements are being made at present for this meeting to take place. 

My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the regulatory framework can be strengthened.

Michael Noonan (Limerick City, Fine Gael)
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The current legal and regulatory framework for the provision of insurance in the European Economic Area (EEA), and the supervision of that activity, is prescribed by European Union Law in the Life and Non-Life Insurance Directives. The provision of insurance throughout the EEA on a freedom of services basis and a freedom of establishment basis (i.e. a branch) within this framework is predicated upon the absence of internal market frontiers and the mutual recognition of the authorisation of insurance undertakings by Member States. 

The Insurance Directives specify particular roles for both the home Member State supervisory authority (i.e. the supervisory authority that grants an authorisation) and the host Member State supervisory authority (i.e. the supervisory authority of a Member State where an insurance undertaking conducts business of a freedom of services or freedom of establishment basis) of an insurance undertaking. Insurance undertakings authorised under the Insurance Directives are subject to solvency and financial reserving requirements, the supervision of these requirements is the sole responsibility of the home Member State supervisory authority. The primary objective of these requirements is to ensure that claims made in respect of policies issued will be adequately provided for by an insurance undertaking.

Under EU law which governs non-life insurance, an insurer is required to inform the regulator in its home Member State (its home regulator) that it intends to pursue business in another Member State. The home regulator must then provide the host regulator with a certificate attesting that the insurer covers the EU Solvency Capital Requirement, as well as the nature of the business which the insurer intends to undertake. The insurer may start to pursue business from the date that the certificate is communicated to the host regulator, in this case the Central Bank of Ireland. Under Article 20 of the Third Non-Life Directive the Home Regulator is also required to notify the Host Regulator if the solvency margin of an undertaking falls below the statutory requirement. In such instances the Home Regulator should inform the Host Regulator of the measures it has taken to address the solvency deficit. Where a non-life undertaking authorised in another Member State goes into liquidation and policyholders in relation to risks in this State are affected, the Accountant of the High Court can make an application to the High Court on their behalf, under the Insurance Compensation Fund and, subject to certain exclusions, can distribute sums due to such policyholders from the ICF.

EEA insurance regulators are also members of EIOPA (European Insurance & Occupational Pension Authority) and are required to comply with the General Protocol relating to the collaboration of the insurance supervisory authorities of the Member States of the European Union.  This general protocol statement was issued in 2008 and is currently under review by EIOPA. Setanta Insurance was regulated at EU regulatory level in accordance with a directive known as Solvency I and I understand that Setanta met its EU regulatory obligations.  Following negotiations that were completed at European level in November, 2013, a new regime known as Solvency II will commence on 1 January 2016, which will further strengthen the EU regulatory framework. The Solvency II EU Directive sets out new, stronger EU-wide requirements on capital adequacy and risk management for insurers with the key aim of increasing policyholder protection.  The new regime will also ensure greater cooperation between supervisors. 

My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has also indicated that it will review whether any issues raised relating to the regulatory framework require action.

Michael Noonan (Limerick City, Fine Gael)
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In my role as the Minister for Finance I have responsibility for the development of the legal framework governing financial regulation. The day to day responsibility for the supervision of financial institutions is a matter for the Central Bank of Ireland, which is statutorily independent in the exercise of its regulatory functions. The decision to provide any specific form of insurance cover and the price at which it is offered is a commercial matter based on the assessment an insurer will make of the risks involved and a need to ensure adequate provisioning for future losses.  The Central Bank has no remit over the pricing of insurance products.  Competent Authorities are specifically restricted from interfering in the pricing of insurance products under the various European insurance directives.

The legal and regulatory framework for the provision of insurance in the EEA, and the supervision of that activity, is prescribed by European Union Law in the Life and Non-Life Insurance Directives. As such, Member States, such as Ireland, are limited in terms of the matters for which provision may be made in national legislation. That framework expressly prohibits Member States adopting provisions requiring the prior approval or systematic notification of certain matters including general and special policy conditions, scales of premiums and, for life insurance, technical bases used for calculating scales of premiums. Furthermore, in the context of non-life insurance, that framework provides non-life insurers with the freedom to set premiums, as has been acknowledged in case law by the ECJ (Case C-518/06). In this regard, Member States cannot require non-life insurance undertakings to make prior notification or seek prior approval of proposed increases in premium rates, except as part of general a price-control system.

Insurance undertakings carrying on business in Member States, including Ireland, are required by the Life and Non-Life Insurance Directives, as transposed into national law, to establish and maintain technical reserves, an adequate solvency margin and a minimum guarantee fund. Compliance by an insurer with those requirements, which are important financial indicators of an insurer, are designed with policyholders in mind.