David Cullinane (Waterford, Sinn Fein)
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149. To ask the Minister for Finance if he has considered establishing a State-owned insurance entity as is the norm in many EU states; and if he will make a statement on the matter. [22309/16]

Michael Noonan (Limerick City, Fine Gael)
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In Ireland, the provision of insurance through private companies has been the  norm for a long time.  This is an operational model which in general has been shown to work well and efficiently. It is acknowledged that over the last 18 months or so, there have been some difficulties with aspects of the system, particularly in relation to the availability of flood cover and the significant increase in the cost of motor insurance.  However, a State owned company would have to operate subject to the same prudential rules as a private company, and there is no basis to conclude that the same problems would not periodically arise with this model.  In addition, there would be significant capital costs for the State.

The Government has in the past examined the introduction of a scheme of State indemnification in respect of flooding.  This approach was not considered financially viable because it is believed that over time it would distort the market and could incentivise industry to discontinue the provision of flood cover in medium and high risk areas, thus making the cost of such a scheme prohibitive. Furthermore, any potential regulatory implications would need to be examined in consultation with the Central Bank and the Office of the Attorney General.

Finally, in relation to the difficulties currently in the insurance market, a task force has been established within my Department to undertake a review of various aspects of policy in the insurance sector.  An important element of this review is an assessment of the factors contributing to the increasing cost of insurance.  Progress on the review will be overseen by a Working Group on the Cost of Insurance with representatives from all relevant Departments and Agencies and chaired by Minister of State Eoghan Murphy. The Working Group will identify issues that can be addressed on a more immediate basis and also those that require more long-term policy solutions.  The first meeting of the Working Group will take place on 20 July with further meetings scheduled for early September and in the coming months.