David Cullinane (Waterford, Sinn Fein)
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100. To ask the Minister for Finance the purpose of the Government levy on car insurance; when it commenced; when it will cease; and if he will make a statement on the matter. [34956/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Insurance Compensation Fund (ICF) was established under the Insurance Act 1964, as amended, in order to provide a certain minimum level of protection for policyholders particularly where an insurer goes into liquidation. In essence the ICF is a consumer protection mechanism which is also found in Member States across the EU and elsewhere. The ICF is currently maintained and administered under the control of the President of the High Court acting through the Accountant of the Courts of Justice.

The ICF is funded by a levy on non-life insurance policies, not just on motor insurance policies. There are some exclusions to this such as health and marine insurance policies. The current ICF levy has been in place since it was re-introduced on 1 January 2012 and was put in place because of the insolvent nature of Quinn Insurance and the need to protect the policyholders of the company. Prior to its re-introduction, the levy was applied once before, between 1984 and 1993, to meet the liabilities of an insolvent insurer following the collapse of PMPA.

The Central Bank of Ireland (the Bank) is required to carry out an assessment of the ICF on an annual basis pursuant to section 6(8) of the Insurance Act 1964, as amended. On the 4th November 2011 the Bank published a levy notice requiring non-life insurance companies to pay a 2% levy on insurance premiums in respect of new business and renewals with an inception date on or after 1 January 2012. This notice remains in force until amended by a further notice. The last assessment was carried out by the Bank in October 2016.

The 2% levy is calculated as a percentage determined by the Bank based on the aggregate of the gross premiums paid to insurers in respect of policies issued in relation to risks in the State.  The current ICF levy generates in the region of €70 million per year.

To date, the Exchequer has advanced in excess of €1 billion to the ICF on which a commercial rate of interest is applied. As of 31st December 2016, the balance owed to the exchequer was €833 million. Until all advances outstanding from the Exchequer to the ICF are fully repaid, continued financial support for the ICF in the form of a levy will be required. Based on the current amount raised by the levy, it is likely to take between 10 to 12 years  for the Exchequer to be repaid. However, this estimate assumes that no further advances to the ICF will be required.