€600m Quinn Insurance levy burden for firms and consumers
Minister to decide but may hit policies sold outside of Ireland
Published 07/06/2011 | 05:00
THE Central Bank has submitted proposals on how the €600m Quinn Insurance levy could be raised, but the decision on how much will be funded by Irish consumers is being left to the Finance Minister since it is "political, not regulatory".
The laws governing the Insurance Compensation Fund mean the levy can be charged on all insurance sold in Ireland, or all insurance policies sold by companies operating out of Ireland.
If the minister decides to apply the levy across all insurance policies sold out of Ireland, then the hit to Irish consumers could fall to as little as €200m, the Irish Independent understands.
The measure would be greeted with relief by Irish consumers but would be deeply unpopular with Ireland's international insurers who would find it difficult to pass the charge on outside of Ireland and would be likely to end up footing the bill themselves.
Lobby group DIMA, which represents international insurers, has said it is in talks with the Department of Finance about the "various options around implementation" of the Quinn compensation scheme.
A spokesman for the Department of Finance confirmed proposals from the Central Bank had been received in recent days, but declined to comment further.
It is understood the Central Bank has not expressed a firm preference for whether the levy should be on Irish policyholders only or should be shared internationally, as the decision is seen as "political not regulatory".
While applying the levy across all international sales of Irish-based companies would anger powerful insurers, the approach appears to be in line with evolving European policies.
Proposals for a new Europe-wide Insurance Guarantee Scheme suggest insurers should pre-fund a scheme in their "home countries" by paying a levy based on their international sales.
A decision from the Department of Finance is not expected for several weeks.
The rate of levy to be applied -- expected to be between 2pc and 3pc -- is expected to be revealed at the same time.