Insurers fear being 'forced out' of semi-state market
Finance Minister Michael Noonan should "do more" to make sure the collapse of Ireland's debt rating doesn't force major insurers out of the massive market for insuring state and semi-state risks, the Irish Insurance Federation said yesterday.
The comments from IIF chief executive Mike Kemp came six months after he wrote to Mr Noonan appealing for him to ask semi-state and state bodies to lift a general ban on buying insurance that didn't have an A rating.
Mr Kemp made the request because three major insurers -- Aviva, Allianz and RSA Ireland -- lost their A rating in April solely because they were based in Ireland and the Irish sovereign had been downgraded.
In a reply sent last week, Mr Noonan acknowledged the impact on the insurers had been "less than desirable", but said he was "not aware of" statutory requirements for state or semi-state agencies to insure only with A-rated companies.
"We knew that, but we were still hoping for something a bit more positive," Mr Kemp said yesterday. "We hoped he could issue an advisory or something. We'll be in touch with his office again to see if he can do more."
Sources close to the Department of Finance last night pointed out that semi-states and agencies fall under a wide variety of departments, not just Finance. In that context, issuing instructions is seen as inadvisable.
The Department of Finance is also not staffed up to oversee all semi-state agencies and bodies, the source added.
The semi-state insurance market accounts for more than 10pc of the €3bn general insurance market, making it a major sector for commercial insurers. Risks are typically shared among a number of insurers for the larger accounts.
Senior industry sources last night admitted that it was "still possible" for international insurers who were adversely impacted by the April downgrade to insure business for semi-states and state agencies.
They can "get around" the ratings issue if they get the business written by their A-rated parent companies in their home territories, sources said. "It can be done but it's not ideal, because the business is going out of Ireland," one said.
Another pointed out that many semi-state and state agencies do not approach them to pitch for business any more, so they aren't given the chance to prove that they are still capable of writing A-rated business.