New levy backs compensation fund after Quinn Insurance losses
A new bill published today proposes a levy of up to 2pc on non-life assurance policies to fund a €280m shortfall in the Insurance Compensation Fund.
The ICF, which is used to protect policyholders if an insurer cannot meet its liabilities, has €40m in its coffers but Quinn Insurance will need an estimated €320m in the last quarter of this year and more funding after that.
A levy has not been used since the collapse of PMPA insurance in 1983.
It is understood the Government will advance monies to the ICF to meet its capital needs but this will have to be repaid with interest once the levies are collected.
Health insurance is not covered by the levy.
The Insurance (Amendment ) Bill 2011 proposes to extend the scope of the fund to cover all insured risk in the State, but insured risk outside the State will no longer be covered.
ICF funding will be available only to companies who conduct a significant percentage of their overall business in the Irish market.
The levies are expected to raise about €65m a year.