QUINN Insurance has been fined a record €5m by the Central Bank for regulatory breaches. But the fine on the company, now in administration, has been waived "in the public interest".
The Central Bank has revealed that Quinn Insurance had breached its solvency requirements by 250pc – some €830m – by the end of 2009.
The fine has been waived by the Central Bank, as it would have to be financed from the Insurance Compensation Fund.
This fund is ultimately paid by taxpayers who are paying an annual levy on all motor and home policies.
The bank said there had been a number of breaches by the firm that merited such a fine – the maximum that could be imposed – including a lack of adequate procedures or controls to manage assets representing its technical reserves.
It described its investigation as "complex and lengthy" and said it involved the commission of significant resources by the bank.
Normally, the costs of such investigations are recouped from the sanctioned firm or individuals. But Quinn Insurance is not in a position to pay any monetary penalty and the Central Bank has said it will not pursue individuals for the costs of the investigation.
The bank said the "wholly exceptional circumstances" warranted waiving the monetary penalty entirely.
This is the second time Quinn Insurance has had enforcement action taken against it. In 2008, a settlement agreement for regulatory breaches by the firm resulted in a then record fine of €3.25m.
Derville Rowland, the head of the Central Bank's enforcement division, said the repeat offence for similar breaches was a significant aggravating factor resulting in the €5m fine.
"We know from recent experience that weak controls can cause firms to fail and result in systemic harm," said Ms Rowland.
She added: "For this reason, the Central Bank will not tolerate weak controls or governance within a firm and will take enforcement action against the firm or responsible senior management when problems arise.
"The Central Bank will not hesitate to impose serious penalties on firms and individuals in order to deter others from similar poor behaviour."