Insurance levy to be extended as Quinn debt hits €775m
THE insurance levy created to fund the collapse of Quinn Insurance could be imposed for longer than expected after estimates for the cost of paying the insurer's debts rose by another €37m.
The Irish Independent has learned that the insurer's administrators recently admitted they expect to need €775m from the Insurance Compensation Fund (ICF) to deal with Quinn Insurance's claims.
When the call on the ICF was first announced back in September the administrators expected to need about €600m. That figure was later revised upwards to €738m.
Sources last night admitted that the €775m might not be the final figure, but said that there should be much more clarity in about two years when the bulk of the old claims will have been dealt with.
The ICF money is being used to plug the gap between the claims left with the 'old' Quinn Insurance and the assets that the administrators still control.
The claims involved are largely UK and commercial business that wasn't included in Liberty Mutual and Anglo Irish Bank's takeover of the 'main' Quinn Insurance business last year.
Because claims are being settled on a daily basis, and the estimates for future claims are continuing to evolve, it is impossible to precisely predict how much ICF money will be needed.
The ICF fund is paid for through a 2pc levy on all general insurance policies sold in the Republic of Ireland.
The Department of Finance last night confirmed that the levy would stay fixed at 2pc.
But this implies that consumers will be paying the levy for a longer time to meet the higher figure of €775m.
Rough calculations predict that the levy will raise about €65m a year, though that figure will vary depending on the price of insurance premiums and the level of cover taken by people.
At €65m a year, it would take almost 12 years to pay off the full €775m. The insurer's administrators will need the money faster than the ICF levy can raise it, so the Government will pre-fund the scheme.