Finance chief warns insurers of ongoing problems with reserving
TWO years after the collapse of Quinn Insurance there are still "fundamental issues" with the insurance industry when it comes to adequate reserving and corporate governance.
The Department of Finance's top civil servant John Moran told an insurance conference in Dublin yesterday there had now been three problems with adequate reserving.
"The industry should reflect on some of the lessons around the Quinn insurance situation," he said.
"If you think about the situation at Quinn and what went wrong there were really two core issues: inadequate reserving and inadequate governance procedures.
"In relation to reserving, the scale of under-reserving that was discovered in that company was. . . shocking.
"There is still, in some sectors of this industry, a lack of understanding of the need to price risk properly and [it is] a very sobering message that the very industry that is supposed to be best-equipped to price risk would have that problem," he said.
When it comes to corporate governance, Mr Moran said his department had seen "fundamental problems" at board level in both insurance and the banks, and said directors needed to be more involved in their business.
Mr Moran was speaking at an Irish Insurance Federation event, where the Federation's president Gerry Hassett called for "increased dialogue" between the industry and the Central Bank on future regulations.