Insurance levy on foreign companies could face legal battle
LEGAL hurdles could prevent the Government from imposing €400m of the €600m Quinn Insurance levy on Ireland's flourishing international insurance hub, Finance Minister Michael Noonan has admitted.
In a response to a recent parliamentary question, Mr Noonan said that while he was "very conscious" of not imposing an extra burden on Irish policyholders the levy must be applied so it was "sustainable over time and stands up to legal scrutiny".
He also revealed that the Department had "extensive consultations" with both international insurers and the European Commission on the issue, as well as holding talks with the Central Bank of Ireland and domestic insurers.
Elements of legislation on the Insurance Compensation Fund appear to give the minister the power to either apply the entire fund on Irish policies or split it on a pro-rata basis between Irish policies and international policies sold out of Ireland.
Since about two-thirds of all general insurance policies sold from Ireland are actually exported, sharing the burden with international insurers would reduce the call on hard-pressed Irish policyholders to just €200m.
But international insurers have been lobbying fiercely against any such measure, arguing that it would be unfair if an Irish-based company selling into another EU country had to apply a levy that its EU competitors did not.
Responding to questions from Sinn Fein finance spokesman Pearse Doherty, Mr Noonan said he was "aware of the customer perspective on this issue" and was "very conscious in these difficult times of not imposing additional unnecessary burdens on them".
"However, ultimately I have to ensure that whatever decision is made on this issue is credible, sustainable over time and stands up to legal scrutiny," he added.
A decision on the way the fund will be applied is expected in early September, giving companies just weeks to prepare for October implementation.