Noonan demands answers from bank on crisis-hit insurance sector
The Central Bank has handed a report on the insurance sector to the Minister for Finance after he sought answers on problems in the sector and whether they could have implications for "the Exchequer, policyholders and the wider financial system".
The latest report into the insurance sector was requested by Michael Noonan in July after an earlier query made by his officials in March was knocked back by Central Bank deputy Governor, Cyril Roux.
A spokeswoman for the Department of Finance confirmed yesterday that the Department has now received a report on the insurance industry from the Central Bank.
Senior officials from the Department of Finance and the Central Bank are to meet in the coming weeks to discuss the contents of the report, including proposals from Central Bank Governor Patrick Honohan.
In a letter dated July 2, released through the Freedom of Information Act, Minister Noonan wrote to Mr Honohan to state that he was "aware of poor financial reports from certain domestic insurance companies: job losses, and reports of an overall negative outlook for the sector domestically".
Minister Noonan wrote the letter days after loss-making Liberty Insurance announced 270 redundancies.
He told Mr Honohan that he was "concerned about any issues arising in the insurance industry could have implications for financial stability, in addition to implications for the Exchequer, policyholders and the wider financial system."
He added: "In the circumstances, I would appreciate if you would prepare a report setting out your assessment as to the outlook for the insurance sector generally and specifically for those companies reported to have difficulties."
The request by Minister Noonan pre-dated troubled insurer FBD last month confirming pre-tax losses of €96m for the first six months of this year with UK-owned RSA Insurance also confirming last month that it had reduced its Irish losses to £16m between January and June.
A spokeswoman for the Department of Finance said yesterday: "The Department is currently examining the contents of (Mr Honohan's) response and officials will be discussing it further with the Central Bank in the coming weeks."
A spokeswoman for the Central Bank stated that the Central Bank has conducted a study of the insurance industry that it has published in the 2015:1 issue of its Macro Financial Review.
She said: "The Central Bank has issued a follow up response to the Minister for Finance to the letter of July 2.
"In this response the Governor referred the Minister to the insurance industry study.
"The Governor also invited the Minister to consider policy initiatives in this area."
Yesterday, Fianna Fail Finance spokesman Michael McGrath welcomed the Central Bank report.
He said: "It is vital that Minister Noonan is prepared to take the follow-up steps necessary to bring much needed stability to the sector and its customers."
Deputy McGrath said that the collapse of Setanta Insurance has left another mess.
He claimed that the State's response was "nothing short of appalling", while, he said, motor insurance premiums are going through the roof and consumers are ending up paying the price. "The insurance sector is facing massive challenges," he said.