FORMER employees of Quinn Insurance Limited (QIL) were disciplined after they were told to make "more factual and realistic" assessments about the amount of reserves that were needed to be set aside to compensate accident victims.
The Irish Independent has learned that a "glass half-full" culture toward insurance claims led some staff to underestimate the amount of reserves required, leading to the potentially "disastrous" collapse of the sale of QIL.
On receipt of certain claims, staff would adopt an overly optimistic view of the likely sums that would ultimately be paid out, affecting the company's cash flows.
The under-reporting of reserves was discovered last October by insolvency experts Michael McAteer and Paul McCann, who were appointed as joint administrators to QIL in April 2010.
When the two Grant Thornton partners were appointed, they reviewed the practice of the setting aside of reserves for claims and asked staff to make what has been described as "more factual and realistic calls" about the likely exposure on accident claims.
When the new procedures were not followed, some staff was subject to disciplinary proceedings. After discovering the under-reporting, the joint administrators had to renegotiate some of the terms of the sale.
Last night, Mr McAteer said he was not in a position to discuss the sanctions meted out to some employees or the number of employees disciplined.
Earlier this week the High Court heard that the under-reporting of reserves by QIL's employees put the sale of the company to the Liberty Mutual/Anglo Irish Bank joint venture in jeopardy.
This could have lead to the collapse of the sale to the joint venture as it represented a material change to the deal, and affected QIL's cash flows.