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Sunday 22 September 2019

Donohoe fails to raise insurance firm concerns with finance ministers in EU

Paschal Donohoe: Has not discussed insurance regulation. Photo: Gerry Mooney
Paschal Donohoe: Has not discussed insurance regulation. Photo: Gerry Mooney
Charlie Weston

Charlie Weston

Finance Minister Paschal Donohoe has been criticised for failing to raise the issue of the repeated failure of insurers here that are regulated in other EU countries.

The minister admitted in a Dáil reply that he has not put the problem on the agenda for meetings with fellow European finance ministers.

It comes after Irish policyholders narrowly escaped having to meet the cost of claims from the collapse of Danish regulated Qudos.

But the Irish compensation fund is picking up the tab for the failure of Setanta.

Insurance companies that are registered and regulated in other EU states are allowed to operate here under freedom of services rules. The Central Bank of Ireland has no way of knowing if they are financially sound.

Danish-regulated Qudos is just the latest insurer to collapse leaving policyholders scrambling for alternative cover and leading to questions over who covers the claims.

The 2014 collapse of Malta-regulated Setanta Insurance left this country's compensation fund with a potential €100m liability.

Enterprise Insurance, whose collapse also affected Irish customers, was regulated in Gibraltar. There are fears this country's insurance compensation fund, funded by a 2pc levy on premiums, will have to meet some of the claims of Denmark-regulated Alpha.

The Central Bank is pushing for a common approach across the EU to how policyholders are compensated when insurers fail.

But Mr Donohoe has admitted he has not raised with other EU colleagues the issue of foreign insurers "passporting" in here, failing and then leaving Irish compensation funds to pay out.

Answering a question from Fianna Fáil's Michael McGrath, Mr Donohoe said: "As it has been some time since the council has discussed insurance matters I have not to date directly raised with my European counterparts issues regarding insurance regulation, consistent enforcement of European insurance regulation and the need for compensation mechanisms to be put in place across the EU.

"However, the deputy can be assured that as and when appropriate I will do so."

Mr McGrath said policyholders here are having to pick up the tab for failures of regulation in other EU states: "Following the failure of Setanta, Enterprise, Alpha and now Qudos, it is incredible that Minister Donohoe has not raised the issue of insurance directly with his political colleagues at an EU level."

A spokesperson for the minister said he would be responding to plans to change EU solvency rules for insurers.

Irish Independent

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