Alliance demands levy on insurance company profits

The levy will be targeted at insurance companies making significant profits, despite the crippling cost of premiums for businesses, motorists and homeowners.

The alliance of Independent ministers is proposing a levy of between 2pc and 5pc on the profits of firms making millions of euros, while the Government is struggling to tackle the rising cost of insurance.

"We are looking at the possibility of an insurance levy and papers are being prepared on ways to bring down premiums," an Alliance source said.

A draft document on the proposal is being drawn up by Transport Minister Shane Ross, and a number of concerns surrounding the levy are being examined.

A central concern is that the levy could be passed on to the consumer by the insurers.

However, the Alliance wants to ensure companies are discouraged from making customers carry the financial burden. They also believe the threat of the levy on profits could help drive down insurance premiums.

The group also wants to ensure the levy targets the sections of the insurance industry which are making the most profits.

An Alliance source accused the insurance companies of "profiteering" from the rise in premiums which are putting companies out of business.

"They have gone from tiny profits into very big profits and they are set to rocket further on the back of heavy premiums," the source said.

Recently published figures show that insurance company profits have increased by 1,300pc, despite the country being gripped by an insurance crisis. The figures from the industry show the 17 main insurance companies operating in Ireland made a combined operating profit of €227m in 2017. The profits were up €16m from 2016, according to Insurance Ireland data. The insurers made combined profits of €125m from private and commercial motorists.

Motor insurance premiums increased by 70pc between 2013 to 2016. Premiums have fallen in price in recent years but are still 50pc higher than the cost in 2008.

Businesses are also being forced to closed down, due to the cost of public liability insurance.

The main UK-based insurer for the leisure sector recently announced it was pulling out of Ireland, meaning thousands of jobs are now at risk.

Justice Minister Charlie Flanagan recently singled out FBD Insurance for criticism after it emerged the firm was making €1.25m profit a week.

"This is a wholly owned Irish company, set up by Irish farmers, and I believe it's important now that we see the resolve, on the part of the insurance company to reduce premiums that they promised," the minister said.

FBD Insurance chief executive, Fiona Muldoon, previously said she makes "no apologies for making a profit".

Mr Flanagan separately said he was looking forward to the outcome of an EU Commission investigation into allegations of cartel behaviour in the Irish insurance industry.