State raked in €110m of insurance levies last year
CONSUMERS paid the State almost €110m last year in levies imposed on their house and car insurance premiums.
New figures from the Revenue Commissioners show that policyholders have paid almost €900m in levies on insurance policies in the past decade.
But none of the money has been set aside to meet compensation claims.
The figures come after the Irish Independent yesterday revealed that consumers will be hit with a fresh levy on their insurance policies to make up for a shortfall of €620m from the collapse of Quinn Insurance.
Anglo Irish Bank and US insurance giant Liberty Mutual have agreed to buy the beleaguered insurance company, but are not willing to take on all the losses on its books.
The Government will now have to make up this shortfall and will do so by imposing a levy -- expected to be between 1pc and 2pc -- on every single non-life insurance customer in the country.
But insurance policy holders have already been paying levies for almost 30 years.
Revenue figures show that a total of €894.2m has been collected since 2001 under the non-life insurance levy scheme, which was first introduced in 1982.
It imposed a 1pc charge on top of all insurance premiums taken out, except health, marine, aviation, transit insurance and life assurance. It was used for day-to-day government spending and the levy was increased to 3pc in 2009.
Revenue figures show that €109.4m was paid last year. This compares with €69m paid in 2001.
But the Quinn bailout will require the Government to impose a new levy under the Insurance Compensation Fund (ICF), first established in 1964.
This fund is to make sure customers of all insurance companies get paid, even if their own insurer gets into financial difficulty.
It was last used between 1984 and 1993 to cover claims arising from the collapse of the PMPA insurance company in 1983 and, later, the AIB-owned Insurance Corporation of Ireland.
This scheme imposed a 2pc levy on top of premiums, which was reduced to 1pc in 1991. Some €370m was collected and the scheme was discontinued in 1993.
There is currently €30m in the fund, which is held by the Central Bank.
The imposition of a new levy is sure to spark anger among consumers who are already reeling under a swathe of taxes and levies.
Finance Minister Michael Noonan warned a group of concerned TDs and Northern Assembly members two weeks ago there was a possibility this levy would be necessary.