I thank the Leas-Cheann Comhairle for affording me the opportunity to raise this very serious and potentially hugely damaging matter for Irish companies. It is unfortunate that the Tánaiste and Minister for Enterprise, Trade and Employment is not here but I recognise she was in Donegal today and could not make it back in time.
On 18 June a provisional liquidator was appointed to the British company, Independent Insurance Limited. The collapse of Independent Insurance will clearly have a serious impact on the insurance industry in Ireland as there are many clients here with extensive insurance cover from the company. Independent Insurance has been operating in the Republic for approximately three years. Initial operations were directed from Britain but since last February the company operated an Irish branch.
The Minister will be aware that the company primarily provided insurance cover to commercial clients and some high net worth individuals. Its main business is understood to be employers' liability insurance and it has insured a number of very large companies, some of which are involved in the construction sector. It appears most of the insurance cover was provided through insurance brokers and in recent days brokers across the country have been desperately trying to reorganise insurance cover for firms with cover from Independent Insurance as claims payments from that company can no longer be guaranteed.
The company has reported premium income of £30 million for this year in Ireland and the figure is possibly higher. The serious threat to Irish companies lies in the fact that, unlike companies in the UK, commercial companies here are not covered by the UK policy-holders' protection board if the insurer is liquidated over claims that cannot be met by the insurer. This is because employers' liability insurance is not compulsory here.
The liquidation of the Independent Insurance group has a number of potentially serious consequences for Irish businesses and employment. There is the obvious loss of between 30 and 50 jobs among Independent Insurance staff in Dublin as well as the potential loss to companies that have paid premiums to Independent Insurance this year because they cannot be sure of being reimbursed for the second half of this year. The third, and by far most serious, potential consequence relates to whether claims submitted by, or due to, Irish companies will be honoured by the company.
To give an example of a potential crisis for a company, there are a number of potentially large compensation claims involving construction companies due before Irish courts shortly. The costs of these claims may have to be borne by the employers because insurance cover may not be met. The liquidation process being undertaken by PricewaterhouseCoopers will take months at least as the process is a complicated one that involves huge assets and liabilities. Estimated assets are £1.7 billion and estimated liabilities are £1.4 billion. The liquidation process covers about six countries. Quite simply, there are many companies that cannot afford to bear the cost of insurance claims and stay in business. Cases exist which could potentially force, for example, contractors to bear the cost of claims incurred by subcontractors who were insured by independent insurance.
I call on the Government to intervene and offer support to businesses which find themselves under a huge financial burden, through no fault of their own, because an insurance group is going into liquidation in the United Kingdom. As I pointed out, companies in the United Kingdom are not in the same position as companies in Ireland and the Small Firms Association has warned that problems of finding competitively priced alternative cover and the cost of potential payouts on claims could close Irish firms. I look forward to a positive response. There is a precedent for this in the 1980s. In press cuttings the Tánaiste says she has considered this and I hope she will be generous to firms which may go under if she is not.
