The Tánaiste and I have been following closely developments in relation to Independent Insurance Company Limited (IICL), a UK insurer which went into voluntary liquidation on 18 June, with particular focus on the immediate implications for Irish policyholders and claimants. We are also concerned at the broader implications for the effective operation of the European Single Market in insurance. Contact is being maintained with the UK authorities and with the EU Commission, as well as with the provisional liquidators, PricewaterhouseCoopers, the Irish Insurance Federation and the Irish Brokers Association.
Under the rules of the European Single Market, responsibility for financial supervision of the company's operations throughout the European Economic Area (EEA) lies with the UK authorities. The main objective of the EU system of financial supervision of insurance companies is to protect policyholders while giving them access to insurance cover from supervised companies in all EEA member states. The treatment of policyholders as creditors of a failed insurer is determined by the laws of the home member state, in this case the United Kingdom. UK insolvency law treats all policyholders as unsecured creditors. It will not be clear for some time the extent to which the liquidators of IICL will be able to meet claims from the creditors of IICL, including policyholders. It appears likely that claims will not be met in full.
The UK policyholder protection Act provides, subject to certain limitations, that compensation be paid to individual policyholders in the event of a company failure. Corporate policyholders are compensated only in respect of compulsory insurance. Our officials are seeking to clarify whether any policies issued to Irish policyholders will meet the qualifying criteria for protection. I met with the Irish Insurance Federation and representatives of the policyholders on this issue last week. We are awaiting the submission of further information to us on this matter.
