Vol. 550 No. 5
7 Mr. Crawford asked the Tánaiste and Minister for Enterprise, Trade and Employment if she has been in contact with the Office of the Attorney General in the UK following the closure of a company (details supplied); and if she will make a statement on the matter. [9367/02]
13 Mr. D'Arcy asked the Tánaiste and Minister for Enterprise, Trade and Employment if she has been in contact with the provisional liquidators appointed as a result of the collapse of a company (details supplied); and if she will make a statement on the matter. [9368/02]
40 Mr. Crawford asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the fact that jobs are under threat in companies which face massive claims as a result of the collapse of a company (details supplied); and if she will make a statement on the matter. [9366/02]
I propose to take Questions Nos. 7, 13 and 40 together.
Independent Insurance Company Limited, IICL, is a UK authorised insurer, currently in provisional liquidation. The liquidation process will be dealt with under UK law. With regard to Irish policyholders of IICL, the Department has been in contact with the provisional liquidators of IICL and has sought information from them on a number of matters, including the amount of premiums paid to IICL, the overall value of claims made and details in relation to claims still outstanding against companies. Information has been received from them, most of it only in the very recent past and the Department is currently examining it in detail. It is not clear at this stage if the information is complete or whether it can be relied on to give the full picture. Indeed, it may be extremely difficult to obtain final comprehensive information in view of the timescale that can be involved in claims actually being made and in settlement amounts being arrived at subsequently.
The Department has also been in contact with the UK insurance supervisory authority, the Financial Services Commission, and with the UK Treasury Department in relation to our concerns regarding Irish policyholders with IICL. Irish policyholders with claims outstanding against IICL are creditors of that insurance company and should pursue their case with the provisional liquidators. I am aware that some Irish businesses are facing difficulties as a result of the failure of IICL on 17 June last and I would be very concerned that any jobs would be lost as a result. However, I do not consider it acceptable to continue to burden Irish taxpayers with the inevitable cost that would be involved in meeting insurance claims resulting from the failure of another insurance company which is registered in another country.
The Minister of State said he does not consider the State should intervene to provide support in such circumstances. Does that also apply where job losses are at stake? Is the Minister of State ruling that out?
I am not ruling anything in or out. The situation pertaining to jobs is a matter for the State agencies and for the directors and investors in a particular company. This case relates to an insurance company registered in another country. It went into liquidation last June and the serious fraud office in the United Kingdom is currently carrying out a major investigation. In the past, Irish taxpayers have bailed out two registered Irish insurance companies. Since 1984, the supervisory regime in the Department has been able to manage the insurance industry, particularly the companies registered in Ireland, to avoid difficulty. We have done that in a very careful manner. It is a very complex area and we have come through some very serious difficulties in doing that job. I am very proud of the record of the Department, including the insurance, supervisory and provincial units within it. At this stage, it would be unfair to expect taxpayers to fund another insurance company, particularly one registered outside Ireland.
Will the Minister of State have a word with his colleague, the Minister of State, Deputy Kitt, and ask him to set that tune to music? Deputy Kitt has considerable talent in that area and perhaps he could even get young David Kitt, our latest star, to perform it? This is the song we have been listening to for a couple of years in relation to IICL in particular. Month after month, the Minister of State, Deputy Treacy, came in and sang this song. Apart from describing the horror involved for people who lost their premia and had to go out into the marketplace at greater cost, having regard to the scale of difficulty being caused for small companies and to what the Minister of State described as a worldwide crisis in insurance that is now threatening employment, is he doing anything about this? Has he taken any initiative at EU level or with European partners to intervene to ensure that reasonably priced insurance cover will be available, especially to small enterprises in Ireland?
First, I have no doubt that my colleague the Minister of State, Deputy Kitt, and his family would have no problem in creating some lyrics and some beautiful music to satisfy Deputy Rabbitte's taste at any time, given some notice.
He has the lyrics and they have the music.
Deputy Rabbitte said that I have come into the House for a number of years with the same story. This issue did not arise until last June so I could not have had the story before that time. I have answered this question for the Deputy before and if he insists on repeating the question, he must surely allow me to repeat my answer. As to what action I have taken, the collapse occurred on a bank holiday in June, we were notified the following day and I had consultations within the Department on the following day. Two days after the collapse, on a Wednesday, there were threats to major companies in this country which could not continue to trade due to the risks involved in the absence of insurance cover. In very strenuous negotiations, over 48 hours, between various sectors of industry and the Irish Insurance Federation, we were able to persuade the federation to provide alternative rapid cover for these companies in order to protect them and their employment. Some of these companies had left Irish insurers previously and had paid premiums for up to three years in advance to the company that is currently in liquidation. I am very pleased we were able to get alternative cover as quickly as we did.
There is a demand being placed on the Government and on me as the Minister of State at the Department of Enterprise, Trade and Employment, to refund the premiums that were paid forward and underwrite the liabilities that may accumulate as a result of claims against companies who were insured by IICL. I have met the various sectoral professional organisations and told them I want hard information. To date I have received very little information and, until I do, I cannot arrive at a conclusion. I can assure the House that I am doing my best in a difficult situation.
The Minster of State said he was in contact with the supervisory body in the UK.
Supervisory and treasury.
Will the Minister of State disclose to the House what information he sought there and what information he received?
We were seeking details regarding the financial situation pertaining to the company, its liquid resources, fixed assets, liabilities and what the expected outcome might be. We successfully negotiated a deal whereby policy holders, particularly motor policy holders who had claims pending would be looked after. We have not been able to negotiate for commercial policy holders but they will be eligible as creditors for whatever percentage of claims that the liquidator may eventually pay from the companies' assets.
A question was asked by Deputy Rabbitte or Deputy Belton regarding the situation in the EU. Immediately on the collapse of this company the senior team from the insurance division of the Department met with the European Commission. The records show that when the third European directive was being put forward in 1994, this country was the only one to object to the directive on the basis that it did not have the full force of law across the EU. We were assured by the Commission and by the other member states that they were satisfied it had. As a result of the collapse of Independent Insurance Company Limited, it is now accepted by all that Ireland was right on that occasion. That is not much consolation but at least we have been assured that the matter will be rectified in the next directive that will come forward.
Will the Minister of State indicate where the buck stops in regard to this matter? If a company operates in the EU selling insurance in France, Germany, Belgium, the UK and Ireland, whose fault is it if that company collapses and is bonded in Britain and France but not in Ireland?
It is certainly not the fault of the Government or the Department or the supervisory authorities. It is a matter for the British Government and its regulatory regime to ensure there is sufficient bonding.
Who is monitoring this at EU level?
European law states that once a company is bonded in a member state and registered in that state, the bond will have the full force of law across the territorial area of the European Union.
The company in question did not.
It did not, and we pointed that out in 1984 but were assured that it would have. This case proved that it did not have and we have been assured by the Commission that it is working to rectify that matter.
Did the Minister of State warn consumers?
Caveat emptor.
Questions that come by way of interruption must not be answered. I call Deputy Rabbitte.
The buyer must beware of the product in the first place. The national advisers to corporate entities were paying premiums three years in advance. What investigation had they undertaken?
Did the Minister of State's office warn businesses?
Deputy Rabbitte has been called.
The Minister of State outlined the action he took in the wake of the collapse of Independent Insurance Company Limited and I commend him for that, but I am afraid he is missing the point. There are many small companies who either cannot get insurance at all in the market place or who are paying inordinately high premiums to get insurance. What is the Minister of State doing about that?
I am not inquiring about the actions he took immediately in the wake of the collapse. I commend him for that, but that was nine months ago and premiums are coming up for renewal. Companies lost their premiums and went out into the market place to get new ones and now are faced with savagely high quotes or, in some cases, they cannot get cover at all for certain kinds of activity. What is the Minister of State with responsibility for this area doing about it?
The Minister of State is fortunate to be in the position to tell us as he leaves office that the MIAB report on a different matter is ready for printing. Can the Minister of State indicate how long printing will take and will it occur before the House rises?
I have no skills in that area.
It will hardly be printed before Good Friday. There must be several days work as it must be a big report.
I do not want to tempt fate but talking about printing is tricky and I do not have any skills in that area so I will not try to forecast how long it will take to print it.
In fairness to the Minister of State, he should not confine his confession to that area. There are a few areas where the Minister of State is not skilled but he has skills in other areas.
I can assure Deputy Rabbitte that it will be done as quickly as possible. I am sure the State printers will respond as rapidly as possible to the situation. The report will contain over 1,000 pages and the Deputy will have much to read until the end of May. I am sure he will enjoy it.
We have worked very hard in this area. There is only one company in the world providing commercial insurance cover. That monopoly is creating a major problem as the company appears to have a "take it or leave it" attitude. I heard of a case where there was a fleet to be covered and a call was made to the insurance company headquarters in the United States and the investment manager offered two options, yes or no. It is as serious as that. To try to rectify that situation we have looked at the sectors and niche areas. We are trying to group the different sectors in an effort to create an alternative opportunity to provide cover through the insurance industry in a different way. It is complex and will take time to resolve. If I had the solutions I would be delighted to outline them, and if other people have them I would like to meet them.
