Dáil Éireann debate -
Wednesday, 17 Apr 2002

Vol. 552 No. 1

Written Answers. - Insurance Industry.

John Perry

Question:

78 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the collapse of a company (details supplied) in June 2001 where many construction companies were left without insurance; the plans she has in place to make available the 2% levy collected for the past 15 years since the collapse of PMPA to deal with the fallout arising from the collapse of this company as this 2% levy is being absorbed into general levy; and if she will make a statement on the matter. [11625/02]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

Independent Insurance Company Limited is a UK authorised insurer currently in provisional liquidation. The liquidation process will be dealt with under UK law.

My first concern on learning that IICL had gone into provisional liquidation in June of last year was to ensure that IICL's policyholders in Ireland could get alternative cover. I met representatives of Irish insurers to underline the importance of alternative cover being made available to them. I understand that most Irish policyholders found alternative cover, although many have had to pay a much higher price.

The 2% levy referred to was introduced by the Government back in 1984 to finance the insurance compensation fund following the collapse of PMPA in 1983. The fund is administered by the High Court, and can only be used in the event of a liquidation carried out by the Irish High Court in respect of an Irish authorised general insurer. The current levy, which at present applies to insurance policies, is a general stamp duty, the proceeds of which go to the Exchequer and not to the Insurance Compensation Fund.

John Perry

Question:

79 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans in place to have mandatory employers' liability and public liability insurances as part of an overall package designed to reduce the costs of settling genuine claims and for the protection of policyholders against insurance company failures; and if she will make a statement on the matter. [11627/02]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

While employers' liability and public liability insurances are not compulsory in Ireland, surveys carried out indicate that approximately 90% of companies were covered either by commercial or self-insurance.

The introduction of a statutory requirement for limited liability companies to have certain minimum levels of insurance cover in place, while trading would be a radical departure from existing practice.

The Deloitte & Touche management consultants' report on insurance costs in Ireland, 1996, pointed out a number of possible disadvantages to having compulsory employers' liability insurance: distortion of the market; special arrangements being needed to insure bad risks, as in the case of motor insurance, possibly increasing premiums overall; companies that currently do not have insurance are unlikely to have the highest safety standards; difficulties with restrictions on market capacity and possible negative effect on safety in the workplace.

There is also the possibility that general insurers in other EU member states might be discouraged from writing business in the Irish market if liability insurance cover were compulsory, since they would have to participate in arrangements designed to ensure that all risks could receive a quote. They would also have to contribute towards an uninsured employers fund.

While I accept that there are also possible advantages to having compulsory employers' liability insurance, I believe that any such proposal would need very careful consideration and would involve detailed consultation with the social partners.

Question No. 80 answered with Question No. 74.