Dáil Éireann Debate, Tuesday - 12 February 2013
243. Deputy Pearse Doherty asked the Minister for Finance if he will confirm the estimate of payments to the Insurance Compensation Fund in 2013; and if he will provide the total amount due from the ICF to the State at the end of January 2013. [7209/13]
View answerThe Insurance Compensation Fund (ICF) operates under the Insurance Act 1964. Its purpose is to protect policy holders in the event of their insurer becoming insolvent. It is an industry financed fund. However because the scheme is not pre-funded, the Act provides for the Exchequer to advance monies on the recommendation of the Central Bank in circumstances where insufficient funds have been generated by an industry levy to cover a large demand. Under the Insurance Act 1964 the responsibility for deciding whether the ICF has sufficient funds available to it to at any particular time is a matter for the Central Bank. Where in the Bank’s opinion the state of the Fund is such that financial support should be provided for it, it determines an appropriate contribution to be paid to it by each insurer calculated as a percentage, not exceeding 2% of the aggregate of the gross premiums paid to that insurer in respect of policies issued in respect of risks in the State. On the basis of its assessment of the Fund the Central Bank concluded that a levy should be applied to industry with effect from 1 January 2012 under section 6 of the Insurance Act 1964.
I estimate that in the region of €337m will be paid into the ICF in 2013 made up of a total advance of €272m from the Exchequer plus €65m from the ICF levy.
At the end of December 2012 the total amount due from the ICF to the State was €762m. There was an additional advance in January 2013 of €154m which brings the total amount outstanding at the end of January 2013 to €916m. This information is set out in the table below.
It should be noted that I would expect the ICF to be in a position to start repaying the State from about 2015. Based on information currently available it is estimated that it will take in the region of 12 to 15 years from the commencement of repayment for the Exchequer to recover its advances in full.
Finally, you should be aware that the interest rate that applies to the advances is 250bp over the 6 month Euribor rate.
|
Year |
Advance |
Interest due* |
|
2011 |
€280m |
€1.84m |
|
2012 |
€455m |
€25.20m |
|
2013 to date |
€154m |
- |
|
Total Amount due at the End of January 2013 |
€916.04m |
- |
* There will be interest due on the amount outstanding at the end of 2013.
