Tax Code

Questions (157)

Brendan Griffin

Question:

157. Deputy Brendan Griffin asked the Minister for Finance his views on whether income tax cuts-USC reductions-widening of the tax bands in the forthcoming budget would pay for themselves through additional spending in the economy; if so, if he will consider holding a mini-budget before the summer recess to ease the income tax burden on workers and to stimulate the economy by putting money in people's pockets; if his attention has been drawn to the number of persons who believe it is hardly worth their while to go to work anymore and feel they would be better off not working; his views on whether working is not rewarding in many scenarios due to the income tax burden; and if he will make a statement on the matter. [24215/14]

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Written answers (Question to Finance)

The Deputy will be aware that I have put on record my belief that the income tax burden is currently too high in Ireland and that I believe it needs to be reduced. However, I have also said that although it is my intention to alleviate the burden I can only do so when the public finances allow it.

I would advise the deputy that it is unlikely that a reduction in labour taxation would pay for itself through additional spending in the economy, in the short run.  It cannot be assumed that any loss in Exchequer revenue from reductions in income tax or USC would be completely offset by additional indirect taxes that might arise, for example, from additional consumer expenditure, not least because taxpayers might apply their additional take-home pay to saving or to debt reduction. If the resulting shortfall was not made up for in tax increases elsewhere this could jeopardise our goal of reaching a 3% deficit by 2015. Therefore, I have no plans to introduce any income tax changes in advance of Budget 2015, which is scheduled for October next. Given the above concerns, a reduction in income tax at that stage, could only be considered in a scenario where the economy performs strongly enough that such a reduction would not threaten the achievement of the deficit goal outlined earlier and sustainable public finances in the longer term. Notwithstanding the above, I do acknowledge that reductions in labour taxation could have positive medium-term impacts in terms of increased employment.

It should be acknowledged that Ireland has a progressive taxation system which ensures that the burden of taxation falls most heavily on those with a higher ability to pay. The low effective tax rates for low income workers ensures that work pays and is a growth friendly aspect of Ireland's tax system.   The latest data from the OECD's 2013 Taxing Wages report shows that Ireland has one of the most progressive income tax systems in the developed world. It is in this context that the Government has committed in the Programme for Government not to increase the marginal rate of income tax.

The Programme for Government also contains a commitment not to change tax credits, which at current levels ensure that an estimated 856,000 workers are excluded from the charge to income tax entirely. Furthermore, delivering on a commitment in the Programme for Government, the USC was reviewed by the Department of Finance in the lead up to Budget 2012.  As a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge.

Insurance Industry Regulation

Questions (158)

Finian McGrath

Question:

158. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding the liquidation of a company. [24242/14]

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Written answers (Question to Finance)

At the outset, I would like to say that both I, as Minister for Finance, and the Government are concerned over the situation that arose with regard to the Irish policyholders of Setanta Insurance Company Limited (Setanta).  My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has indicated that it will also review whether any issues raised relating to the regulatory framework require action. 

Setanta is a Maltese incorporated company which was both authorised and prudentially supervised by the Malta Financial Services Authority (MFSA). The Central Bank is in contact with the MFSA in relation to Setanta Insurance Company Limited, the impact on policyholders and the provision for relevant and appropriate information.

Setanta was regulated at EU regulatory level in accordance with a directive known as Solvency I which currently places requirements on the amount of regulatory capital European insurance companies must hold against unforeseen events. I understand that Setanta met its EU regulatory obligations and under EU law is, therefore, entitled to trade across EU borders. Under EU legislation the Central Bank of Ireland is not responsible for the prudential supervision of Irish branches of credit institutions authorised in other EEA Member States and operating under a passporting arrangement in Ireland.  The Central Bank does however have responsibility for the supervision of such entities in the following areas:

1. in co-operation with the home state regulator, assessment of their compliance with liquidity requirements;

2. consumer protection issues; and

3. compliance with Anti-Money Laundering regulations.

The current legal and regulatory framework for the provision of insurance in the EEA, and the supervision of that activity, is prescribed by European Union Law in the Life and Non-Life Insurance Directives. The provision of insurance throughout the EEA on a freedom of services basis and a freedom of establishment basis (i.e. a branch) within this framework is predicated upon the absence of internal market frontiers and the mutual recognition of the authorisation of insurance undertakings by Member States. 

The Insurance Directives specify particular roles for both the home Member State supervisory authority (i.e. the supervisory authority that grants an authorisation) and the host Member State supervisory authority (i.e. the supervisory authority of a Member State where an insurance undertaking conducts business of a freedom of services or freedom of establishment basis) of an insurance undertaking. Insurance undertakings authorised under the Insurance Directives are subject to solvency and financial reserving requirements, the supervision of these requirements is the sole responsibility of the home Member State supervisory authority. The primary objective of these requirements is to ensure that claims made in respect of policies issued will be adequately provided for by an insurance undertaking.

Under EU law which governs non-life insurance, an insurer is required to inform the regulator in its home Member State (its home regulator) that it intends to pursue business in another Member State. The home regulator must then provide the host regulator with a certificate attesting that the insurer covers the EU Solvency Capital Requirement, as well as the nature of the business which the insurer intends to undertake. The insurer may start to pursue business from the date that the certificate is communicated to the host regulator, in this case the Central Bank of Ireland.

Under Article 20 of the Third Non-Life Directive the Home Regulator is also required to notify the Host Regulator if the solvency margin of an undertaking falls below the statutory requirement. In such instances the Home Regulator should inform the Host Regulator of the measures it has taken to address the solvency deficit.

Following negotiations that were completed at European level in November, 2013, a new regime known as Solvency II will commence on 1 January 2016, which will further strengthen the EU regulatory framework. The Solvency II EU Directive sets out new, stronger EU-wide requirements on capital adequacy and risk management for insurers with the key aim of increasing policyholder protection.  The new regime will also ensure greater cooperation between supervisors. 

With regard to the position of Setanta policyholders, my officials have been in discussions with the Central Bank of Ireland, with the Setanta Liquidator, the Accountant of the High Court and with the insurance industry representative bodies and I have asked them to convey my wish that every effort is made to facilitate Setanta policyholders in obtaining new motor insurance policies and in understanding their overall position.  We are endeavouring to obtain legal certainty on a number of matters relating to policyholders' claims for compensation and this will be made publicly available in due course.  At this time, I propose to set out the position as it currently stands. 

Setanta was formally placed into liquidation by the MFSA on the 30 April 2014 and a liquidator was appointed. Officials from my Department together with officials from the Central Bank met with the Liquidator and his representatives in Ireland on 7 May 2014 and the Central Bank is in ongoing contact with him regarding the position of Setanta policyholders. All Setanta policies have now been cancelled in line with the terms of the policies. 

In the circumstances, I continue to strongly advise policyholders to make alternative insurance arrangements without delay and that they should contact their insurance broker or an insurer directly to seek alternative cover.  This is also the advice of the Central Bank.

The Liquidator made arrangements for policyholders to obtain their "no claims bonuses" certificates from Setanta. Insurance Ireland have informed me that these certificates are being honoured by other insurers and we are aware that many insurers are being flexible surrounding requirements for documents.  In addition, the Insurance Ireland 'Declined Cases Agreement' is available to policyholders of Setanta.  I am informed that under the agreement, the insurance market will not refuse to provide insurance to an individual seeking insurance, if he/she has approached at least three insurers and has not been able to obtain cover from them.  I understand that Insurance Ireland is also making information available to those who have queries, complaints or difficulties in relation to this matter through their service at (01) 676 1914 or by email at info@insuranceireland.eu.

With regard to Setanta premiums and claims, the position on each policy is for the liquidator to decide in due course.  My officials and the Central Bank will remain in close contact with the Liquidator and I have asked that public statements are provided to clarify matters for policyholders and claimants.

The Motor Insurance Bureau of Ireland (MIBI) is a non-profit-making organisation registered in Ireland.  All insurance companies underwriting motor insurance in this county must, by law, be members of MIBI and contribute to the funding of claims in proportion to their market share.   

The principal role of MIBI is to compensate innocent victims of accidents caused by uninsured and unidentified vehicles. This is regulated under the terms of an Agreement between the MIBI and the Minister for Transport, Tourism and Sport.  We are endeavouring to clarify the position on a number of matters relating to policyholders' claims for compensation, including the role of MIBI in this regard.  However, if, for legal reasons, MIBI is not in a position to accept a claim, these third party claims will be eligible to proceed for consideration by the High Court for compensation from the Insurance Compensation Fund (ICF).

The ICF is funded by a levy which is applied to home, motor and commercial insurance operates and under the Insurance Act 1964. The levy is 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. The purpose of the ICF is to protect policy holders in the event of their insurer becoming insolvent. It is anticipated that the ICF will be adequately funded to meet all expected claims on the fund.

Claims on personal insurance policies will be payable from the ICF.  All ICF payments are subject to the limit of 65% of the amount due or €825,000, whichever is the lesser. Under Section 3.6 of the Insurance Amendment Act 1964 (as amended) first party claims by a body corporate or unincorporated body are not covered by the ICF.

The refund of premiums for either commercial or personal insurance policies is not covered by the ICF or MIBI. However, unpaid premium would fall to be claimed from the Setanta Liquidator in due course. 

Officials from my Department met with the Irish Brokers Association at my request on 30 May and I am aware of their concerns regarding the position of the Setanta policy holders.

Insurance Industry Regulation

Questions (159)

Michael McGrath

Question:

159. Deputy Michael McGrath asked the Minister for Finance if he will check the accuracy of his Dáil statement during a Topical Issue debate on Wednesday, 30 April 2014 on the collapse of Setanta Insurance that the Motor Insurance Bureau of Ireland intends to accept all third party claims in connection to Setanta policies; if he will confirm whether this information is correct; and if he will make a statement on the matter. [24264/14]

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Written answers (Question to Finance)

At the outset, I would like to say that both I, as Minister for Finance, and the Government are concerned over the situation that arose with regard to the Irish policyholders of Setanta Insurance Company Limited (Setanta).  My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has indicated that it will also review whether any issues raised relating to the regulatory framework require action. 

With regard to the position of Setanta policyholders, my officials have been in discussions with the Central Bank of Ireland, with the Setanta Liquidator, the Accountant of the High Court and with the insurance industry representative bodies and I asked them to convey my wish that every effort is made to facilitate Setanta policyholders in obtaining new motor insurance policies and in understanding their overall position.

Setanta was formally placed into liquidation by the MFSA on the 30 April 2014 and Mr Paul Mercieca was appointed as liquidator. Officials from my Department together with officials from the Central Bank met with the Liquidator and his representatives in Ireland in May and the Central Bank is in ongoing contact with him regarding the position of Setanta policyholders. All Setanta policies have now been cancelled in line with the terms of the policies and the Liquidator made arrangements for policyholders to obtain their "no claims bonuses" certificates from Setanta. Insurance Ireland have informed me that these certificates are being honoured by other insurers and we are aware that many insurers are being flexible surrounding requirements for documents.  In addition, the Insurance Ireland 'Declined Cases Agreement' is available to policyholders of Setanta.  I am informed that under the agreement, the insurance market will not refuse to provide insurance to an individual seeking insurance, if he/she has approached at least three insurers and has not been able to obtain cover from them.  I understand that Insurance Ireland is also making information available to those who have queries, complaints or difficulties in relation to this matter through their service at (01) 676 1914 or by email at info@insuranceireland.eu.

With regard to Setanta premiums and claims, the position on each policy is for the Liquidator to decide in due course.  My officials and the Central Bank will remain in close contact with the Liquidator and I have asked that public statements are provided to clarify matters for policyholders and claimants.

The Motor Insurance Bureau of Ireland (MIBI) is a non-profit-making organisation registered in Ireland.  All insurance companies underwriting motor insurance in this county must, by law, be members of MIBI and contribute to the funding of claims in proportion to their market share. The principal role of MIBI is to compensate innocent victims of accidents caused by uninsured and unidentified vehicles. This is regulated under the terms of an Agreement between the MIBI and the Minister for Transport, Tourism and Sport.  I am endeavouring to clarify the position on a number of matters relating to policyholders' claims for compensation, including the role of MIBI in this regard.  However, if, for legal reasons, MIBI is not in a position to accept a claim, these third party claims will be eligible to proceed for consideration by the High Court for compensation from the Insurance Compensation Fund (ICF).

On 16 April, 2014, Setanta determined that the company was insolvent. This means that Setanta does not have sufficient funds to be able to honour its full obligations towards claimants, policyholders and other creditors. Setanta was formally placed into liquidation by the MFSA following a meeting of the creditors which took place on the 30 April, 2014 where a liquidator, Mr Paul Mercieca, was appointed.  At the time of the Liquidators appointment on 30 April 2014 there was a degree of uncertainty regarding the exact legal status of Setanta polices and whether these policies remained valid. The statement made during the Topical Issue debate on Wednesday 30 April 2014, that "the Motor Insurance Bureau of Ireland has indicated that they intend to accept all third party claims in connection to Setanta policies", was accurate as based on the information available up to that time on the status of the policies.  Officials from my Department had been informed that the Motor Insurance Bureau of Ireland (MIBI) had indicated that they intended to accept all third party claims. This statement was used in answer to Parliamentary Questions on 30 April and 01 May 2014.

In the following days there was clarification from the Liquidator that all Setanta policies remained valid until cancelled by either the Liquidator or the policyholder. MIBI has sought legal advice regarding their liability in situations where the unpaid third party claims arising are in relation to insured drivers. Once this ambiguity was brought to the attention of my Department then more appropriate text which stated that "The principal role of MIBI is to compensate innocent victims of accidents caused by uninsured and unidentified vehicles. If, for legal reasons, MIBI is not in a position to accept a claim, these third party claims will be eligible to proceed for consideration by the High Court for compensation from the Insurance Compensation Fund (ICF)", was used in the next Parliamentary Questions on 7 May 2014 to reflect this legal position.  

From 27 May 2014 the text was changed to state that "The principal role of MIBI is to compensate innocent victims of accidents caused by uninsured and unidentified vehicles. We are endeavouring to clarify the position on a number of matters relating to policyholders' claims for compensation, including the role of MIBI in this regard. However, if, for legal reasons, MIBI is not in a position to accept a claim, these third party claims will be eligible to proceed for consideration by the High Court for compensation from the Insurance Compensation Fund (ICF)." This change was made in order to inform Deputies that the position of MIBI was being clarified. 

Claims on insurance policies will be payable from either the ICF or MIBI.  All ICF payments are subject to the limit of 65% of the amount due or €825,000, whichever is the lesser. Under Section 3.6 of the Insurance Amendment Act 1964 (as amended) first party claims by a body corporate or unincorporated body are not covered by the ICF.

Insurance Industry Regulation

Questions (160)

Michael McGrath

Question:

160. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 81 of 30 April 2014, if he will provide a list of the 744 insurance firms that are regulated in Ireland for conduct of business rules specifying, of those 744, the 45 which are prudentially regulated in Ireland and write Irish risk; if he will further specify the 67 which are prudentially regulated in Ireland and do not write Irish risk; and if he will make a statement on the matter. [24267/14]

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Written answers (Question to Finance)

The Central Bank of Ireland maintains registers of authorised financial service providers which can be found at; http://registers.centralbank.ie/DownloadsPage.aspx.

A requested list of the 744 insurance firms that are regulated in Ireland for conduct of business rules is titled "Non-Life Undertakings operating on a Freedom of Services Basis as at 08 May 2014" and can be found under the heading "Register of Life and Non-Life Insurance Undertakings".

The latest public data in relation to insurance firms writing general and motor insurance risk in Ireland and risk elsewhere was published in 2013 in the Central Bank Insurance Statistics. The details of these firms are below. The latest data is currently being compiled by the Central Bank based on returns from the various insurance companies and will be published in the coming months.

The 45 firms which are prudentially regulated in Ireland and write Irish risk are;

Allianz plc

Allied World Assurance Company (Europe) Limited

Amtrust International Underwriters Ltd

Aviva Health Insurance Ireland Limited

AXA Insurance Ltd

Axis Specialty Europe SE

BMS International Insurance Company Ltd

Canterbury Insurance Ltd

Carraig Insurance Limited

CODEVE Insurance Company Limited

Coromin Insurance (Ireland) Ltd

Cuna Mutual Insurance (Europe) Ltd

DeCare Dental Insurance Ireland Ltd

Electric Insurance Ireland Limited

Euro Insurances Limited

FBD Insurance Plc

GD Insurance Company Limited

Golden Arches Insurance Limited

Great American International Insurance Limited

Irish Dairy Board Insurance Limited

Irish Public Bodies Mutual Insurances Limited

Ironshore Europe Limited

Kingfisher Insurance Limited

Liberty Insurance Limited

Lifeguard Insurance (Dublin) Limited

Markel Europe plc

Navillus Insurance Company Limited

New Technology Insurance

Noble Insurance Company Limited

Pan Insurance Limited

PartnerRe Ireland Insurance Limited

PI Indemnity Company Limited

Pine Indemnity Limited

Quinn Insurance Limited (under administration)

Red Disk Insurance Company Limited

RSA Insurance Ireland Limited

Seamair Insurance Limited

Societe D'Assurance Generales Appliquees (SAGA) Ltd

UK General Insurance (Ireland) Limited

UPS International Insurance Limited

Valiant Insurance Company Limited

Volkswagen Insurance Company Limited

Western Captive Insurance Company Limited

White Horse Insurance Ireland Limited

Zurich Insurance plc

The total number of firms which are prudentially regulated in Ireland and do not write Irish risk is composed of 49 firms which only wrote foreign risk premiums and 15 firms which did not write any new business in 2012, giving a total of 64 firms. This information is published by the Central Bank only on an annual basis in the Insurance Statistics and was last published on 3 December 2013.

Since then there has been an increase in the total number of firms to 67 and this was the number provided in reply to Parliamentary Question No. 81 of 30 April 2014.  This information was provided by the Central Bank on an anonymised basis, as the Central Bank only publishes the names of firms on an annual basis in the Insurance Statistics. The revised list of firms is expected in October 2014.

The 49 firms which are prudentially regulated in Ireland and wrote only foreign risk are;

Acadia International Insurance Limited

Accent Europe Insurance Company Limited (under administration)

ACE Bermuda International Insurance (Ireland) Limited

Aetna Health Insurance Company of Europe Limited

Allianz Worldwide Care Limited

Alreford Limited

Arbor Property & Casualty Ireland Ltd

Arch Mortgage Insurance Limited

ATC Insurance Ireland Limited

Barclays Insurance (Dublin) Limited

CACI Non-Life Limited

Carrefour Insurance Limited

Catalina Insurance Ireland Limited

Chartis Excess Limited

Classic Brand (Europe) Limited

ENI Insurance Limited

Equinox CA Europe Limited

Esprit Insurance Ltd

European Insurance Risk Excess Ltd

FDI Insurance Ltd

Greenval Insurance Company Limited

Hitachi Capital Insurance Europe Limited

INEOS Insurance Limited

KPN Insurance Company Ltd

Martinsurance Teoranta

MBDA Insurance Limited

Medical Insurance Company Limited

MetLife Europe Insurance Limited

Miripro Insurance Company Ltd

National Grid Insurance Company (Ireland) Ltd

Newell Insurance Limited

NEWWATER INSURANCE LIMITED

Nokatus Insurance Company Ltd

Orkla Insurance Company Ltd

Overseas NEIL Limited

Petroswede Insurance Company Limited

Pharma International Insurance Limited

Philip Morris International Insurance (Ireland) Limited

PMI Mortgage Insurance Company Limited

Preem Insurance Company Limited

Probus Insurance Company Europe Ltd

RSIF International Limited

Santander Insurance Europe Limited

Sasol International Insurance Ltd

TCS Insurance Company of Ireland Ltd

The Baxendale Insurance Company Ltd

Vishay Insurance Ltd

Wagram Insurance Company Limited

Yara Insurance Ltd

The 15 firms which are prudentially regulated in Ireland and did not write any new business in 2012 are;

Baltimore Insurance Ltd

Bavaria Insurance Company Ltd

Beech Hill Insurance Limited

CBL Insurance Europe Limited

Delphi Insurance Limited

Deutsche Post Insurance Ltd

Dornoch International Insurance Limited

Inveralmond Insurance Limited

Irish Permanent Property Company Limited

Nautilus Insurance (Europe) Limited

Standard Trane Insurance Ireland Ltd

Tetra Laval Insurance Company Ltd

Trans-Europe Assurance Limited

W.T.C.D. Insurance Corporation Limited

XERON INSURANCE

Tax Forms

Questions (161)

Michael McGrath

Question:

161. Deputy Michael McGrath asked the Minister for Finance if an error in the balancing statement for 2013 issued to a person (details supplied) in County Cork will be corrected; and if he will make a statement on the matter. [24291/14]

View answer

Written answers (Question to Finance)

I am advised by the Revenue Commissioners that this taxpayer's record has been updated with the information received from  the customer on 21st May 2014, and a revised P21 balancing statement, with a small refund, is in the course of being issued.

The issue of an incorrect balancing statement on 29th March 2014 is regretted.  It occurred because of separate notifications of two social protection payments, which did not indicate that one included the other.

European Stability Programmes

Questions (162)

Pearse Doherty

Question:

162. Deputy Pearse Doherty asked the Minister for Finance when Ireland will be fully integrated into the European semester framework; and if he will make a statement on the matter. [24293/14]

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Written answers (Question to Finance)

On 2 June 2014, the EU Commission published its proposals for Country Specific Recommendations (CSRs) for the 26 Member States across the EU who are not in a programme of financial assistance, as part of the 2014 European Semester. Only Greece and Cyprus did not receive CSRs this year.

Having successfully exited the Programme of Financial Assistance, Ireland is now fully participating in the semester process for the first time. The engagement of Ireland in the annual process is part of the normalisation of our position as a post Programme country. The European Semester is a part of the new regime for economic surveillance, in operation since 2011 and codified by the 'six-pack' of legislative measures adopted in December 2011, to secure and maintain sound public finances across the EU, promote growth and employment and avoid macroeconomic spillovers between Member States.

The publication of the Annual Growth Survey (AGS) at the end of November 2013 commenced the fourth European Semester cycle. The Country Specific Recommendations now proposed by the Commission are based on its assessment of Member States' Stability Programme Updates and National Reform Plans submitted in April this year. They are designed to ensure that Member States work together to put in place and maintain the necessary conditions for stability, growth and jobs.

The Commission addressed a variety of CSRs to the 26 participating Member States in the fields of budgetary, fiscal and financial matters. The CSRs also cover areas where they propose deeper structural reforms. Ireland received a total of seven (7) CSRs.

The proposed CSRs for all 26 Member States are being processed through the relevant EU Committee formations and Ministers in all relevant Council formations will work in a coordinated and consistent manner towards final endorsement of the 2014 CSRs by Heads of State and Government at the June European Council before being finally adopted by the ECOFIN on 8 July.

Insurance Industry Regulation

Questions (163, 164, 188)

Gerald Nash

Question:

163. Deputy Gerald Nash asked the Minister for Finance the steps he has taken with the Central Bank of Ireland to protect the interests of Setanta Insurance policy holders; if he is considering the introduction of measures to permit the return of premiums due to policy holders and to provide clarity regarding the payment of pending claims; the date on which his Department first became aware of the difficulties facing the company; the action his Department took to protect the interest of policy holders here; the new mechanisms that will be put in place to protect the customers of companies regulated outside of Ireland; and if his Department will support a review of passporting in-out requirements in the industry. [24354/14]

View answer

John Browne

Question:

164. Deputy John Browne asked the Minister for Finance further to Parliamentary Question No. 55 of 29 May 2014, regarding Setanta Insurance, the date on which the home regulator advised the host regulator of the company’s solvency issue, of the company's deficit and any measures required; if it is his understanding that the accounts of Setanta Insurance showed it was not solvent from a regulatory viewpoint for some time and could not therefore be in a position to meet its EU regulatory obligations under Solvency I; if he will expand on his statement that the regulatory obligations were met, and at what point in time they were met; his views on the behaviour of the home regulator in this case; and if he will make a statement on the matter. [24358/14]

View answer

Patrick O'Donovan

Question:

188. Deputy Patrick O'Donovan asked the Minister for Finance in relation to the recent Setanta Insurance liquidation, the recourse or action available to persons to recoup their policy premiums; if the State has provided assistance to other insurance companies who have got into financial difficulty; and if he will make a statement on the matter. [24635/14]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 163, 164 and 188 together.

At the outset, I would like to say that both I, as Minister for Finance, and the Government are concerned over the situation that arose with regard to the Irish policyholders of Setanta Insurance Company Limited (Setanta).  My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. The European Commission has indicated that it will also review whether any issues raised relating to the regulatory framework require action. 

Setanta is a Maltese incorporated company which was both authorised and prudentially supervised by the Malta Financial Services Authority (MFSA). The Central Bank is in contact with the MFSA in relation to Setanta Insurance Company Limited, the impact on policyholders and the provision for relevant and appropriate information.

Setanta was regulated at EU regulatory level in accordance with a directive known as Solvency I which currently places requirements on the amount of regulatory capital European insurance companies must hold against unforeseen events. I understand that Setanta met its EU regulatory obligations and under EU law is, therefore, entitled to trade across EU borders. Under EU legislation the Central Bank of Ireland is not responsible for the prudential supervision of Irish branches of credit institutions authorised in other EEA Member States and operating under a passporting arrangement in Ireland.  The Central Bank does however have responsibility for the supervision of such entities in the following areas:

1. in co-operation with the home state regulator, assessment of their compliance with liquidity requirements;

2. consumer protection issues; and

3. compliance with Anti-Money Laundering regulations.

The current legal and regulatory framework for the provision of insurance in the EEA, and the supervision of that activity, is prescribed by European Union Law in the Life and Non-Life Insurance Directives. The provision of insurance throughout the EEA on a freedom of services basis and a freedom of establishment basis (i.e. a branch) within this framework is predicated upon the absence of internal market frontiers and the mutual recognition of the authorisation of insurance undertakings by Member States. 

The Insurance Directives specify particular roles for both the home Member State supervisory authority (i.e. the supervisory authority that grants an authorisation) and the host Member State supervisory authority (i.e. the supervisory authority of a Member State where an insurance undertaking conducts business of a freedom of services or freedom of establishment basis) of an insurance undertaking. Insurance undertakings authorised under the Insurance Directives are subject to solvency and financial reserving requirements, the supervision of these requirements is the sole responsibility of the home Member State supervisory authority. The primary objective of these requirements is to ensure that claims made in respect of policies issued will be adequately provided for by an insurance undertaking.

Under EU law which governs non-life insurance, an insurer is required to inform the regulator in its home Member State (its home regulator) that it intends to pursue business in another Member State. The home regulator must then provide the host regulator with a certificate attesting that the insurer covers the EU Solvency Capital Requirement, as well as the nature of the business which the insurer intends to undertake. The insurer may start to pursue business from the date that the certificate is communicated to the host regulator, in this case the Central Bank of Ireland.

Under Article 20 of the Third Non-Life Directive the Home Regulator is also required to notify the Host Regulator if the solvency margin of an undertaking falls below the statutory requirement. In such instances the Home Regulator should inform the Host Regulator of the measures it has taken to address the solvency deficit.

Following negotiations that were completed at European level in November, 2013, a new regime known as Solvency II will commence on 1 January 2016, which will further strengthen the EU regulatory framework. The Solvency II EU Directive sets out new, stronger EU-wide requirements on capital adequacy and risk management for insurers with the key aim of increasing policyholder protection.  The new regime will also ensure greater cooperation between supervisors.

The Central Bank had Regulator to Regulator contact with the MFSA in September 2013. In October 2013 the Central Bank undertook a consumer protection inspection of Setanta. The Central Bank became aware of prudential issues in the course of this investigation and subsequently shared these with the MFSA in November 2013. At this point the Central Bank entered into a phase of heightened contact with the MFSA in relation to these issues. Regular contact was maintained in the following months, and in January 2014 an announcement was made that the firm would cease writing new business and issuing further renewals. The Central Bank wrote on the 16th January 2014 to advise my Department of their concerns with Setanta's solvency margin and I was subsequently informed of this.  

With regard to the position of Setanta policyholders, my officials have been in discussions with the Central Bank of Ireland, with the Setanta Liquidator, the Accountant of the High Court and with the insurance industry representative bodies and I have asked them to convey my wish that every effort is made to facilitate Setanta policyholders in obtaining new motor insurance policies and in understanding their overall position.  We are endeavouring to obtain legal certainty on a number of matters relating to policyholders' claims for compensation and this will be made publicly available in due course.  At this time, I propose to set out the position as it currently stands. 

Setanta was formally placed into liquidation by the MFSA on the 30 April 2014 and a liquidator was appointed. Officials from my Department together with officials from the Central Bank met with the Liquidator and his representatives in Ireland on 7 May 2014 and the Central Bank is in ongoing contact with him regarding the position of Setanta policyholders. All Setanta policies have now been cancelled in line with the terms of the policies. 

In the circumstances, I continue to strongly advise policyholders to make alternative insurance arrangements without delay and that they should contact their insurance broker or an insurer directly to seek alternative cover.

The Liquidator made arrangements for policyholders to obtain their "no claims bonuses" certificates from Setanta. Insurance Ireland have informed me that these certificates are being honoured by other insurers and we are aware that many insurers are being flexible surrounding requirements for documents.  In addition, the Insurance Ireland 'Declined Cases Agreement' is available to policyholders of Setanta.  I am informed that under the agreement, the insurance market will not refuse to provide insurance to an individual seeking insurance, if he/she has approached at least three insurers and has not been able to obtain cover from them.  I understand that Insurance Ireland is also making information available to those who have queries, complaints or difficulties in relation to this matter through their service at (01) 676 1914 or by email at info@insuranceireland.eu.

With regard to Setanta premiums and claims, the position on each policy is for the liquidator to decide in due course.  My officials and the Central Bank will remain in close contact with the Liquidator and I have asked that public statements are provided to clarify matters for policyholders and claimants.

The Motor Insurance Bureau of Ireland (MIBI) is a non-profit-making organisation registered in Ireland.  All insurance companies underwriting motor insurance in this county must, by law, be members of MIBI and contribute to the funding of claims in proportion to their market share.   

The principal role of MIBI is to compensate innocent victims of accidents caused by uninsured and unidentified vehicles. This is regulated under the terms of an Agreement between the MIBI and the Minister for Transport, Tourism and Sport.  We are endeavouring to clarify the position on a number of matters relating to policyholders' claims for compensation, including the role of MIBI in this regard.  However, if, for legal reasons, MIBI is not in a position to accept a claim, these third party claims will be eligible to proceed for consideration by the High Court for compensation from the Insurance Compensation Fund (ICF).

Under Section 6 of the Insurance Act 1964 the Minister for Finance may, on the recommendation of the Bank, advance from time to time to the ICF such sum as he thinks proper to enable payments out of the Fund. During the administration of Quinn Insurance Limited, Primor plc (formerly PMPA) and Icarom plc (formerly Insurance Corporation of Ireland) the State was required to advance funds to the ICF in order to ensure that the administrators were adequately funded in order to meet their financial obligations as they arose.

Claims on personal insurance policies will be payable from the ICF.  All ICF payments are subject to the limit of 65% of the amount due or €825,000, whichever is the lesser. Under Section 3.6 of the Insurance Amendment Act 1964 (as amended) first party claims by a body corporate or unincorporated body are not covered by the ICF.

The refund of premiums for either commercial or personal insurance policies is not covered by the ICF or MIBI. However, unpaid premium would fall to be claimed from the Setanta Liquidator in due course.

Tax Collection

Questions (165, 190, 191)

Aengus Ó Snodaigh

Question:

165. Deputy Aengus Ó Snodaigh asked the Minister for Finance if the Revenue Commissioners will act immediately to proceed to wind up a company (details supplied) in Dublin 1 to satisfy outstanding arrears of tax and PRSI due to the Revenue Commissioners and providing a route for the workers to access the insolvency fund to receive payment of wages and other entitlements. [24403/14]

View answer

Aodhán Ó Ríordáin

Question:

190. Deputy Aodhán Ó Ríordáin asked the Minister for Finance if he will confirm that the Revenue Commissioners are in the process of winding up the company (details supplied) to satisfy outstanding arrears of tax and PRSI due to the Revenue Commissioners. [24670/14]

View answer

Aodhán Ó Ríordáin

Question:

191. Deputy Aodhán Ó Ríordáin asked the Minister for Finance if he will confirm that the Revenue Commissioners will wind up a company (details supplied) to satisfy outstanding arrears of tax and PRSI due to the Revenue Commissioners; and the time frame for the wind up. [24671/14]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 165, 190 and 191 together.

I am advised by Revenue that in accordance with Section 851A of the Taxes Consolidation Act 1997, it is precluded from disclosing any information in regard to the tax affairs of any taxpayer or business on the grounds of taxpayer confidentiality.

NAMA Property Rental

Questions (166, 184, 185)

Stephen Donnelly

Question:

166. Deputy Stephen S. Donnelly asked the Minister for Finance if he will provide, in tabular form, the number of residential National Asset Management Agency properties in each county; and if he will make a statement on the matter. [24424/14]

View answer

Kevin Humphreys

Question:

184. Deputy Kevin Humphreys asked the Minister for Finance if he will provide a breakdown, in tabular form, of the number of units the National Asset Management Agency made available for social housing in each local authority; if they are apartments or houses; the number that have been accepted for social housing; the number that are subject to negotiations; and if he will make a statement on the matter. [24575/14]

View answer

Kevin Humphreys

Question:

185. Deputy Kevin Humphreys asked the Minister for Finance the number of housing units the National Asset Management Agency currently controls; if he will provide a breakdown of the number that are apartments or houses; the number currently occupied; if they are habitable or in need of finishing out or refurbishment; if he will indicate for each of these figures the number that are in the county of Dublin comprising the four local authorities; and if he will make a statement on the matter. [24576/14]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 166, 184 and 185 together.

A detailed breakdown of the property securing NAMA's remaining loans by region and by sector is outlined on page 42 of its Annual Report and Financial Statements for 2013, which is available on the Agency's website, www.nama.ie.  In evidence to the Dáil Committee of Public Accounts on 29th May, NAMA indicated that it has an interest as a secured lender in about 16,000 completed residential properties in Ireland, mainly apartments, which are located in Dublin, Limerick, Cork and Galway.  The vast majority of these properties are currently let by their owners/receivers in the private rental market.  In addition, NAMA has to date made 5,237 residential properties available for social housing.  This includes 500 apartments that will soon become available in Tallaght following the completion of substantial remediation works funded by NAMA and which are, NAMA understands, subject to on-going assessment by the Dublin local authorities.

Of the 5,237 properties made available by NAMA, Local authorities have confirmed demand for 2,004, 695 of which have been contracted.  NAMA expects that 1,100 properties will have been delivered for social housing through this process by the end of 2014.  This does not include potential delivery arising from the 500 apartments recently identified in Tallaght.  The Deputy will appreciate that NAMA has no role in terms of determining the take-up of properties that it has made available for social housing as this is a matter for local authorities. Where local authorities do not take up properties identified by NAMA, the properties are let or sold by their owners/receivers.  Once demand has been confirmed for houses and apartments and contracts entered into, NAMA immediately makes them available for social housing.  This often involves significant NAMA investment to complete construction works and resolve outstanding statutory compliance issues.  NAMA provides detail on this process on page 30 of its Annual Report and Financial Statements for 2013. 

Local Authority Functional Area

Total Made Available by NAMA

Demand Confirmed by Local Authorities

In Negotiation

Complete/ Contracted

Carlow Co. Co.

137

77

-

55

Cavan Co. Co.

49

17

-

-

Clare Co. Co.

202

42

23

7

Cork City

419

95

41

53

Cork Co. Co.

471

148

67

55

Donegal Co. Co.

118

55

5

Drogheda Borough Council

27

27

-

27

Dublin City

769

388

201

163

Dún Laoghaire-Rathdown Co. Co.

305

114

-

77

Fingal Co. Co.

203

56

-

44

Galway City

137

137

86

45

Galway Co. Co.

114

70

21

15

Kerry Co. Co.

114

54

-

15

Kildare Co. Co.

243

82

3

64

Kilkenny Co. Co.

167

87

66

5

Laois  Co. Co.

98

6

-

Leitrim  Co. Co.

35

-

-

Limerick  Co. Co.

128

71

-

9

Longford  Co. Co.

31

3

-

Mayo  Co. Co.

66

58

-

Meath Co. Co.

215

37

12

11

Monaghan  Co. Co.

42

42

42

North Tipperary Co. Co.

13

 

Offaly Co. Co.

79

55

51

Roscommon Co. Co.

91

 

Sligo  Co. Co.

46

16

 

South Dublin Co. Co.

568

50

8

40

South Tipperary Co. Co.

34

13

 

Waterford City

7

7

 

Waterford Co. Co.

65

39

46

Westmeath Co. Co.

64

47

12

8

Wexford  Co. Co.

152

104

81

2

Wicklow Co. Co.

36

7

7

Grand Total

5,237

2,004

772

695

NAMA Property Leases

Questions (167)

Stephen Donnelly

Question:

167. Deputy Stephen S. Donnelly asked the Minister for Finance further to the recent announcement by Dublin City Council that it had acquired the National Asset Management Agency’s 53% interest in the Ballymun Shopping Centre, if he will disclose the sale price and yield percentage of this asset which is being transferred between two agencies of the State. [24425/14]

View answer

Written answers (Question to Finance)

I am advised that, the Board of NAMA has approved the recommendation of the Receiver to Ballymun Shopping Centre to sell its 53% share in the Shopping Centre to Dublin City Council, which holds the remaining 47% interest, for a consideration of €2.5m.  The price is supported by an open market valuation.

NAMA Transactions

Questions (168)

Stephen Donnelly

Question:

168. Deputy Stephen S. Donnelly asked the Minister for Finance the amount of vendor finance provided by the National Asset Management Agency to date; the amount presently outstanding; the number of transactions to which vendor finance has been provided; the number of transactions to which vendor finance has been provided which relate to property located in the Republic of Ireland, Northern Ireland and Britain; and the amount of interest booked and paid to NAMA in respect of vendor finance in 2013. [24426/14]

View answer

Written answers (Question to Finance)

I refer the Deputy to page 21 of NAMA's Annual Report and Financial Statements for 2013, which is available on the Agency's website, www.nama.ie.  NAMA has, as set out in its Annual Report, advanced €373m to date across six transactions, four of which relate to properties in the Republic of Ireland and two in the UK.  These loans are fully performing.

NAMA Accounts

Questions (169)

Stephen Donnelly

Question:

169. Deputy Stephen S. Donnelly asked the Minister for Finance when the management accounts and report for the National Asset Management Agency, as provided for under section 55 of the NAMA Act 2009, were delivered by NAMA to his Department; when they will be published; the reason for any delay with publication; and if he will make a statement on the matter. [24427/14]

View answer

Written answers (Question to Finance)

In line with the NAMA Act 2009 the Section 55 Report and Accounts for Quarter 4 2013, was received in my Department on the 31st of March 2014.  The Section 55 Report and Accounts for Quarter 4 2013 was laid before the House together with NAMA's 2013 Annual Report following the Government meeting on the 27th of May 2014. Both of these documents are available in the Oireachtas Library.

I am advised the Quarter 1 2014 Section 55 report and accounts will be submitted to me by the statutory deadline of 30 June 2014 and I intend to publish these as soon as possible thereafter.

NAMA Transactions

Questions (170)

Stephen Donnelly

Question:

170. Deputy Stephen S. Donnelly asked the Minister for Finance further to the recent publication of the National Asset Management Agency Annual Report 2013, which states the need for vendor finance in 2013 may be reducing, and in view of the relatively attractive terms on which NAMA’s vendor finance is provided, if he is concerned at dysfunction in the property marketplace; and if he will make a statement on the matter. [24428/14]

View answer

Written answers (Question to Finance)

As set out in NAMA's Annual Report and Financial Statements for 2013, which is available on the Agency's website, www.nama.ie, NAMA Vendor Finance was introduced in 2012 at a time when many potential investors were constrained by a lack of access to bank finance.  A number of market changes arising out of the improved landscape and increased activity in the Irish property market from 2013 suggest that the need for NAMA vendor financing may be reducing.  These include the prevalence of international investors with ready access to capital, a gradual increase in domestic bank lending and the introduction of Irish REITs as an alternative investment mechanism.  These developments point to recovery in the Irish property market place.

IBRC Liquidation

Questions (171)

Stephen Donnelly

Question:

171. Deputy Stephen S. Donnelly asked the Minister for Finance if he has any concerns with the deal reportedly struck between the special liquidators of Irish Bank Resolution Corporation, acting under the appointment and on behalf of him, and two unidentified informants, whereby the special liquidators have agreed to pay the informants 3% of any moneys recovered; and if he will make a statement on the matter. [24429/14]

View answer

Written answers (Question to Finance)

Irish Bank Resolution Corporation (IBRC), which is owned by the State and is currently subject to a liquidation process has been seeking control of security relating to very substantial loans to companies which were owned and controlled by the Quinn family. The total value of this lending was approximately €2.8 billion. The Bank sought to enforce its security in April 2011 only to discover that steps had been taken to undermine the value of that security. It is the Bank's position that these steps were executed pursuant to a fraudulent conspiracy between members of the Quinn family. The Bank commenced proceedings in June 2011 in Ireland in respect of this conspiracy and obtained a number of injunctions against members of the Quinn family. The Bank's position is that both prior to and following the commencement of the conspiracy proceedings that members of the Quinn family have used every means at their disposal to hide assets from the Bank. Extensive efforts have been made by the Bank to retrieve assets in a range of jurisdictions with limited success.

Prior to the appointment of the Joint Special Liquidators (JSLs) to IBRC in February 2013, the Bank was informed through a solicitor, that two former clients of his (the informants) had information pertaining to the assets held by the Quinn family. The Informants requested that an agreement be put in place between them and the Bank to recompense them for providing information. Before entering into an agreement, the Bank undertook due diligence on these two people to establish their credibility.

Following this due diligence, the Board of IBRC decided that it was incumbent on the Bank to do what it could to establish the truth of the information promised by the informants in order to ensure that any assets properly belonging to the Bank be discovered. The Board initiated an agreement with the informants. This agreement was on the basis of a percentage of any funds retrieved directly through information provided by the informants.

When the JSLs were appointed in February 2013, they were appraised of the proposed agreement which had not been fully concluded. The JSLs are under a legal duty to realise assets and pay creditors including the Irish taxpayer. Having reviewed all of the details pertaining to this, the JSLs formed the view that the proposed arrangement was appropriated as it would only arise if funds were retrieved as a result of information provided by the informants. In March 2013, an agreement between the Bank and the informants was signed providing that they would receive 3% of any cash recoveries.

The JSLs note that this information was detailed in an affidavit sworn by them and opened in the English High Court.  

This arrangement is a matter for JSLs who have been appointed to maximise the overall return for creditors in the liquidation including the Irish taxpayer.

NAMA Operations

Questions (172)

Stephen Donnelly

Question:

172. Deputy Stephen S. Donnelly asked the Minister for Finance his views on the appropriateness of the recent appointment by the National Asset Management Agency of Pricewaterhouse Coopers to provide an internal audit service to the agency, in view of the ongoing litigation by the receivers of Quinn Insurance who are claiming approximately €1 billion in damages from PwC in respect of alleged audit failings by PwC at Quinn Insurance. [24430/14]

View answer

Written answers (Question to Finance)

I am advised that NAMA, in selecting a service provider to provide internal audit services, undertook an open competitive tender process.  The selection of the winning bid was a matter for the  NAMA Board.

Insurance Industry

Questions (173)

Stephen Donnelly

Question:

173. Deputy Stephen S. Donnelly asked the Minister for Finance the total amount of funding provided by the insurance compensation fund to Quinn Insurance to date; and the current estimate of the overall amount of funding to be provided, including that forecast to be provided in future. [24431/14]

View answer

Written answers (Question to Finance)

In 2010,  at the request of the Central Bank of Ireland, Joint Administrators were appointed by the High Court under the Insurance No. 2 Act 1983 to Quinn Insurance Limited (QIL) because of concerns about the solvency position of that firm.   To date, a total of €1,118m has been drawn down from the Insurance Compensation Fund by the Joint Administrators.

The Joint Administrators, when presenting their 10th report to the High Court in July 2012, indicated that the potential call on the ICF could be up to €1.65bn. The Joint Administrators pointed out in their report that if they were to remove most of the accounting adjustments and use a "best estimate" calculation, then the call on the fund is likely to be in the range of €1.1bn to €1.3bn rather than the €1.65bn for which they have provided.

The latest update from the Joint administrators to officials from my Department indicate that they are increasingly confident that the total drawdown will be in that lower range.

Insurance Industry

Questions (174)

Stephen Donnelly

Question:

174. Deputy Stephen S. Donnelly asked the Minister for Finance if he will provide an update on the litigation by the administrators of Quinn Insurance against PricewaterhouseCoopers, which was commenced on 15 February 2012, and involves a claim for damages of approximately €1 billion in respect of alleged audit failings by PwC at Quinn Insurance. [24432/14]

View answer

Written answers (Question to Finance)

In July 2012 the Joint Administrators of Quinn Insurance Limited (QIL) informed the High Court that they were considering taking legal action for negligence against the former auditors of QIL, PricewaterhouseCoopers.

The proceedings were admitted to the Commercial Court on 29 July 2013 and QIL provided its statement of claim to PricewaterhouseCoopers on 24th September 2013.  The Commercial Court is case-managing the proceedings and the most recent directions issued by the Court anticipate that PricewaterhouseCoopers will provide its defence to QIL by 1 August 2014.

As this case is before the Courts I do not propose to make any further statement now.