I propose to take Questions Nos. 74 and 169 together.
The Insurance Compensation Fund (ICF) levy being applied to home, motor and commercial insurance, and which came into effect from 1 January 2012, operates under the Insurance Act 1964. Its purpose is to protect policy holders in the event of their insurer becoming insolvent. The funds are collected by the Revenue Commissioners and transferred to the ICF on a monthly basis. Since the reintroduction of the ICF levy in January 2012 approximately €142.8m was collected.
In 2010 Joint Administrators were appointed by the High Court at the request of the Central Bank of Ireland because of concerns about the solvency position of Quinn Insurance Limited (QIL). The ICF has been used in accordance with the legislation to allow the QIL Administrators to meet their financial obligations as they arise. High Court approval is required to be obtained by QIL Administrators each time before any funds can be withdrawn from the ICF. 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 losses at the former company and therefore 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 indicates that they are increasingly confident that the total drawdown will be in that lower range.
Under Section 6 of the Insurance Act 1964 the responsibility for deciding whether the ICF has sufficient funds available to it 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.
The Central Bank have advised me that, it is not anticipated that there will be a change in the levy of 2% in the short to medium term.
