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Insurance Industry

Dáil Éireann Debate, Wednesday - 19 December 2018

Wednesday, 19 December 2018

Questions (160)

Michael McGrath

Question:

160. Deputy Michael McGrath asked the Minister for Finance when the law was changed governing the Danish guarantee fund to deal with insurance company failures in 2018; and if he will make a statement on the matter. [53956/18]

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Written answers

At the outset I would like to say that as there is currently no EU harmonised approach to insurance guarantee schemes. Member States have adopted their own approach to such schemes, which show noticeable differences in design features, such as scope, coverage and funding.

I understand that the Danish scheme for non life companies (Garantifonden for skadesforsikringsselskaber) was established on 1 October 2003 and comes under the remit of the Consolidated Act on the Guarantee Fund for Non-life Insurance. This Act was most recently amended by Act No. 375 of 1 May 2018, which changed the scope of the Fund from a home-country principle to a host-country principle, with effect from 1 January 2019, and requires all insurers writing business in Denmark to be a member of the Danish Insurance Guarantee Fund.

The difference between a host based insurance guarantee scheme and a home based one is that the former only covers policies or risks in that state no matter where they are written from, whereas the latter covers all policies issued by domestically authorised insurers whether sold in that state or in other member states via branches or Freedom of Services (FoS).

It should be noted that the Irish Insurance Compensation Fund (ICF) is a host-based scheme.

In conclusion, while the provision of cross-border insurance is an essential part of the Single market, it is acknowledged that there are obvious difficulties which arise when an insurer fails. It is important therefore that EU supervisors properly and consistently supervise the insurers that they authorise, and that there is greater communications between supervisors across the EU about their respective companies conducting cross-border business.

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