Dáil Éireann díospóireacht -
Tuesday, 3 Jul 2001

Vol. 540 No. 1

Written Answers. - Insurance Industry.

Seán Haughey

Ceist:

137 Mr. Haughey asked the Tánaiste and Minister for Enterprise, Trade and Employment if an insurance company (details supplied) in Dublin 2 has a licence to operate; if her attention has been drawn to the fact that this company has gone into liquidation causing financial losses and inconvenience for many businesses; if she will support this company or compensate these businesses; and if she will make a statement on the matter. [19680/01]

John Bruton

Ceist:

151 Mr. J. Bruton asked the Tánaiste and Minister for Enterprise, Trade and Employment the initiatives the Government is putting in place following the liquidation of a company (details supplied) in Dublin 2; and if she will make a statement on the matter. [20041/01]

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

I propose to take Questions Nos. 137 and 151 together.

The Tánaiste and I have been following very closely developments in relation to Independent Insurance Company Limited (IICL), a UK insurer which went into voluntary liquidation on 18 June last, with particular focus on the immediate implications for Irish policyholders and claimants. We are also concerned at the broader implications for the effective operation of the European Single Market in insurance. Contact is being maintained with the UK authorities and with the EU Commission, as well as with the provisional liquidators, PricewaterhouseCoopers, the Irish Insurance Federation and the Irish Brokers' Association.

Under the rules of the European Single Market, responsibility for financial supervision of the company's operations throughout the European Economic Area (EEA) lies with the UK authorities. The main objective of the EU system of financial supervision of insurance companies is to protect policyholders while giving them access to insurance cover from supervised companies in all EEA member states.

The treatment of policyholders as creditors of a failed insurer is determined by the laws of the home member state, in this case the United Kingdom. UK insolvency law treats all policyholders as unsecured creditors. It will not be clear for some time the extent to which the liquidators of IICL will be able to meet claims from the creditors of IICL, including policyholders. It appears likely that claims will not be met in full.

The UK Policyholder Protection Act provides, subject to certain limitations, that compensation be paid to individual policyholders in the event of a company failure. Corporate policyholders are compensated only in respect of compulsory insurance. Our officials are seeking to clarify whether any policies issued to Irish policyholders will meet the qualifying criteria for protection.