I welcome the opportunity to comment on the Bill. As previous speakers have alluded to, the UK is due to leave the EU at the end of next month. We do not know how or under what conditions it will leave. This Bill is a product of that uncertainty. It is prudent legislation, which I hope will never be used, but hope is not a strategy upon which the Government can rely. As Minister of State with responsibility for financial services and insurance, the topic of Brexit is raised at every meeting I attend. The uncertainty surrounding the type of Brexit there will be is impacting on businesses and their investment decisions not just in the UK, but here in Ireland. A number of issues are repeated along with a number of problems Brexit poses in respect of insurance from a financial services perspective.
Contract continuity is the main risk posed in respect of insurance from a financial services perspective. In the absence of a political agreement between the EU and the UK, UK insurers will no longer be able to write new business in Ireland on freedom of service or freedom of establishment bases and will not have the authority to continue to service contracts that were concluded prior to the Brexit decision. In a worst-case scenario, this could mean that an insurer could not, or would not, pay claims or benefits under existing policies. This issue will impact some member states more than others but, given the substantial volume of cross-border insurance business between Ireland and the UK, it is important that we take the necessary steps to protect Irish policyholders through the proposed legislation for a temporary run-off regime. The Department of Finance and the Central Bank of Ireland have been working closely over recent months to come up with a solution to the issue addressed in this legislation. The Central Bank has also engaged with the European Insurance and Occupational Pensions Authority, EIOPA, to assess Brexit-related risks and mitigation as well as issues relating to ongoing supervisory co-operation.
With regard to the impact of Brexit, the decision of the UK to exit the EU undoubtedly poses challenges for the Irish insurance market given the level of cross-border insurance business. This will be the case no matter the outcome of negotiations on the UK's withdrawal from the EU. Regarding general liability insurance, including employer and public liability insurance in particular, I understand that the majority of the main non-life insurers operating in Ireland also write this type of business. In this regard, the Central Bank of Ireland has advised that in 2017 40% of the domestic Irish liability market was provided by UK-authorised insurers, with one large UK insurer accounting for 22% of the total liability exposure. The Central Bank notes that this insurer has implemented its Brexit plan for both new and existing business. The majority of undertakings providing liability insurance have developed and are progressing and implementing Brexit plans on time for 29 March. As liability insurance is a commercial insurance product, the Central Bank expects that insurance brokers will review the capacity of the insurance market and ensure their commercial clients are provided with products from insurers suitable to match their needs.
The impact of Brexit on the provision of insurance will not be that significant. Of much more importance to the general health of the sector is the need to address the high level of awards for soft tissue injuries in line with the recommendations of the Personal Injuries Commission, PIC.
The Government strategy to develop the international financial services sector, IFS2020, was launched in 2015. That plan was based on the 2009 plan, so the plan has stood for the greater part of a decade. Since May 2018, officials in the Department of Finance and I have completed a substantial body of work to prepare a successor to the current strategy for the development of the international financial services sector as IFS2020 is now in its final year. I expect the work will be concluded and a proposal brought to Government in the coming weeks. I hope and anticipate that strategy will move through the Government processes before the end of March.
The growth in the sector arising from IFS2020 has not been limited to Dublin. More than a third of jobs are located in other areas of the country. The sector has a significant presence in a number of regional locations, including Cavan, Clare, Cork, Drogheda, Dundalk, Galway, Kerry, Kilkenny, Letterkenny, Leitrim, Limerick, Sligo, Tipperary, Waterford, Wexford and Wicklow. A number of international financial services companies have chosen to build centres of excellence in regional locations in Ireland, taking advantage of the opportunities afforded by the higher staff retention rates associated with operations located outside Dublin.
I want to touch upon the new strategy because it will be important for the future. The crossover between Ireland and the UK in the area of financial services is enormous. The primary area in which international financial services are based is in funds. There are €4.4 trillion worth of funds under administration in Ireland . There is a lot of co-operation between Ireland and the UK. Without this legislation, this sector is at risk. Sectors operating in Ireland include aircraft leasing, financial technology, sustainable green finance, banking and payments, and other sectors. Considering moves in technology, it is really important that we ensure the sector is on a strong footing to be able to continue trading with our closest partner, the UK. The crossover is enormous.
The new strategy has four primary themes. One is communications and promotion. We have not been as good in this area as perhaps we should be. To some extent we have allowed others to pass us out because we have not focused ourselves in this sector.
The talent pool for the financial sector based in Ireland is second to none. That is not only my opinion. On every occasion I meet senior executives from outside of the country they always highlight the standard of staff available. This staff is very diverse. Many do not come from Ireland. A large percentage, though not a majority, are from outside of Ireland. The statistic I use is that at the time of the latest census one person in six was not born here. The figure for those working in the international financial services sector is much higher than that.
The operating environment will be crucial. That is why this legislation is so important. We have to put the correct operating environment in place for what will happen after Brexit. I have highlighted some of the sectors that are important, but new sectors based on new technologies will also develop. The payments sector in Ireland is enormous and getting bigger every year. We have to make sure that we can continue with the crossover of talent between the UK and Ireland. The common travel area agreement is hugely beneficial in that regard. Ireland will be the only country able to hire people from the EU 27 and from the UK because of the common travel area agreement that goes back to the Anglo-Irish agreement of 1921.
The final primary area is the area of innovation and technology. We cannot ignore the opportunities, but it is even more important that we do not ignore the challenges that technology could pose. It is difficult to put a figure on it for each sector, but it is said that technology could cost one third of the jobs in some sectors. I do not believe the proportion will be that high in financial services, but it will be high. We want to make sure that the staff who are there continue in the sector and continue retraining.
There are also horizontals across those areas. One such horizontal is regionalisation, upon which I have touched. We are determined to continue developing jobs outside County Dublin. Everybody thinks that all of the financial services sector is based in the docks on the River Liffey; it is not. It is also based outside County Dublin.
Sustainable green finance is an enormous area now and into the future. The way we deploy capital cannot be done through only one stream. It will require private equity, borrowing, funds investment as well as Government funding and funding from the multilateral banks. There will be a blending of all those streams for the deployment of private capital.
The final sector is diversity and trying to ensure we have a higher diversity of not only males and females, which needs to be improved, but also in the space of people from different jurisdictions, continents, ethnicities and people with different sexualities because that reduces the group thinking in the sector. All of this will be contingent upon ensuring we have a good trading relationship with our closest trading partner in financial services. Without this Bill, there could be consequences that could cost many jobs.