Ceisteanna Eile - Other Questions

Insurance Industry

Michael McGrath


43. Deputy Michael McGrath asked the Minister for Finance when he plans to bring forward legislative changes that would oblige insurance companies to inform policyholders of claims made against them; the reason he has not brought forward legislation in its own right; and if he will make a statement on the matter. [17767/19]

Aindrias Moynihan


62. Deputy Aindrias Moynihan asked the Minister for Finance when he plans to introduce legislation to ensure motor insurance policyholders who have claims made against them are informed of claims against them before a settlement is made; and if he will make a statement on the matter. [17824/19]

This question is on a similar theme but on the previous point, if the guidelines are too loose they will be a waste of time. My advice to the Minister is that he should not go down that road.

With regard to some specific issues in the insurance area, what policyholders have found in many instances is that claims have been settled behind their back. They are often claims they did not even know had been made against them and their policy. That is simply not good enough. There have been cases where the policyholder felt they could successfully have defended those claims yet they have been settled because the insurance company did not want to take the risk of going to court. When will that specific issue be dealt with?

I propose to take Questions Nos. 43 and 62 together.

My Department is currently working on developing legislative changes that would oblige insurance companies to inform policyholders of claims made against them. The objective of the proposal is to ensure that policyholders are informed as soon as possible after a claim against their policy is lodged and informed after a claim is settled. In addition, the proposal will seek to require insurers to engage with the policyholder to ensure the policyholder’s views are taken into consideration.

The proposal originates from Recommendation 8 of the Report on the Cost of Motor Insurance. A corresponding recommendation was then included in the Report on the Cost of Employer and Public Liability Insurance, Recommendation 10, as this issue is generally far more relevant to businesses and other liability insurance policyholders than individual motorists. The proposal seeks to include within the scope of the changes small businesses which have an annual turnover of €3 million or less.

The Department engaged with Insurance Ireland to seek voluntary agreement of this proposal through a protocol. Unfortunately, no such agreement could be reached on a non-legislative basis.

As a result, it is proposed to include the legislative proposal within the Consumer Insurance Contracts Bill 2017, a Private Members’ Bill which is based on a 2015 Law Reform Commission report. The Government provided support in principle for the objectives of this Bill on Second Stage and noted the intention of the Minister for Finance to submit substantive amendments should the Bill reach Committee Stage.

This proposal is now being developed as a Committee Stage amendment, the specifics of which are dependent on approval from the Office of Parliamentary Counsel.

The reason the legislative changes are not being drafted as part of a new, separate Bill is because the Minister and I see the Consumer Insurance Contracts Bill as an ideal vehicle for addressing insurance consumer-related issues such as this from an efficiency and effectiveness perspective. In addition, as all parties have worked very constructively together on important insurance legislation such as the Insurance (Amendment) Act 2018, and the Central Bank (National Claims Information Database) Act 2018, I see no reason this constructive engagement cannot continue.

I would like the Minister of State to indicate who would not agree to provide for this on a non-legislative basis in order that policyholders might be told of claims made against their policies. That is so dispiriting. This recommendation dates back to January 2017 and Insurance Ireland was to have had a general protocol in place by the end of that year. This did not happen and then the next report referred to legislative change. If we cannot get to a point where insurance companies tell policyholders that claims have been made against them and ask them whether they have anything to say in that regard or any defence to put forward - and whether the company can see the evidence - then in what direction are we moving?

Policyholders are still not even told in their renewal notices what premiums they paid in the previous year. I got my car insurance quote recently and there was no information on what I paid last year. I had to contact the insurance company to check. That is a joke. We are talking about data and transparency, yet simple information that would allow consumers to make more informed and better decisions continues to be withheld from them. That is not good enough.

I will read the relevant section of the reply again; it is pretty clear. It states, "The Department engaged with Insurance Ireland to seek voluntary agreement of this proposal through a protocol. Unfortunately, no such agreement could be reached on a non-legislative basis." Insurance Ireland represents the main insurance companies. We were unable to agree on the recommendation from the motor report and the employer liability and public liability report. That is the answer to the question.

I thought it would be particularly easy for somebody to be able to see the quote from the previous year listed three or four lines above this year's quote. The Deputy heard me cite my own business as a dairy farmer, for which I have multiple insurance policies., and the fact that I am obliged to search the file from the previous year in order to find information on the premium I paid. This is the easiest and most transparent way to proceed, and it would cost nothing. However, we have to go through a certain process in this regard and it will be done within the next month.

That is pathetic. It has taken two and a half years for the most basic reform to be introduced in order that consumers will be informed, via their annual renewal notices, what they paid last year and what they are being asked to pay this year. It has taken that amount of time to have that level of basic information provided to consumers. I feel sorry for the Minister of State at times in trying to deal with this. It is a joke that it was not possible to reach agreement with the insurance industry on a protocol requiring its members to inform policyholders that claims were made against them and to inform them subsequently how those claims were dealt with, namely, whether they settled, the amount of the settlements involved and so on.

I am not afraid to call out the insurance industry either when I think it is wrong. It is depressing that such a simple reform could not be agreed on a voluntary basis and that we have to go down the road of legislating in order to give consumers the most basic information, to which they are entitled and should be provided as a matter of course.

This issue highlights the battle with the insurance industry. This is something that should be have been dealt with and should never have had to emerge in a report. That report has been in existence for two and a half years. This is about transparency. We will have the industry representatives before us again. One would swear butter would not melt in their mouths when they are sitting across from us at the committee, where they are all about transparency and are consumer-centric and all the rest. We have seen the cut of them. We have seen how they fought the Minister of State in this regard for the past two and a half years. The legislation I introduced passed Second Stage two years ago. I had a commitment from the person who was in the Minister of State's position previously that it would go through the committee in a matter of months. However, despite being designed to give consumers more rights vis-à-vis the insurance industry, the Bill has been stalled for two years due to the requirement for a money message from Government. That said, I am glad the Minister of State is going to use this legislation as a vehicle to deal with the issue. I was somewhat concerned when the Department put the legislation out for consultation last week, with a six-month window for said consultation.

It is six weeks.

Sorry, a six-week window. This means that it is unlikely the legislation will be before the committee prior to the summer recess. I am very disappointed with that because I thought we would be dealing with it straight after Easter.

I want to clarify that, in regard to the previous year's premium, when I came into this position, I was the one who was pursuing that. It has not been in train for 30 months but rather 15. That is how long it takes to get something through these processes in order to improve transparency for consumers.

I have not spared the insurance companies where I think they have not acted in a fair and reasonable manner towards their clients - their customers. These clients purchase products from those companies. It has been difficult on occasion to try to get improved transparency from the companies, and I have made that point before. As I see it, the biggest issue with the insurance companies is that the customer does not come first; he or she comes last. That is a terrible position for customers to find themselves in vis-à-vis the companies from which they purchase products. The consumer does not come first; the consumer comes last.

The Deputies will have seen that I have proposed the establishment of an insurance culture board similar to the Irish Banking Culture Board. It is something that badly needs to be reconfigured. On too many occasions, Irish consumers do not come first with the companies with which they contract. Without their customers, the insurance companies do not have a basis for their business.

NAMA Transactions

Mick Wallace


44. Deputy Mick Wallace asked the Minister for Finance if he has had discussions with NAMA officials or his officials with regard to the UN special rapporteur letter on Ireland which stated that 93% of NAMA assets have been sold to foreign investors; and if he will make a statement on the matter. [17801/19]

The question relates to the UN special rapporteur's letter on Ireland which states that 93% of NAMA assets have been sold to foreign investors. I am not sure where the UN rapporteur got his figures but I would expect NAMA to know exactly how much it has sold and to whom. It appears that this is not the case. In a press release last week, NAMA stated that 69% of its asset sales went to Irish companies but, last November, NAMA told the Committee of Public Accounts that 69% of its assets were sold to foreign companies. The Minister might be able to provide a definitive answer.

I am advised that the formal response to the UN joint communication relating to housing will be delivered by the Tánaiste in early May and that input for this response is currently being gathered, including in my Department.

In the context of the UN communication relating to NAMA, I wish to clarify a number of points.  First, I am advised that the reference to a figure of 93% in the letter refers to loan sales only and does not include sales of property assets securing NAMA’s loans. To date, in excess of two thirds of NAMA disposals have been sales of property assets or refinancing arrangements. Therefore, loan sales relate to less than one third of NAMA disposals. As regards the purchaser profile of Irish properties sold by NAMA debtors and receivers, I am advised that almost 70% of the purchasers were Irish.

Second, the sale of loans by NAMA does not result in a change in the ownership of the underlying properties. This means that the purchaser of the loans does not become a property owner or a landlord; rather, that individual or entity becomes a secured creditor. The registered owner, be they Irish or foreign, retains ownership of the secured property.

Third, foreign assets have accounted for approximately 45% of the assets included as collateral for loan sales undertaken by NAMA. Thus, it is incorrect to infer that loans purchased by foreign investors are secured by Irish assets only. I can assure the Deputy all those points will be made to the UN.

There is a play on language here. Of the €74 billion that went into NAMA, what percentage ended up with foreign entities? The Committee of Public Accounts report into Project Eagle from 2016 showed that NAMA had sold 20% of its entire debt of €74 billion to one company, Cerberus.

This works out at €14.5 billion, whether one calls it loans or assets. This included Project Eagle, Project Arrow, Project Gem and Project Shift. I will not go into the fact Project Gem and Project Arrow were sold to Cerberus after the Project Eagle debacle surfaced and were sold at knockdown prices.

Can the Minister defend the agency selling a fifth of its entire portfolio to one vulture fund? I would expect NAMA to know to whom it sold its loans and assets. There appears to be some discrepancy in its statements, although the Minister may disagree with me on that.

Under section 172 of the National Asset Management Agency Act, a person who is a debtor or debtor-connected party, in relation to an acquired bank asset, is prohibited from acquiring from NAMA any acquired bank assets in relation to which default has occurred. Is the Minister concerned that the Project Nantes loan sale, which I raised with him before, is an example of this? NAMA was not aware that the purchaser, Clairvue, was based in Luxembourg nor was it aware that purchaser and the debtor, Avestus, share a director. It had to go back and investigate because it never verified its original section 172 declarations.

The figures I have shared with the Deputy are figures that have been shared with me by NAMA and put into a different light the statement made by the United Nations on the operation of NAMA. By sharing this information with the Tánaiste, I have no doubt at all that these perspectives will be shared with the UN in response to the communication that it has issued.

The Deputy referred to a number of specific matters on the operation of NAMA and I want to tell him that despite our difference in views on the matter, I am fully satisfied that NAMA has acted in accordance with its mandate on the disposal of its assets. The Deputy will be aware of the different pieces of work that are under way on the operation of NAMA and I await their outcome. I remain satisfied in the matters that have been raised with me that NAMA has operated in line with its mandate.

Some €352 million was owed on the Avestus assets and it got them back through a shell company based in Luxembourg for €26 million. How can the Minister stand over this?

On a different issue, the Minister might be aware of a recent case in the United States involving a NAMA debtor versus NAMA and the National Asset Loan Management, NALM, it was argued by NAMA that NALM was a sovereign and, therefore, subject to the foreign sovereign immunity Act, which prevents lawsuits been brought against other countries. The US Court accepted NAMA's argument that NALM was a foreign sovereign but this is now being challenged.

As the Minister is aware, NALM is a private company. The Minister's Department has indicated to the IMF, the World Bank, the ECB and EUROSTAT that NALM is 51% privately-owned, which was done to get around the state aid rule. I am checking if the Minister's Department has any involvement in the US court case or if he is concerned that NALM is being portrayed as a State entity, when it is a private entity, of which the Government made sure.

I am not involved in the detail or decisions that are made in individual court cases. The Deputy will be aware as to how NAMA has been set up. I am responsible for setting its mandate and for influencing and setting the objectives it wants to fulfil but it has independence as to how it goes about that. That firewall is also in place to ensure that it is able to fulfil its mandate in a proper way, which is what it is doing.

I am not aware of the detail of the individual American court case the Deputy referred to but I will get some information in relation to it.

The Deputy always raises matters like this because of his interest in the common good and public interest. I note his decision not to use any posters in the European Parliament elections and I wish him good luck in his efforts in the coming weeks.

Tax Code

Joan Burton


45. Deputy Joan Burton asked the Minister for Finance if he has examined the recent report by the Committee on Budgetary Oversight in relation to tax expenditures and the estimated cost that revenue forgone could be as much as €10 billion to €15 billion per annum; his plans to implement the recommendations of the committee in respect of same; and if he will make a statement on the matter. [17826/19]

I hope the Minister will convey the good wishes he conveyed to Deputy Wallace with other Deputies and parties who may be contesting the European and local elections.

My question relates to the recently published report by the Committee on Budgetary Oversight. Evidence given by Professor Micheál Collins from UCD suggested that tax expenditures could be costing the State between €5 billion and as much as €10 billion to €15 billion per annum. Is the Minister aware that more than 80% of these tax reliefs, once put into effect, have no sunset clauses? Some 23% of these reliefs have never been reviewed.

I am aware of the Committee on Budgetary Oversight's work in the area of tax expenditures, and the publication of a report on the topic earlier this month. The committee met with representatives of my Department and Revenue in January 2019. It also met separately with the Parliamentary Budget Office, and with the economist, Dr. Micheál Collins from the school of social policy in UCD.

The Committee on Budgetary Oversight report acknowledges that estimates of revenue forgone can be different due to different definitions of what is included in tax expenditure. The figures of €10 billion to €15 billion of revenue forgone quoted in the Deputy’s question is from the opening statement to the committee by Dr. Micheál Collins. The Parliamentary Budget Office aggregate cost estimate is in the region of €5 billion based on the Department of Finance's classification which is narrower and is aligned with an OECD’s definition of tax expenditure.

The work on tax expenditures review is a continuous process. The 2017 tax strategy group paper on the topic noted that significant advances have been made in the analysis of tax expenditures. Therefore, in the Department’s 2014 tax expenditure guidelines, a comprehensive analytical process for evaluations and ex-ante evaluations of proposed new tax incentives were put in place.

With regards to the eight recommendations made in the report by the committee, these are currently being considered by my Department and by the Revenue Commissioners.

The essence of a tax expenditure, tax incentive, a tax break or whatever one wants to call it is that it is provided to incentivise individual taxpayers, companies or others to do certain things, create certain activities and generate economic activity. It is genuinely shocking that there are no sunset clauses. At a minimum, we should try to address an approach this where as companies grow and develop, they contribute their proper share of tax contribution to the Exchequer.

It is important that tax expenditure should be reviewed. The research and development tax credit is a case in point. We know it was intended for a certain type of activity but we have not had sufficient analysis done to find out who and how the country are benefitting from it. I have put forward a Private Members' Bill to create a standing commission which would constantly look at tax breaks.

It is worthwhile acknowledging that all tax expenditures that have been commenced since 2014 have been subject to sunset clauses. Since that point in time, we have brought in the requirement the Deputy is referring to. In the last four annual reviews done via the tax strategy groups, we have looked at different elements of tax expenditures. In the 2018 report, for example, we included reviews of the employment and investment initiative, agri-tax, help-to-buy, the film relief and start-up relief for businesses. Each year, as we move through our tax strategy group process, we have looked at various tax expenditures.

As the Deputy may be aware, we are currently in the process of doing that for the research and development tax credit. Each initiative brought forward since 2014 has had a sunset clause. The most recent change made by me in the last budget on the tax credit for the film industry was also sunsetted.

That is information that the Minister and his Department did not communicate to the Committee on Budgetary Oversight. The essence of the problem is that these kinds of tax breaks, where merited, can be extremely useful in generating economic activity and employment, especially in regions or parts of the country that need employment. We know many parts of the country are not getting the employment bonus that they should be getting which is evident in the big cities and towns. I am at a loss to understand why the Minister, the Department of Finance and indeed the Revenue Commissioners should be so reluctant to provide detailed information so that each year, three years or four years we can make decisions on which have outlived their usefulness and which deserve to be continued and if there are cases for new measures.

I will afford Deputy Pearse Doherty a short supplementary.

I want to focus on one issue of tax forgoing, which is vulture funds in the State buying up billions of euro of assets in the form of individual mortgages and business loans and putting them in structures which are tax-exempt. The Minister is well aware that the vultures are setting up special purpose vehicles under section 110 which means that they pay no tax on the multi-billion euro assets that they hold in the form of Irish mortgages. It is a scandal that they are being sold in the first place but the fact that they are paying no tax on it is another scandal. The Taoiseach said in response to our questions that he would look at this issue. Will the Minister confirm to the House that this will be blocked and not allowed to continue after the Finance Bill this year?

In response to Deputy Burton, I am sure that the information I have shared in the House was shared with the Committee on Budgetary Oversight.

As I have indicated over the last number of years, we have already looked to review tax expenditure. I thought a good example of that was the work that we did with the film industry. While we might have had different views on the outcome of that review, I do not recall anybody criticising the content of the review or the way that it was being done.

In response to Deputy Doherty's question, as the Deputy will no doubt remember from the debate on the Finance Bill, I committed to reviewing these matters in the context of the tax strategy group process and the papers that it will produce before the summer. I explained the issue that we have with timing and that if we do it as part of the tax strategy group, by that point we will have a full set of data on tax returns from that part of our economy. I will deliver against that commitment and that will inform choices that I may or may not make later in the year.

Mortgage Arrears Proposals

Bernard Durkan


46. Deputy Bernard J. Durkan asked the Minister for Finance the steps which can be taken to encourage lenders, directly or through the medium of the Central Bank, when dealing with borrowers in arrears to take into account the willingness of the borrowers to make reasonable repayments in line with their circumstances rather than liquidation, particularly in circumstances in which the family home or small business is concerned; and if he will make a statement on the matter. [17798/19]

This question seeks to ascertain the extent to which the Minister, whether directly or through the aegis of the Central Bank, can influence the manner in which borrowers in arrears are treated, especially where the borrowers are making realistic payments.

As the Deputy will be aware, within the remit of the Central Bank's responsibilities for safeguarding stability and protecting consumers, its approach to mortgage arrears resolution is focused on ensuring the fair treatment of borrowers through a strong consumer protection framework and ensuring that lenders have appropriate arrears resolution strategies and operations in place.

There are clear steps outlined for lenders and how they engage with borrowers in the statutory code of conduct on mortgage arrears, CCMA, that forms part of the Central Bank's consumer protection measures.  There are clear steps for consumer protection, aimed specifically at the process to be followed by relevant firms, to ensure borrowers in arrears or pre-arrears in respect of a mortgage loan are treated in a timely, transparent and fair manner. Banks, retail credit firms and credit servicing firms are all required to comply with the CCMA.  There are regulations for firms lending to small and medium enterprises which regulated lenders have been required to comply with since 1 July 2016 and in the case of credit unions from 1 January 2017.

I further seek to ascertain whether it might be timely to visit again the manner in which all borrowers are being treated. There is a vast difference between those who refuse to make any payment and those who are struggling to make payments but are achieving reasonable results. Some lending institutions are surreptitiously offering the properties for sale under the counter. This is not obviously advertised and it puts the borrowers in a very sensitive position, especially at a time when approximately 30,000 borrowers, homeowners and small businesses are the subject of this conversation. I ask the Minister to ensure that the lenders actually do what they say they are doing.

We keep this matter under review all the times. As the Deputy will be aware, every quarter we publish all of the different information on the performance of mortgages and how the issue of non-payment of arrears is dealt with. I regularly meet the banks at CEO and chairperson level and I raise these issues at each of these meetings. The Deputy will know that we are making and have made progress with regard to restructuring agreements and that by the end of the fourth quarter of last year, we saw a further 4,251 new restructuring arrangements put in place, bringing the total number of these structures agreed in 2018 alone up to 22,171 restructures. That shows the degree to which these kinds of arrangements are being used to deal with the issues that the Deputy is referring to. I will continue to look at the framework we have in place to ensure that it gets the balance right between treating our citizens fairly and ensuring that we have a banking sector that can meet the needs of all citizens and our economy.

I appreciate the extent of the role and the position that the Minister must have in this situation. However, I am a little concerned, having dealt with many such cases, that the lenders do not always tell the full and true story. I find that, wrapped up in the statistics, can be a multitude of stories which ultimately boil down to individual families and households losing their small businesses or homes and finding themselves thrust out into the marketplace where there is a very severe shortage of housing. As a result, the question that arises is that, when borrowers are making payments in line with their ability today as opposed to their ability a number of years ago, could a special arrangement be entered into or consideration given to such a special arrangement to facilitate this?

I will facilitate a brief question from Deputy Pearse Doherty.

The Minister obviously does not know what is happening under his nose. Ulster Bank sold a portfolio of more than 2,000 buy-to-lets to Promontoria Scariff. Cabot is administering them. It is appointing a receiver to all of those properties. It is telling them to clear the arrears within 30 days or a fixed asset receiver will be appointed. That means they are taking the asset whether there is negative equity or positive equity. They are not facilitating any arrangements. All of these tenants in these assets will get a notice to quit. This has happened because of the Minister's policy of rolling out the red carpet to the vultures. They can do this because nothing can be legally done to prevent them from doing it. That is happening right now.

Deputy Burton can ask a brief supplementary.

Permanent TSB is getting ready, in April and May, to transfer its mortgages to a vehicle that it has sold them to. Like the circumstances that Deputy Durkan is outlining, many families are terrified that they will be forced out of the home on which they are paying three quarters or more of the old mortgage, when it was taken out in 2003 or 2005, at the height of the boom, at very high cost prices. The Minister has to step in to look after these families.

I am well aware of what is happening, as Deputy Doherty put it, underneath my nose. I am aware of the number of mortgages that have been successfully restructured.

The number of mortgages in arrears is declining but citizens still face challenges if they find they are in arrears and are worried about their future. This is why we have organisations like Abhaile and the Insolvency Service of Ireland, which has been successful in ensuring that the majority of citizens who find themselves in difficulties stay in their homes. Very few Deputies refer to these when we are acknowledging the difficulties that exist and I rarely hear recognition of the progress that has been made, nor of the protections that are in place.

In respect of loan book sales, I do not have a role to influence or direct banks on how they manage their commercial operations but I have a responsibility to make sure protections are in place for citizens who find themselves in difficult situations. The figures I have shared with the House show how those regulations are working

What about Cabot Ireland and the thousands of people who are going to be evicted?

Pension Provisions

Aindrias Moynihan


47. Deputy Aindrias Moynihan asked the Minister for Finance his plans to deal with the issue of private pension schemes which are not paying cost of living increases in circumstances in which the recipient is entitled to same; if his attention has been drawn to the fact that many policies may be affected like this in the future; and if he will make a statement on the matter. [17823/19]

There is an expectation among pensioners of a bigger pension but because of Revenue rules, a restriction has been put on the 5% escalators in certain policies. How will the Minister ensure people get the pension increase they were expecting?

I am advised by Revenue that it is aware that a number of pension providers are not paying out the full yearly increases on a number of policies known as "5% escalators".  These are pension policies where the provider has agreed that the amount of the pension paid out will be increased by a certain percentage on an annual basis. The legislation governing the tax treatment of pensions is contained in Part 30 of, and Schedules 23 to 23C to, the Taxes Consolidation Act 1997. In addition, the Revenue pensions manual gives general guidance on, among other things, how this legislation is to be applied.

Revenue rules in relation to policies such as these escalators allow that guaranteed increases of a pension in payment may be made if within the following limits: a fixed increase of not more than 3% per annum compound; or an increase linked to the consumer price index or another similar agreed index. The rules in question have been in existence for many years and their purpose is to maintain the real value of pension payments. Consequently, these rules allow for the real value of pensions in payment to be maintained over the course of a pensioner’s lifetime.

Having made inquiries, Revenue has identified that there are around 1,000 of these 5% escalator policies in total in Ireland and that payments have been restricted in around 160 of these policies.  This matter will be raised by Revenue in the course of its meeting with the insurance industry representative body, Insurance Ireland, which is arranged for later this month. Revenue has advised me that it is considering a number of options to address the issue, including changes that may be needed to their pensions manual to ensure policyholders receive the full benefits to which they are entitled.  I have been assured that any changes that may be required will cover all policyholders that are or may be affected.

Over many years, the State has encouraged people to make provision for their own pension. People need to have confidence that the system will deliver for them in respect of their pensions but mixed messages have been sent here and restrictions have been put in. I understand from the Minister that there is a move to take action, and that is important, but will that action deal only with existing pensions? Will it pay back what has been restricted? How confident is the Minister on his estimation of "around 1,000" such cases? We know that one in seven is restricted. Are there a total of 1,000 or might there be many others which have not been discovered yet? We also need to know how quickly people will get the increased pension which they were expecting and for which they had paid.

I am very confident about the figure as it was given to me by the Revenue Commissioners on foot of the Deputy's question. It affects around 160 policies overall. I cannot predetermine what the outcome will be of the engagement which the Revenue Commissioners will have with Insurance Ireland. Any changes that might be made are a matter for the Revenue Commissioners and this might lead to a change in the Revenue pensions manual. I am aware of the matter, as are the Revenue Commissioners, which is why they are meeting Insurance Ireland later this month. I will update the Deputy as to the outcome of that meeting and whether any relevant next steps emerge.

It is good that those moves are being taken. Is there a timeline for when the changes will be made to the manual? Will the Minister be able to direct that the money will be paid in respect of pensions that have already been restricted and that it will not be just new pensions? People have paid into their pensions but they have been restricted and they should be able to get their money back.

I never said any changes would be made because that is a matter for the Revenue Commissioners and it depends on their interpretation of law. If they approach me to say they believe changes are needed in law, or that they require my assistance with something, I will consider it very carefully. The question of whether a pension will be paid retrospectively is a matter for the pension companies themselves and I do not have a role in directing them to do or not to do something. It is first and foremost a matter for the Revenue Commissioners and a meeting will take place on this matter with representative bodies in the next couple of weeks.

Question No. 48 replied to with Written Answers.

Insurance Industry

I will facilitate the next question on the basis that there will be no introduction, a short response and one supplementary question.

Michael McGrath


49. Deputy Michael McGrath asked the Minister for Finance the number of persons who had latent defect insurance with a company (details supplied) who have obtained alternative insurance; and if he will make a statement on the matter. [17768/19]

The Deputy should note that neither my Department nor the Central Bank has information on the number of persons who had latent defect insurance with the now bankrupt Danish insurer, Alpha, and who have since organised alternative insurance. The private and commercial nature of these arrangements means that such information is not publicly available.  

In a recent parliamentary question response to the Deputy, I indicated that my officials would contact BCR Legal Group and the Danish insolvency administrator to seek further information in relation to policyholders in Ireland affected by the liquidation of Alpha. In response, my Department has been informed that BCR Legal Group figures show that there were 1,588 policies sold to developers in respect of properties in Ireland. Of these, 1,147 certificates were issued to developers for passing onto homeowners once the properties were sold.

BCR also informed my Department that it is exploring the possibility of the transfer of UK-issued Alpha policies to a new insurer under the UK financial services compensation scheme, FSCS. It should be noted that the insurance compensation fund, ICF, does not cater for such a situation under the Insurance Act 1964, as amended. However, even more relevant is that even if the ICF did facilitate such a scenario, my understanding is that given the nature of this business, it is likely there would be considerable practical difficulties with another insurer providing this cover retrospectively.

Additional information not given on the floor of the House

The background to this case, as the Deputy is aware, is that the Danish Financial Supervisory Authority, Danish FSA, on 7 March 2018 notified the Central Bank that it had ordered Alpha Insurance A/S, Alpha, to cease writing new business, including renewal of existing contracts and business, with immediate effect. It further advised the Central Bank on 9 May 2018 that the liquidators of the insurance company Alpha had filed a petition for bankruptcy. As Alpha was a Danish-based insurance firm, and therefore subject to prudential supervision by the Danish FSA, the Central Bank had no role in this decision.  Alpha was selling non-life insurance policies in Ireland through the broker network on a freedom-of-services basis and it also operated in Denmark, France, Germany, Greece, Italy, Norway, Spain and the United Kingdom. According to the information for Irish policyholders, published on Alpha’s website, https://alphagroup.dk, on 26 June 2018, the insolvency estate commenced the distribution of information notices to all policyholders and claimants of Alpha in bankruptcy in Ireland. The information notice contains information on the termination of insurance policies, the Danish guarantee fund for claimants owed money, information regarding the reporting of claims to the insolvency estate and the procedure for reporting new claims.

The claims handler for Alpha in Ireland and the UK, BCR Legal Group, confirmed to the Central Bank that its representative, CRL, wrote to the developers who had purchased these latent defects policies, on two occasions. The purpose was to advise that Alpha had been placed in bankruptcy, that polices would be cancelled from 11 August 2018, and to request details of the owner of the properties insured under these policies. BCR subsequently wrote to all homeowners affected by the liquidation of Alpha following receipt of their details from the developers to advise that, as Alpha had gone into liquidation, its latent defects policies had been terminated and that they should consider replacing this policy. BCR also provided these homeowners with an information sheet from the liquidators.

This relates to the collapse of Alpha Insurance, a Danish regulated firm, in May 2018. The key concern relates to approximately 1,600 households which had latent defect insurance in place with the company, in policies which lapsed in August 2018 as a result of the collapse of the company. I am seeking to establish what the position is for those people. I understand that they were notified that their policy had lapsed and I do not believe it is possible for individual households to take out a new, similar policy. If the Minister would write to me in respect of the outcome of the contact he had with the company to which he referred, namely, BCR, I would be satisfied with that.

Sitting suspended at 12 noon and resumed at 2 p.m.