Dáil Éireann Debate, Tuesday - 18 May 2010
168 Deputy James Reilly asked the Minister for Finance the solvency reserves of each of the health insurers here; if each of them meet the Financial Regulator’s requirements; and if he will make a statement on the matter. [20026/10]
Amharc ar fhreagra169 Deputy James Reilly asked the Minister for Finance the reason the required solvency reserves for health insurers in the market here is higher than the required solvency reserves for health insurers elsewhere in European Union market; and if he will make a statement on the matter. [20027/10]
Amharc ar fhreagra189 Deputy Caoimhghín Ó Caoláin asked the Minister for Finance the reason the State maintains an insurance sector solvency threshold far in excess of that required by the European Union; if this threshold applies to all insurance companies performing in the Irish market, both indigenous and foreign-based; if not, the names of the companies to which it applies; his plans to bring the Irish requirement into line with that of the European Union; and if he will make a statement on the matter. [20407/10]
Amharc ar fhreagraI propose to answer Questions Nos. 168, 169 and 189 together.
The Financial Regulator has informed me that the solvency margin calculation set out under the EC Directives determines the minimum acceptable requirement. In practice, in common with the Financial Regulator in Ireland, most EU supervisory authorities insist on solvency being maintained above this minimum requirement, as this allows for supervisory authorities to intervene before a company breaches the minimum requirement of 100% and becomes technically insolvent.
The application of higher solvency requirements than the minimum also reflects the fact that the existing Solvency regime (Solvency 1) is not sufficiently risk based. This explains why a new insurance directive on solvency requirements has been agreed (Solvency II) which will come into force from 1 January 2013. This regime will harmonise solvency requirements for all insurance companies across the EU.
The Financial Regulator has also advised my Department that it does not draw a distinction between health insurance and other types of general insurance as the solvency requirements for all non-life insurance companies are the same. Under the conditions of authorisation imposed by the Financial Regulator, all insurance companies must maintain a solvency margin of 200% of the EU minimum requirement for their first three years of operation due to the fact that the risk of financial difficulties arising is higher during this period. After three years they can apply to have the requirements reduced to 150% of the EU minimum requirement. This is the case for all Irish-authorised insurance undertakings.
Finally, in relation to the specific solvency reserves of individual insurers, this information is not in the public domain due to its commercially sensitive nature.
