Wednesday, 13 November 2019

Ceisteanna (44)

Brian Stanley

Ceist:

44. Deputy Brian Stanley asked the Minister for Finance when the car insurance premium levy will be terminated. [46265/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

At the outset, you should note that there are no plans to discontinue the existing insurance premium levies and contributions which are on both motor and non-motor insurance premiums. It is important to understand that these payments serve different purposes and some have been in place for some time: The levies and contributions are as follows:

The Motor Insurers Insolvency Compensation Fund (MIIC Fund) commenced on 1 December 2018 and was introduced by the Insurance Amendment Act 2018. This is a contribution equivalent to 2% of gross motor premiums and is being provided by motor insurers in order to finance the gap between what the ICF used pay to third party claimants (65%) and the amount which the Motor Insurers Bureau of Ireland pays in respect of victims of uninsured and untraceable drivers (100% of claim as general rule). This is not considered a levy as the decision rests with the insurance companies as to how they finance this contribution, i.e. either through absorbing it or passing it onto consumers.

The contribution rate is subject to an annual review by the Minister and may be varied between 0 and 3% depending on factors such as the amount held in the MIIC Fund and the likelihood of a call on that Fund. In a steady state, this contribution is likely to be required for a period of 8 to 9 years.

The second contribution that impacts motor premium is the Insurance Compensation Fund (ICF) levy. This levy was in place from 1984 to 1992 and was reintroduced in January 2012. It currently applies at a rate of 2% of all gross premium income and its purpose is to repay the Exchequer for funding the administration of Quinn Insurance. As there is still a significant amount owing to the State, the levy is likely to be applied for another 10 years or so. The balance on the loan provided by the Minister to the ICF was €800.6m at 31 December 2018.

Finally, the Deputy may wish to note that there is a stamp duty on non-life insurance premiums that was introduced in 1982. The rate of stamp duty when introduced was 1%, rising to 2% in 1993 and further increased to 3% in the 2009 Supplementary Budget. This stamp duty on non-life insurance premiums forms a part of general stamp duty receipts and is paid into the Central Fund along with other tax receipts.