The Central Bank has announced that it is to conduct an inquiry into suspected contraventions of insurance regulations by former management of Quinn Insurance Limited(QIL) which was placed into administration in 2010.
An investigation conducted by the Central Bank under its administrative sanctions procedure determined that there was “reasonable grounds” to suspect that “ certain persons who were concerned in the management of Quinn Insurance participated in the commission of a suspected prescribed contravention” of EU non-life insurance regulations.
It said that an inquiry will now be held by the Central Bank “ to establish whether the persons who were concerned in the management of QIL participated in the above mentioned suspected prescribed contravention.”
Under legislation, the Central Bank first looks into these issues before launching a formal inquiry. The type of alleged breach involved in the case is not specified. A prescribed contravention could include a legislative breach or a breach of a requirement imposed by the regulator.
In February 2013 the Central Bank entered an agreement with Quinn Insurance in relation to a finding that it had failed between October 2005 and March 2010 to maintain adequate solvency margins and had insufficient internal control mechanisms. A fine of €5 million was imposed but the financial penalty was waived as by then the firm was in administration.
The fine followed the discovery of a massive financial hole in the firm’s accounts, estimated to have run to €830 million by the end of 2009, partly related to guarantees given to other parts of the former business empire of businessman Sean Quinn.
A levy was placed on all insurance policies to fund the shortfall following the collapse of the company. The Quinn Insurance business was subsequently taken over by Liberty Insurance.
