URGENT LEGISLATION putting €240 million of public funding in an insurance compensation fund for Quinn Insurance Ltd to allow it to be sold, has been introduced in the Dáil. The funds are required to meet the losses on the Quinn Insurance books.
Fianna Fáil finance spokesman Michael McGrath said the Bill was essentially putting “a charge of somewhere in excess of €700 million on policyholders, but in truth it is an open-ended commitment, because we don’t know for sure what the full extent of the losses are”. He said the levy would be imposed on ordinary policyholders right throughout the State, on all their insurance policies.
Richard Boyd Barrett of the United Left Alliance claimed there was “no provision in this Bill to go after the €200 million in personal wealth which Seán Quinn gave to his children, yet ordinary people will be carrying the can”. Given this situation, he said, it was “outrageous” to rush through such a complex Bill with far-reaching consequences, when it needed sufficient debate.
It would mean “ordinary policyholders having to bail out this failed entity which is tied up with Anglo Irish Bank bondholders” and the policyholders “will be forced to pay a significant levy for at least the next 10 years or so”.
Minister for Finance Michael Noonan said, however, that the Insurance (Amendment) Bill, amending the 1964 Act, had to be enacted quickly so the sale of the insurance group to Liberty Mutual Direct Insurance Co Ltd, a joint venture of Liberty Mutual and Anglo Irish Bank, could go ahead by October 4th. The administrators of the company will report to the High Court that day. High Court approval would be an “important milestone”, completing the sale of the company and ensuring that “the future of the workforce is secure”.
Mr Noonan said the court had to be satisfied that he would advance €200 million to the compensation fund, which only had €40 million remaining in it. The Central Bank recommended that level of funding was necessary, in order for the administrators of the company to “meet their financial obligations in the last quarter of this year”.
The Minister said that when the sale of the company was announced in April the administrators indicated that Quinn Insurance had losses of €905 million in 2009, due mainly to losses in Britain and a writedown in the value of assets. Further losses of €160 million for 2010 are expected. The administrators also estimated a compensation fund requirement of €600 million but the figure was revised upwards in recent weeks to €738 million because of an increase in outstanding claims.
Mr McGrath expressed his dissatisfaction with the handling of the Bill and the need to rush it through. He said the sale was announced in April but it was only on the eve of an important court date that the legislation was being introduced.
Sinn Féin finance spokesman Pearse Doherty was equally critical of the handling of the legislation and said that “when a Government attempts to railroad through legislation, you have to ask why is the parliamentary process being denied. Why isn’t there a proper time being allocated?”
He said the Seanad dealt with the Bill in just two days a fortnight ago and no Senators were able to “comment on or support” the Bill. “And when you consider the financial implications to the taxpayers and . . . policyholders across the State, this type of cavalier approach by yourself Minister . . . is simply outrageous.”
Debate on the Bill concludes today.
