2% levy to fund shortfall at Quinn

CONSUMERS WILL face a 2 per cent levy on all non-life and health insurance policies to help fund a €720 million shortfall at Quinn Insurance.

Details of the Insurance (Amendment) Bill 2011 were published yesterday, and will go before the Seanad tomorrow.

While about €720 million will be needed by the fund, some €280 million will be advanced by the exchequer in the fourth quarter of this year to meet the requirements of Quinn Insurance.

This money will be classified as a “financial transaction”, according to the Department of Finance, and will not affect the Government deficit.

The value of the Insurance Compensation Fundis about €40 million. It is envisaged that the levy, which will indirectly be charged to consumers through their insurance providers will raise about €65 million per year.

A similar levy was introduced in 1984 following the collapse of PMPA the previous year. At that time there was insufficient money in the fund to meet liabilities. A levy of 2 per cent was paid by all non-life insurers until the end of 1991. This was then reduced to 1 per cent for the following year.

The new Bill proposes a number of changes to the existing legislation. The main changes are that funding will only be available to firms who conduct a significant percentage of their business here, and the levy will not be applied to risks outside the State. It is intended that all stages of the Bill will be passed before the end of this month.