Treacy responds to IBEC statement on the liquidation of Independent Insurance Company Ltd in the UK

Minister for Science, Technology and Commerce Noel Treacy this evening (Wednesday 11 July, 2001) rejected criticisms by the employers’ organisation IBEC of the Government’s response to the collapse in the UK of Independent Insurance.

Minister Treacy, who met representatives of IBEC, the Small Firms Association and the Construction Industry Federation today said "It is important to remember that Independent Insurance is regulated by the UK authorities and that the regulatory authorities in Ireland here had no role in monitoring its financial solvency. Nevertheless, given the impact of the company’s liquidation on Irish policyholders, my Department has maintained close communication in recent weeks with the UK authorities, the Irish Insurance Federation and the European Commission with a view to establishing the precise implications of the closure."

In response to IBEC’s call for the appointment of an administrator to act on behalf of interested parties in discussions with the liquidator, Minister Treacy said "An administrator appointed by the Government would have no standing in relation to the liquidation process now underway in London. Nor would such a person have access to necessary legal documentation. However, creditors do have standing and are free to organise their representation in the liquidation, as they see fit."

Minister Treacy went on to explain that the Insurance Compensation Fund, which was established by legislation in 1964 can only be used in the event of a liquidation carried out by the Irish High Court in respect of an Irish-authorised insurer. It cannot therefore be used in the case of Independent Insurance. The Fund, which is administered by the High Court, was financed between 1984 and 1992 by means of a levy designed to cover the costs of the administration of the PMPA.

Minister Treacy continued "the current 2% levy is for general taxation, to broaden the tax base and in particular to reduce the burden on income tax. It is therefore not available for the purposes proposed by IBEC."

"While I fully endorse the need for competition, the issue of the cost of insurance is not simply a matter of competition. The incidence of claims and the high cost of settling claims and particularly personal injury claims, is a significant factor in the cost of cover. The Second Report of the Special Working Group on a Personal Injuries Tribunal did confirm, however, that the costs of delivering compensation were very high in Ireland, varying from 25% to 40% of the total cost of settling the claim. Accordingly, the Government has decided to establish a Personal Injuries Assessment Board with a view to reducing those delivery costs," Minister Treacy added.

Minister Treacy acknowledged the fact that many businesses and individuals will experience difficulty as a result of the failure of Independent Insurance and said that the Government was doing everything it could in consultation with the UK and EU to minimise its impact.