Quinn move could lead to 3% non-life premium tax

A GENERAL hike in insurance premiums and as much as a 3% tax on all non-life premiums could be the cost consumers have to pay for the state’s second largest insurance provider going into administration.

Although the dust has yet to settle from the High Court’s move to appoint administrators to Quinn Insurance the fall-out has effectively begun.

In attaining their target of placing Quinn Insurance “on a sound financial and commercial footing”, the administrators (Paul McCann and Michael McAteer of Grant Thornton) could, conceivably, apply to put a levy in place if needed to counteract losses at the company. Industry representatives have also warned that insurance premiums will also rise. Across-the-industry premium levies were imposed to soak up losses from the collapse of PMPA and the Insurance Corporation of Ireland in the early-to-mid 1980s.

The Central Bank’s head of financial regulation, Matthew Elderfield, said Quinn Insurance’s financial strength has been overstated by around €450 million.

Furthermore, if the investigations into dealings at Quinn Insurance, currently being undertaken by the Financial Regulator, unearth any serious regulatory breaches, the company could be hit with a fine of anywhere up to €50m.

The Quinn Group (with interests from cement and building materials to healthcare, hotels and financial services) called Tuesday’s developments “deeply disappointing” and followed up with a longer statement, yesterday, which reiterated its claim that both the Quinn Group and the Quinn Insurance business “are fully able to meet all of their payment obligations”.

It refuted any idea that the insurance division breached any regulations and said the Regulator had made a “wrong decision”.

“We do not believe that his [the Regulator’s] decision was in the interests of any of the relevant stakeholders – Quinn Group, its staff, its customers or indeed the Irish Exchequer, which has received well in excess of €1bn in tax from Quinn Group since it was established in 1973.”

“Even if the Regulator’s concerns in relation to Quinn Insurance were well-founded, which we dispute, it is extraordinary that the Regulator was unwilling to give the necessary time to work through those concerns, rather than taking precipitate action which damages the interests of all stakeholders, including the state,” it added.