Quinn Insurance collapse to cost another €912m

Consumers will be on the hook for the collapse of Quinn Insurance for close to another decade-and-a-half, despite already paying out more than €236m for its failure.

Customers have been forking out to cover the cost of Quinn’s demise since 2012 when a 2% levy on all non-life insurance premiums was introduced.

A total of €236.46m has been collected by the levy since its introduction almost four years ago.

Despite the huge sums customers have been forced to stump up, it appears years of financial pain lie ahead with the majority of the cost yet to be covered.

Current estimates put the total cost to the Insurance Compensation Fund, into which the levy is paid, at between €1.1bn and €1.15bn.

Consequently, more than €912m is yet to be paid into the fund to cover the cost of the collapse meaning the levy is likely to remain in situ for another 14 years.

Reacting to the figures Fianna Fáil finance spokesman Michael McGrath described the levy as “another kick in the teeth for policyholders”.

“In the last four years, a staggering €236m has been collected from hard pressed policyholders. At the present rate, this 2% levy will be in place for another 14 years.

"This makes it all the more important that the regulation of the insurance industry is fit for purpose.

“We saw, with disastrous consequences in the case of Setanta Insurance, that firms regulated in other EU countries can passport in their services to Ireland,” said Mr McGrath.

“The Central Bank needs to ensure that staff vacancies in the insurance regulation area are filled with people who have the necessary expertise and experience to effectively supervise the sector.”

Latest figures from the CSO show that insurance costs have climbed more than 8% already this year while motor insurance costs appear to be spiralling ever-higher with an annual increase of 29.4% recorded to the end of last month.

Premium hikes this year look set to be compounded by a further jump of up to 15% for motor policies next year.

“Premiums are definitely going to increase in the local market,” Irish Brokers’ Association director of general insurance, Brian McNeils told the Irish Examiner earlier this month.

“It will be [a rise of] 10% to 15% coming down the line, on average. By next autumn prices will be up to 15% higher on average.”