Finance and Central Bank to seek insurance remedies

Senior officials from the Department of Finance and the Central Bank are to meet to discuss measures to address weaknesses in the loss-making insurance industry.

Patrick Honohan: Talks between Finance and Central Bank officials will focus on policy initiatives suggested by the governor to address the loss-making insurance industry.

The talks between the two sides are to focus on policy initiatives suggested by Central Bank governor, Patrick Honohan for the sector. 

This follows the intervention of the Minister for Finance Michael Noonan who requested a report on the difficulties being faced by the Irish insurance sector from Mr Honohan.

The request by Mr Noonan followed an earlier rebuke in March from the Central Bank deputy governor, Cyril Roux to the Department of Finance in seeking a report. 

However, a spokeswoman for the Department of Finance confirmed yesterday that the department has now received a report on the insurance industry from the Central Bank.

In a letter dated July 2, released through the Freedom of Information Act, Mr Noonan wrote to Mr Honohan to state that he was “aware of poor financial reports from certain domestic insurance companies: job losses, and reports of an overall negative outlook for the sector domestically”.

Mr Noonan wrote the letter days after loss-making Liberty Insurance announced 270 redundancies and he told Mr Honohan that he was “concerned any issues arising in the insurance industry could have implications for financial stability, in addition to implications for the exchequer, policyholders and the wider financial system.”

He added: “In the circumstances, I would appreciate if you would prepare a report setting out your assessment as to the outlook for the insurance sector generally and specifically for those companies reported to have difficulties.”

The request by Mr Noonan pre-dated troubled insurer FBD last month confirming pre-tax losses of €96m for the first six months of this year with UK-owned RSA Insurance also confirming last month that it had reduced its Irish losses to £16m between January and June.

A spokeswoman for the Department of Finance said yesterday: “The department is currently examining the contents of (Mr Honohan’s ) response and officials will be discussing it further with the Central Bank in the coming weeks.”

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