Dail Debate on Quinn

Deputy Caoimhghín Ó Caoláin: The Insurance (Amendment) Bill 2011 proposes to amend the Insurance Act 1964 to change the scope of the insurance compensation fund from one which covers the risks of policyholders of Irish authorised insurance companies to one which covers all insured risk in the State, except for specified excluded risks. So states the opening sentence in the Department of Finance’s explanatory memorandum that accompanies the Bill. Nowhere in the explanatory memorandum, however, is there any reference to what this Bill is actually designed to serve and neither is there any explanation for the Government’s insistence in pressing this legislation through both Houses of the Oireachtas on or before 29 September 2011.

The haste employed in pressing all Stages through the Seanad in a single day, the day following the Bill’s publication, speaks volumes on this Government’s total disregard for proper scrutiny, careful consideration and debate on important legislation that has significant consequences for all non-life, non-health policy-holding citizens and much more besides. While a little more time has been made available for Dáil Members to prepare for yesterday’s and today’s Second Stage, all remaining Stages will be guillotined by 7.30 p.m., yet this legislation provides for among other matters the imposition of a 2% levy on all insurance products with the exception of life and health policies. This is expected to realise €68 million per annum and will continue indefinitely, irrespective of any suggestion that it might be time-limited.

This is without question yet another tax and one unrelated to any notion of one’s means or ability to pay. The Revenue Commissioners will collect the levy on behalf of the insurance compensation fund. So what is it all about? It is wholly and solely allied to the sale of Quinn Insurance Ltd, QIL, to the giant US insurance company, Liberty Mutual Direct, a deal set for ratification in the High Court on 4 October. The joint administrators of QIL, Michael McAteer and Paul McCann, require a Government transfer of some €280 million from the insurance compensation fund to seal the deal. The money involved will, of course, be recouped, not from the insurance industry, but from the pockets of every other non-life and non-health insurance policyholder in this State, irrespective of with which insurance company they do their business.

It is important to recall some of the background to this Bill. On Tuesday, 30 March 2010, the High Court appointed two joint provisional administrations to QIL, acting on the application of the newly-appointed Financial Regulator, Matthew Elderfield. Mr. Elderfield took up his appointment on 19 October 2009, less than six months prior to moving so aggressively against arguably the most successful, certainly the most competitive, player in the insurance market here and then a growing thorn in the side of the long-established players in the British market. From day one, my concern was first and foremost for the jobs of the some 2,800 employees in Quinn Insurance, for their dependent families and the economy of the Cavan-Fermanagh-Border region. Mr. Elderfield had also placed a bar on Quinn writing new business north of the Border and in Britain.

With fellow elected representatives of all parties, I met Mr. Elderfield at the Central Bank building on the following Tuesday, 6 April, at which we sought a lifting of the ban to protect 1,500 jobs directly impacted by his ban decision. A joint all-party appeal to Mr. Elderfield on 29 April was co-signed by myself with the now Taoiseach, Deputy Enda Kenny, the now Tánaiste and Minister for Foreign Affairs and Trade, Deputy Gilmore, and other Ministers, including Deputies Noonan, Bruton and Howlin. It sought the early restoration of the maximum access possible for QIL to the North of Ireland and British markets. Following this and intense lobbying, the next day Matthew Elderfield responded advising that he had decided to amend his direction and that private motor insurance business, both new and renewals, could again be written by Quinn in the Six Counties and Britain.

It was too late and not enough, however. That same day, Friday, 30 April, brought the news from the joint administrators that some 900 jobs were to go at different Quinn Insurance sites, with Cavan, Enniskillen, Navan and Blanchardstown to be most acutely hit. As convenor of the all-party cross-Border elected representatives group, I accompanied colleagues of all politics, North and South, to a series of meetings in the weeks following. The exchanges and questioning continued throughout all of 2010 as my files confirm. In the early course of its work, the group cited four agreed pillars of concern. These were the retention of all jobs and where they were already located and the future of the Border economy; the need to secure the €2.8 billion due to Anglo Irish Bank, the taxpayer, by Seán Quinn; the need to maintain the competitiveness brought by the Quinn Insurance model to the market; and the need to protect all Quinn policyholders.

In January 2011, we embarked on a renewed offensive securing meetings with the Financial Regulator, the Governor of the Central Bank, the administrators, the chief executive and chairman of Anglo Irish Bank and the chief executive of the National Treasury Management Agency. It was apparent to all of us on the group when attending the first of these meetings with the administrator, Michael McAteer, that proposals prepared by the Quinn representatives, which for a considerable time had been jointly worked on by Quinn representatives and a representative of Anglo Irish Bank, were not going to be given any consideration whatsoever, deadlines or no deadlines. The absolute rejection of our appeal for a serious evaluation of the then styled Quinn proposals beggared belief. Why would an administrator, someone entrusted with the task of overseeing the business and ensuring its continuation as a going concern and with the responsibility to consider all possible resolutions of the understood difficulties in the business, including its sale, so adamantly refuse to give any consideration whatsoever to proposals emanating from the senior management in the company, the very people who knew the business best?

We got our answer when we met the Financial Regulator, Mr. Matthew Elderfield, on Tuesday, 25 January of this year, a meeting also attended by the Governor of the Central Bank, Professor Patrick Honohan. In response to a direct question from an elected Member of these Houses, Senator Wilson, Mr. Elderfield stated that he had made it abundantly clear to the administrators and to all stakeholders that there was to be no consideration given to any proposal whatsoever that involved Seán Quinn, his family or any of his senior management team. Contrary to normal procedure, the administrators did not have a free hand.

This blatant admission shocked all in attendance and left us in no doubt that all was not as it should be. It now transpires that a tape may exist whereon administrator Mr. Michael McAteer is recorded as saying, and I quote from a typed purported transcript sent to my Cavan office:

Let me be ... categoric: The Quinn family are gone. They will never have an involvement whatsoever in this insurance company ever, ever again. Now I’ve been saying it for months ... I know they’ve been at various games in the background to try and manipulate things. That is the facts of the matter. We can’t put that in an email. I can’t put it in writing but that’s what’s going on.

This is a further shocking insight into the thinking and disposition of those placed at the helm of this major employer and player in the financial services sector and of those who sought their appointment.

Let there be no mistake about it. Our appeal has always been for fair and full consideration of the Quinn proposals, not to favour it. We believed from the thorough presentations we had received that it was a viable formula to address all the agreed pillars of concern we had adopted and were pursuing. We were not of course privy to the detail of any other proposal, so we could not make comparisons, but that was clearly not unique to us. It also applied to the administrators, who were given a clear instruction from the Financial Regulator, that is, no consideration for any Quinn-connected proposals. We have never been voices for Seán Quinn. If the Quinn proposals, properly assessed and properly evaluated, were shown to be deficient and not fit for purpose, then so be it. How much time have I remaining?

An Ceann Comhairle: Fifty seconds.

Deputy Caoimhghín Ó Caoláin: It is my belief that the full facts in respect of what went on prior to and since the appointment of the administrators need to be fully investigated. I call on the Government to place the Insurance (Amendment) Bill 2011 on hold for a limited period to allow for a full, independent inquiry - one with statutory powers to compel all potential witnesses to present - to report within three or four months. Once the full truth is established, let the Government decide on whether the course provided for in this legislation is the way to go. I am not convinced that it is.

I will highlight some of the questions that need answering. Why did the joint administrators maintain for over six months that there would be no call on the insurance compensation fund but have now made a call of almost €700 million? Why have the joint administrators set the average reserve in Quinn Insurance Limited, QIL, outstanding claims at almost three times the market average?

Acting Chairman (Deputy Olivia Mitchell): The Deputy’s time has concluded.

Deputy Caoimhghín Ó Caoláin: Why was the Quinn proposal not properly assessed and compared with what is being proposed in the Bill in the interest of taxpayers and insurance consumers? Did the Financial Regulator influence the selection of proposals received by the court appointed joint administrators and did he seek to stymie the Quinn proposal from the outset? I have many more questions, but these need to be answered in the interest of full truth and to allow for a proper evaluation of the best way forward. I am only asking for a short setting aside and putting on hold of this legislation to ensure-----

Acting Chairman (Deputy Olivia Mitchell): The Deputy is taking from other speakers’ time.

Deputy Caoimhghín Ó Caoláin: -----the very best decisions are taken in respect of this company, its employees, the taxpayer and the policyholders.

Deputy Frank Feighan: I welcome the opportunity to address the Dáil on the Insurance (Amendment) Bill 2011, which was published in early September. Owing to changes in EU law on the non-life insurance sector since the fund was last used, it was necessary for the Minister to seek legal advice on current legislation. On 4 October, a deal will be done between Liberty Mutual Direct and Anglo Irish Bank. The Bill will assist the deal in going through and will secure the 1,600 jobs at stake in the Quinn Group.

I am a part of this ongoing saga. On Good Friday of last year, we were called to a meeting on the future of the Quinn Group. At the time, I represented Roscommon-South Leitrim, which included Ballinamore and Carrigallen. Seán Quinn’s role in the area was important. According to one person, the area was only good for snipe grass. However, Seán Quinn set up a quarry many years ago and took on the vested interests in the cement and glass cartels and the insurance industry. He created jobs in an area that otherwise would never have had them. He gave young people an opportunity to up-skill so that they would not need to go to Belfast, Dublin, London or New York, as was usual at the time. They could work, be involved and have futures in their localities. Irrespective of whether we like him, Seán Quinn gave people the opportunity to regenerate their localities.

Seán Quinn made many enemies in the insurance and financial industries because he proved that he could outdo the old establishment, be it in the City of London, Frankfurt or Dublin. He was not a popular person within those industries. He had a team of young people who excelled in delivering a service. A young person could not get insurance many years ago. I was a named driver on my father’s licence for 25 years because insurance would have cost me £1,700 or £1,800. Seán Quinn took on the established groups.

Deputy Ó Caoláin correctly stated that the group attending our meetings was cross-Border, cross-party and cross-community. We agreed that the retention of jobs was paramount at all times, that the €2.8 billion Seán Quinn owed to Anglo Irish Bank would be repaid to the Irish taxpayer, that the company would retain competitiveness in the insurance industry and that existing policyholders would be protected. We met the administrators and the staff, who were fearful for their jobs. We also met the management team, Seán Quinn, the Financial Regulator, the Minister for Finance and the National Treasury Management Agency, NTMA. Everyone seemed to have a different story.

I pay tribute to Deputy Ó Caoláin for convening our group. He was forensic and fair in managing the group’s work and he included people from all sides. He played a major role in seeking answers, given the wide gulf. To this day, they have not been answered. Whenever we attended meetings with Seán Quinn and his management team, they had opinions on what was the right model.

When we met officials from Anglo Irish Bank and other institutions, such as the Financial Regulator, we were presented with a completely conflicting view. To this day, we have still not got to the bottom of it. The current Financial Regulator has done a very good job. I told him when I met him it was a pity he was not in place six or seven years theretofore when the regulation was of such a light touch. We were told then the way forward was international finance and we lost sight of real economic activity, including agriculture and the creative industries. Our economic activity involved selling houses to one another. The then Government and Financial Regulator believed this was right. Perhaps we all thought we would have an easy ride but we ended up where we are.

Seán Quinn made the mistake of trying to own his own bank. He was duped by the chairman of Anglo Irish Bank, Mr. Seán Fitzpatrick. He wanted to take on the banking industry and made a huge mistake. The country is paying for it and many of his employees have been left in a very vulnerable position. Having said that, however, Seán Quinn made a huge difference at the time in question to an area that would not otherwise have had a fair crack of the whip.

I am delighted Liberty Mutual has decided to buy the Quinn group. In the past six months, many of the staff have been quite pleased they have a future under an international insurance company. However, there is resistance from unnamed elements, who have caused a certain amount of trouble by cutting communication lines. There is no place in this society for those kinds of actions. The cross-Border, cross-party group has stated very strongly that the way forward is working with all the stakeholders to ensure the jobs are retained.

The insurance compensation fund only contains €40 million. Whatever we give to the fund will be repaid to the Exchequer. This has happened before. A levy was introduced in 1984 following the collapse of PMPA in October 1983.

The Minister has decided to exclude health insurance from the scope of the scheme. The main player in the market, the VHI, is not authorised by the Central Bank. Huge difficulties face people in private insurance schemes and many are going without private insurance because they simply cannot afford it. The costs have increased. There are far too many cosy cartels and far too many consultants getting paid four times more than those in other areas. The Minister for Health is examining this. There is far too much waste.

Many young couples do not have the money to insure their own houses. Many businesses do not have the money to insure themselves. The only reason they are being insured is because the banks are putting on pressure in this regard. Houses and businesses are being insured not because it is right to do so but because the banks want to ensure they have a hold on them if something happens to them. This is a considerable problem. The Minister should set up a team to investigate it.

I would like to believe politicians on both sides of the Border will try, on a cross-party basis, to deal with this very difficult problem, not by throwing political missiles at one another but by working together to ensure 1,600 jobs are retained. I thank the Minister for his interventions, which I hope will secure the jobs.