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The Insurance (Amendment) Bill 2011 (the "Bill") which amends the Insurance Act 1964 (the "1964 Act"), was passed by the Oireachtas on the 28 September 2011. The Bill proposes to update the existing legislation relating to the Insurance Compensation Fund (the "ICF")
The main changes proposed by the Bill are:
- the application of the 2% levy to the aggregate of the gross premiums paid to an insurer (the definition of which will be expanded to include an insurer duly authorised in another Member State) in respect of policies issued to cover "risks in the State" which relate to any of the following;
- a building in the State;
- a vehicle registered in the State;
- travel/holiday insurance taken out in the State where that policy is for a duration of 4 months or less; or
- any other case provided the policy holder is an individual who is habitually resident in the State or, if the policy holder is not an individual, the establishment of the policy holder to which the policy relates is in the State. However, this will not include a policy of insurance in respect of a building in another Member State or travel/holiday insurance taken out in another Member State where the risk is situated in another Member State.
(ii) the dis-application of the levy to policies that do not relate to "risks in the State";
(iii) the introduction of "excluded risks", policies of insurance in respect of which will not be subjected to the levy (e.g. reinsurance, marine insurance and health insurance, amongst others will not be subjected to the levy); and
(iv) the introduction of new offences; such as the suspension of a non-paying insurers' authorisation and the creation of an offence for failure to pay the appropriate contribution. An insurer that is found guilty of such an offence is liable on conviction on indictment to an unspecified fine and/or imprisonment for a term not exceeding 5 years. The Bill imposes personal liability on directors, managers, secretaries or other officers of an insurer where the offence was committed with that person's consent, connivance or willful neglect.
These changes are required to ensure that the ICF levy legislation is consistent with EU law.
The introduction of the 2% levy is in addition to the existing 3% stamp duty on premiums. The Chief Executive of the IIF, Mr Mike Kemp has welcomed the introduction of the new Bill as it provides clarity on which policies will be subject to it and what purposes administrators will be able to use Compensation Fund drawdown's in the future. However, the IIF has called on the Minister to abolish or reduce the 3% stamp duty already levied on home, motor and commercial insurance costs in light of the additional 2% levy so as not to unfairly burden policy holders who have difficulty in paying insurance costs.
More in-depth information on this Bill can be found on the Dillon Eustace website under the Insurance publications at: www.dilloneustace.ie/publications/Insurance
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
