Irish Compensation Fund may pay outstanding £550m
Quinn’s outstanding claims in the UK, which include motor and professional indemnity claims, may have to be paid for by the Irish Compensation Fund.
Quinn Insurance is suffering a shortfall of around €620m (£549.5m) to pay for claims in the UK and Ireland, according to reports.
Anglo Irish Bank and American mutual giant Liberty have bought Quinn Insurance but refuse to take on all of its losses, it is reported.
That would force the Irish Compensation Fund, a fund of last resort for insurance claims, to pay up.
The Irish government is expected to put rate increases of 1%-2% on non-life insurance policies in the country to strengthen the fund.
It is unclear yet whether a decision to tap the fund could delay claims in the UK.
To access the fund, the administrators of Quinn Insurance will have to apply to the High Court. The fund is then administered by the Central Bank. The administrators have not yet formally made this application.
Irish minister for finance Michael Noonan warned two weeks ago that the levy may be necessary.
Before its collapse in March last year, Quinn Insurance wrote around £1bn worth of UK commercial and personal lines premium, including solicitors’ professional indemnity insurance and motor insurance. Quinn Insurance racked up around €700m losses in 2009 and is expected to announce a €120m loss in 2010.
The insurer has been banned from writing commercial insurance in the UK, although it can underwriter private motor, through Quinn Direct, which specialisies in young drivers.
Quinn’s woes deepened last week when it emerged that it is on the hook for around £3m worth of solicitors’ professional indemnity claims.
The sum was the result of a cash call on behalf of the Solicitors Regulation Authority, which required extra money to pay for the assigned risk pool.
Quinn’s administrators Grant Thornton refused to comment.