Fianna Fáil Spokesperson on Finance, Michael McGrath TD has expressed concern and frustration at the lack of reform to the European Single Market for insurance after receiving a response from European Insurance and Occupational Pensions Authority Chairperson, Gabriel Bernardino, following the collapse of Qudos Insurance.
He commented, “It is crystal clear that we have serious issues at the heart of the single insurance market and that urgent reforms are needed to protect policyholders and claimants before and after an insurance company gets into trouble.
“In the case of Qudos Insurance, which is regulated in Denmark, Irish policyholders will thankfully not be expected to foot the bill as the company was declared bankrupt by a Danish court in late December. There was a genuine fear that Irish policyholders would have to pay for the failure if the company was declared bankrupt in 2019 when new rules surrounding the Danish Guarantee Fund came into operation.
“Despite this, the recent failure of Qudos and Alpha insurance highlights the urgent need for reform in the insurance market. The European Court of Auditors reported in 2018 that the current set up for supervision in the insurance market creates the wrong incentives for both supervisors and insurers.
“I do acknowledge the work that EIOPA is doing in an effort to address these issues. However, it’s apparent in both the letter I have received from Mr Bernardino and in the report published by the European Court of Auditors that the European Commission and the European Council need to apply greater effort to address the serious weaknesses. It is disturbing that Minister Donohoe has not raised the issue of insurance reform formally with his EU counterparts.
“A fully functioning and transparent single market for insurance is critical for customers not only in Ireland but across the European Union as a whole. Customers and claimants need to be protected when an insurance company gets into trouble and the current structure needs to be reformed. There must be consistent supervision and standards throughout the market and when an insurance company fails there needs to be clear rules on who foots the bill. The current situation is not acceptable.
“I’m urging Minister Donohoe to raise these matters with his European colleagues at the first opportunity. If customers are to be protected, the market as it is currently designed is in need of dramatic change”, concluded McGrath.