Levy on insurance company profits would be a 'mistake', claims minister in U-turn

The minister responsible for insurance reform has slapped down a proposal to introduce a levy on company profits in this year’s Budget.

Junior Finance Minister Michael D’Arcy said a levy would be “counterproductive” and “a mistake” as it wouldn’t entice underwriters to re-enter the Irish market.

Independent Alliance ministers met earlier this week to agree on pre-Budget demands, including a new levy on insurance companies due to consumers facing high premium costs.

Mr D’Arcy had previously supported the idea of the special tax on company profits – unless they reduce premiums – but has now changed his views.

“Having been to London and spoken to a number of underwriters and trying to encourage them to come back into the Irish market, to consider a levy at this point would be counterproductive,” he told the Irish Independent.

“I want insurers to reduce premia rather than collect taxes from them. It would be an error to introduce a levy right now.

“I did say earlier I would consider it, but you have to look at the bigger picture in totality.”

The alliance of Independent ministers is proposing a levy of between 2pc and 5pc on the profits of firms making millions of euro, while the Government is struggling to tackle the rising cost of insurance.

Business owners across the country fear attempted reforms of the insurance industry will be a case of too little, too late.

Earlier this year, Leisure Insure, the only company that insured leisure activities in this country, pulled out of the market.

“People have to accept more responsibility for their actions, as unfortunately if people take claims and the claims go against the insurance company, eventually the companies start stepping out,” Mr D’Arcy said.

“If there’s no negligence and you fall and it’s your fault, you shouldn’t be taking the claim.”

Meanwhile, members of Alliance for Insurance Reform – a group campaigning for reduced insurance costs – have also voiced concern over the Judicial Council Bill and its ability to help reduce high payouts for personal injuries.

The bill passed through the Oireachtas in July and provides for the establishment of a personal injuries guidelines committee whose function will be to develop guidelines for appropriate damages in personal injury cases.

As it stands, however, it could be two years or more before the guidelines are produced.

However, Mr D’Arcy says he is hopeful an initial set of guidelines can be completed before the end of the year.

“I’m actually determined we can do it by the end of this year for the simple reason I know the damage that has been done to businesses the length and breadth of the country,” he said.

When asked whether the guidelines would help stop “Santa Claus” judges giving out large awards for minor injuries, Mr D’Arcy added: “I’m not going to comment on that. That’s a matter for the judiciary and that’s why we passed the Judicial Council Bill.

“If a judge goes outside of the guidelines, a written explanation is now legally required to be presented as to why he or she is outside the guidelines.

“I have confidence in the Chief Justice and believe the judiciary will take this opportunity to make the necessary changes.

“It’s a question now of how much awards will be reduced by.”

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