The Irish Insurance Federation (IIF) has welcomed the publication of Government proposals to clarify the scope of the levy on insurance premiums to fund the administration of Quinn Insurance, but called on the Minister for Finance to abolish the existing 3% stamp duty on premiums.

“The introduction of a Compensation Fund levy has been expected for some time and the new Insurance Bill provides much needed clarity on which policies will be subject to it and what purposes administrators will be able to use Compensation Fund drawdowns for in the future,” said Mike Kemp, Chief Executive of the IIF.  “However we are concerned that policyholders will now face an additional 2% levy on their premiums at a time when the economic situation means that many consumers are having difficulty in paying existing insurance costs.” 

Noting that the Minister had expressed his concern at the additional burden on consumers entailed by a Compensation Fund levy, the IIF called on him to abolish or reduce the 3% stamp duty already levied on home, motor and commercial insurance premiums.  

A 1% stamp duty was first introduced in the early 1980s, and an additional 2% Compensation Fund levy was applied in 1984. When this Compensation Fund levy (used to finance the administrations of PMPA and Insurance Corporation) was being phased out in the early 1990s, a 2% stamp duty was applied which was increased to 3% in 2009.

Mr Kemp said; “Unlike the Compensation Fund contribution it is not used for any insurance-related purpose but is simply a general tax raising measure.  The Minister could demonstrate his concern for consumers in a practical way by abolishing or reducing this tax, which is of marginal importance to the public finances at this point.”