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News : International Last Updated: Oct 1, 2012 - 10:17 AM


Monday Newspaper Review - Irish Business News and International Stories - - October 01, 2012
By Finfacts Team
Oct 1, 2012 - 8:13 AM

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The Irish Independent reports that new rules could push up health insurance premiums by as much as €200 for a typical family.

The regulations are being brought in by the Government to ensure older people don't have to pay more for health coverage.

But insurance companies warn the new "risk-equalisation" measures will spark a fresh round of premium increases.

There is currently a temporary levy of €285 on every adult's health policy, with a €95 charge for children.

The new rules are likely to push that up considerably. Industry experts fear it could be as much as €200 for a family of two adults and two children.

They admit that would be a devastating increase for families and would drive more people out of private insurance into the public system.

Any increases would come on top of a series of recent rises, as health cover costs have gone up five times in two years.

This month, Aviva is due to increase its premiums by up to 7pc, which will cost families an additional €150 a year.

That is expected to spark a new round of rises from VHI, Laya and Glo Health.

Now the Irish Independent has learned that the Department of Health is introducing a new set of levies on health cover from January.

It is part of a formal risk-equalisation scheme to replace the current one. The State has promised the EU it will put a such a scheme in place by the start of next year.

Risk equalisation is a way of ensuring everyone pays the same for health insurance no matter their age and irrespective of the state of their health.

Insurers with the majority of older people get compensated through a levy on all policies for having more aged clients, who make more claims.

Most of the new levy will go to the VHI.

The temporary levy of €285 on every adult's health policy and €95 for children came after Health Minister James Reilly hiked it by 40pc at the start of this year.

In a letter sent by Dr Reilly's department, it is explained that there will be four separate rates for the new levy.

In addition to the two rates for adults and children, there will be separate ones for those whose health insurance covers them for treatment in public hospitals only.

Another rate will apply for those with private hospital plans.

Health insurance experts said this would make it more expensive for insured people to get medical procedures done in private hospitals. Semi-private rooms in public hospitals will also get dearer.

The letter from the Department of Health says the new permanent risk-equalisation scheme and the new levies will apply from the start of next year. But it does not say how much the levies will be.

The current high level of the levies means it already costs a family of two adults and two children around €2,000 a year for health cover.

Notice

The new rules will force health insurers to tell the department what exactly they will cover on their plans.

The department letter states: "A 90-day notice period is required for both new products and for changes to existing products (other than premium changes). Changes to existing products (other than premium changes) will be permitted to take effect only from January 1 of any year, subject to the 90-day notice period."

Insurers said this would mean that once a health insurance plan was submitted for approval they would have to wait a year before offering new procedures and new drugs on the plan. At the moment, insurers only have to give 30 days' notice when changing a plan or introducing a new one.

The new rules would also make it more difficult for insurers to negotiate cost cuts with private hospitals, senior health insurance industry people said.

One senior source said: "This will mean premiums going up. Private hospitals will have the whip hand because the department is imposing deadlines."

The Irish Independent also reports that under-pressure borrowers are using off-shore trusts and companies in countries such as Russia, Mauritius, Gibraltar and the Cayman Islands to put assets beyond the reach of Irish banks.

A leading global fraud network has heard that cross-border asset transfers are on the rise here and throughout Europe as borrowers turn to sophisticated financial instruments to protect their assets and move them beyond the reach of creditors.

The latest trends were revealed last Friday at a conference on fraud and asset recovery hosted by FraudNet, the international legal group that helps victims and governments locate and recover stolen assets.

The conference was held days ahead of a Supreme Court appeal move by Sean Quinn Jnr, who is challenging a finding of contempt against him and a three-month jail sentence for breaking court orders preventing any interference with the Quinn family's €500m international property group (IPG).

The global scheme by Sean Quinn Snr, his son Sean Quinn Jnr and nephew Peter Darragh Quinn to place assets beyond the reach of the former Anglo Irish Bank, is the largest asset-stripping scheme to come before the Irish courts.

Recovery

Joseph Wielebinski, executive director of FraudNet, which is part of the Commercial Crime Services division of the International Chamber of Commerce (ICC), said greater co-operation is needed between countries to combat rapidly developing financial frauds and schemes to move assets offshore.

"There is a growing problem with large-scale asset recovery cases," Mr Wielebinski said, adding that timely access to company and bank records is critical in the fight against financial crime.

Forensic accountant Paul Jacobs, a partner in Grant Thornton who addressed the FraudNet conference, said that "the fight is on" to locate the assets of companies and borrowers who signed personal guarantees.

"There is an increased pressure on borrowers and that may prompt some to commit fraud and try to hide their assets, however, not all transfers are themselves fraudulent."

FraudNet works with individuals, companies and governments to help recover stolen millions.

Its Irish member is Gregory Glynn, a partner at Dublin law firm Arthur Cox.

Recent FraudNet investigations include the Allen Stanford fraud in the US and work on behalf of the Tunisian government following the Arab Spring to try and locate and freeze the funds of former president Ben Ali and his family.

The Irish Times reports that  Taoiseach Enda Kenny has demanded EU leaders “stand by” their decision to ease Ireland’s banking debt, warning of damage to trust between member states.

EU economics commissioner Olli Rehn said yesterday there were “different interpretations” of what was agreed at the June EU summit in relation to using the euro area’s bailout fund to recapitalise banks.

However, Mr Kenny inisted last night the decision was binding and called on fellow leaders to demonstrate they could follow through on the agreement.

“In meetings of EU leaders one of the problems you find is the missing element is trust that if they make a decision they will stand by it,” he said at the International Bar Association conference’s opening in Dublin.

“There is a need for transparency, for decisiveness, for clarity,” he said, departing from a prepared script.

Finance ministers from Germany, Finland and the Netherlands delivered a surprise blow to Ireland’s campaign for debt relief last week when they argued national bodies should remain liable for most bank losses.

Mr Kenny’s comments last night echoed remarks contained in his speech to Fine Gael’s presidential dinner on Saturday night, when he insisted a binding decision had been taken by heads of state.

“There is no resiling and going back from a formal decision made by the leaders of the 27 countries of the European Union,” he said. “I was happy that at that meeting in June there was a clear and unequivocal decision made not by ministers, not by civil servants, not by commentators but by the heads of government of the 27.”

Mr Kenny said the decision had two parts: “Firstly, to break the link between sovereign and bank debt to allow for recapitalisation directly of banks and secondly, that a review of Ireland’s position would be held to improve our capacity to meet our debts and that equal treatment would be given to the country,” he said. “They’re the decisions that were made. They’re the decisions that stand.” Mr Kenny was warmly applauded for his comments.

Ministers are expected to raise the question of Ireland’s debt sustainability when 11 of them fly to Brussels on Wednesday to meet European Commissioners as part of Ireland’s preparation to take up the presidency next year.

Mr Rehn said he was working to resolve disagreements over how the EU crisis fund could be used to recapitalise struggling banks. “It seems there have been different interpretations about the June decision,” he said. “Already this week the member states have begun to discuss with the help of the European Commission on what exact rules could be implemented in bank recapitalisation. This work proceeds in parallel to the work on the banking supervisor.”

Sinn Féin’s Pearse Doherty accused the Government of having “over-egged” the June decision and said the statement had not said anything about retrospective debt.

Meanwhile, Mr Kenny said additional savings under the Croke Park Agreement would minimise budgetary cutbacks to frontline services.

“What we need to do is to maximise what we can get out of the Croke Park agreement in the shortest time with greatest impact for people, so as not to have to make decisions where frontline services might potentially suffer as a consequence,” he said.

Mr Kenny said he had met three Ministers on Friday to discuss their proposals for “reinvigorating” the Croke Park agreement and accelerating the level of savings to be generated under the deal.

He also said Tánaiste Eamon Gilmore and himself were absolutely focused on implementing the programme for government. He said the level of unemployment was still far too high.

Separately, a spokeswoman for the Department of Social Protection said any decision about taxing maternity benefit would be taken collectively by Cabinet at budget time.

The Irish Times also reports that Governments have misdiagnosed what went wrong in the euro zone and are also advocating the wrong solution to the crisis, Nobel economics laureate Prof Joseph Stiglitz told the opening of the International Bar Association conference in Dublin last night.

The answer being proposed to the crisis was austerity which “has almost never worked,” he said.

“It was tried in 1929, the IMF tried it in Asia and Latin America. Each time it succeeded in turning downturns into recessions, recessions into depressions.”

He pointed out that “Europe’s debt-to-GDP ratio is less than that of the US,” and noted the US can borrow at almost negative interest rates. The fundamental problem in Europe was that the euro was a flawed currency arrangement that did not meet the conditions needed to establish a common currency. A structural change of the euro arrangement was needed. It was happening now, but too late for the economics of the situation.

Reform of banking systems was also necessary. At the moment they were as strong as the governments of the countries that guaranteed them. This meant that where a government was weak, confidence ebbed and money flowed out of the banks, reducing their capacity to lend to business, which in turn led to the further weakening of the economy.

A common European banking system was needed, with a common guarantee, he said. The mutualisation of debt across Europe was also needed.

“There has to be more Europe or less Europe. The present half- way position is not viable,” he said.

The easiest way to have less Europe was for Germany to leave, but that probably would not happen. A different form of break-up would create a great deal of work for lawyers, he joked.

Either way, Europe was likely to face turmoil for some time to come. He said another issue of concern was the growth of inequality in the major economies. This had been exacerbated by the crisis. “In 2010 [in the US] 93 per cent of the growth went to the top 1 per cent of the population – a few of them in this room.”

Economic inequality led to political inequality, including inequality in access to justice. He said in the US, legal aid had been cut back, and he urged the delegates to ensure that justice was accessible to everyone.

The conference brings 5,200 lawyers from around the world to Dublin this week. Speakers will include former president and UN commissioner for human rights Mary Robinson; the UN’s special rapporteur on torture, Juan Mendez; Nobel economics laureate Dr Mohammed Yunus; and the UN legal counsel, Irish lawyer Patricia O’Brien.

The Irish Examiner reports that nearly 40% of engineering firms hope to grow and hire more staff over the course of the next 18 months.

The statistic is one of the major findings from a survey undertaken by Engineers Ireland as part of a year-long research and consultation programme aimed at revising its CPD (continuing professional development) accredited employer standard; newly launched by Education Minister Ruairí Quinn.

First launched three years ago, the national standard has been achieved by 144 leading engineering employers across Ireland and is backed by the Government.

"The engineering sector will play a central role in Ireland’s economic recovery. It is important to ensure our engineering talent, already in the workforce, continues to upskill and progress. The CPD process and accreditation is leading the way in this respect and will ensure our engineers are able to compete with the best talent globally," Mr Quinn said.

Engineers Ireland director general John Power said that CPD-accreditation is creating and sustaining over 5,000 jobs. "Given the invaluable business benefits which CPD is proven to deliver, we would urge all engineering-led organisations to take action now and engage with us," he added.

Engineers Ireland’s latest survey questioned companies with a combined workforce of more than 25,000 people.

Foreign news reviews and more comprehensive coverage of Irish news is available in our Daily News Digest in the Global category on Finfacts Premium.

Check out our new subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.


© Copyright 2011 by Finfacts.com

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