By Natalie Lindo
Quinn Insurance head quarters in County Cavan
Quinn Insurance company faces a challenging future.
The business, which is part of Sean Quinn's conglomerate, was placed into administration last week.
The High Court in Dublin appointed administrators on application by Ireland's financial regulator.
Regulation chief Matthew Elderfield told the High Court in Dublin that Quinn Insurance had "significantly breached" its solvency ratios.
The insurance arm of the Quinn Group, which offers motor, home and business and healthcare policies has a deficit of 200m euros.
Last week Mr Elderfield said one scenario could see administrators apply for a levy to be imposed on all insurance premiums, not just Quinn premiums, to help cover the company's losses.
It may sound like drastic action, but in fact, it is a story all to familiar in the Irish Republic.
In 1983 Irish motor insurance company, Private Motorists Protection Association, (PMPA) collapsed amidst insolvency issues.
This led to the first State insurance bailout and ultimately cost Irish insurance policy-holders over 10m euros over a 10-year-period.
At the time, PMPA was Ireland's biggest motor insurance company, having a 70% share of the car insurance market, but weak regulation meant its premiums were too low to build up a cushion of cash.
In the late 1970s, following a rise in the number of claims, the firm's finances were seriously damaged.
PMPA raised its premiums but it was too late, by 1983 the company was insolvent.
A previously unused element of the Insurance Act was rushed through that imposed a levy on other insurers to keep PMPA afloat.
The levy ceased to apply from 1 January 1993 as it was felt that sufficient funds had been collected to enable the successful completion of the administration of the business.
The second major blow to the Irish taxpayer came in 1985, when Insurance Corporation of Ireland (ICI) collapsed.
ICI was owned by a major Irish bank, AIB, and had to again be bailed out by Irish the government.
The company's London office took on risks without matching these with an appropriate premium.
In effect ICI UK was growing too fast, taking on a lot of reinsurance and not having enough money to cover its claims.
AIB claimed it was unable to cover the losses of ICI and was on the brink of collapse, so another over-extended financial giant was bailed out by the state.
This involved two loans, which have now been repaid, totalling over 100m Punts (Irish pounds) advanced in 1985 and 1993 respectively.
If Quinn Insurance was to suffer a similar fate the Irish Finance Minister, Brian Lenihan, said a second levy tax will not affect all consumers.
"There is no call on the need for a levy at this stage," he said.
"When the administrator has conducted a review of the company he will be in a better position to know how to proceed."
Mr Lenihan acknowledged an insurance levy of 2% was imposed on all non-life insurance premiums to cover the collapse of PMPA, but said it was not necessary when ICI collapsed.
The finance minister said he wanted to make it clear that travel, health, aviation and marine insurance would be exempt from any future levy.
During members' questions in the Irish parliament last week, the minister said the Quinn Insurance potentially owed 200m euros more than it had in assets, but stressed that this did not mean it was unable to pay its bills.
The two elements of the Quinn Group affected by the court order are Quinn Healthcare and Quinn Direct, which offers motor, home and business policies.
Quinn Healthcare provides cover for around 400,000 in Ireland, while Quinn Direct has 1m policy-holders in Ireland and the UK.
A decision on the ban on Quinn Insurance doing business in Britain and Northern Ireland is expected to be reached later this week.
The administration hearing is due to return to the High Court in Dublin on 12 April.
Although policy holders with health insurance and travel cover may escape a new levy, the cost of Quinn Insurance's deficit to Irish economy remains to be seen.