Three major foreign-owned insurance companies have been restricted from providing cover for Irish state companies as they have been downgraded because Ireland has been demoted by credit rating agencies.
The Irish Insurance Federation has been lobbying Finance Minister Michael Noonan on the issue.
Allianz, Aviva and RSA Insurance represent 40% of the non-life insurance market. Although they are foreign- owned, they have been capitalised in Ireland and have most of their customers here.
As the country has been downgraded, the companies have also been demoted despite meeting solvency requirements of the Central Bank.
In a letter to the Minister for Finance, seen by RTÉ News, the Irish Insurance Federation says the development has resulted in serious consequences.
One of the effects is that the insurers no longer meet the requirements needed to offer cover to Irish state and semi-state companies.
Last week Minister Noonan wrote back to say he was unaware of a specific code of practice or legislation which set minimum criteria. However, it is understood that state bodies do have their own minimum ratings which they set individually.
