The administrators appointed to Quinn Insurance are suing the companies' auditors Price WaterhouseCoopers for €1 billion in damages.

They are alleging negligence and breach of contract in an action that has been fast-tracked into the Commercial Court list.

Joint administrators were appointed to Quinn Insurance Limited back in March 2010 over serious concerns about the running of the company.

A subsequent investigation by the Central Bank found the business had failed to maintain the required solvency margin.

Last year the High Court was told €1.65 billion may have to be drawn down from the State-funded Insurance Compensation Fund to meet the company's obligations to policyholders.

Now the administrators are suing the former auditors Price WaterhouseCoopers of Quinn Insurance for alleged negligence.

They are seeking damages of €1 billion and claim that had PwC 'properly performed its duties' between 2005 and 2008 Quinn Insurance's true financial position would have been brought to the attention of the board or the financial regulator.

The action is expected to be vigorously defended.