Press Statement by Eoghan Murphy TD on Setanta Insurance liquidation
Statement by Minister of State Eoghan Murphy
Supreme Court Jugement
Law Society of Ireland v Motor Insurers’ Bureau of Ireland (MIBI)
Setanta Insurance Liquidation
Minister of State Eoghan Murphy TD notes that the Supreme Court has today made a decision in the case of Law Society of Ireland v Motor Insurers’ Bureau of Ireland (MIBI) and has found that the Insurance Compensation Fund (ICF) is liable for third party claims of Setanta policyholders. This means that an amount of 65% due to each outstanding third party claim, or €825,000, whichever is the lesser, will be paid. It is likely that in many cases a proportion of the balance, of 35%, of a claim will be met from the proceeds of the distribution of assets on completion of the liquidation process.
The above decision provides clarity around this matter and enables the Government to move ahead with its proposal to ensure that compensation equivalent to MIBI levels will be paid for any future motor insurer insolvencies . In this regard, the Minister of State met the Chief Executives of the major insurers earlier this week to discuss the implementation of the recommendations of the Review of the Framework for Motor Insurance Compensation in Ireland – a report issued by a Joint Working Group led by the Department of Finance and the Department of Transport, Tourism and Sport last year.
A key recommendation of the Report is that in the event of the liquidation of a motor insurer in the future the full amount due should be paid from the Insurance Compensation Fund (ICF), but that the MIBI should makes a 35% contribution to that claim by way of recoupment to the ICF.
In an effort to provide greater certainty around the level of contributions, Minister of State Murphy agreed a proposal in principle with the insurance industry as to how they can meet the above 35% contribution which will involve insurers paying a fixed percentage of gross premiums, to an ex-ante fund to finance their share of any future motor insurer insolvencies. There will be potential to vary the rate depending on the circumstances.
It is expected that draft heads of a Bill will be brought to Government shortly to amend the Insurance Compensation Fund legislation in line with the above.
Minister of State Murphy stated:
“it is important that we implement the recommendations of the Review of the Framework for Motor Insurance Compensation in Ireland as soon as possible to ensure that equivalent compensation levels to those of MIBI are put in place for any future motor insurance insolvencies. He also noted that his agreement with industry represents a significant step forward to achieving a more stable insurance market and also should make Ireland more attractive to new entrants.”
Thursday 25 MAY 2017
ENDS
For Further information:
David Byrne Press Officer pressofficer@finance.gov.ie 086 026 7978
