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The Department of Finance invites interested parties to make submissions in relation to the exercise of Ministerial powers under section 26 of the Motor Insurance Insolvency Compensation Act (the "Act").
Directive 2009/103/EC, as amended (the “Motor Insurance Directive” or “MID”) ensures that vehicles can freely circulate in the EU while using a minimum harmonised level of insurance cover. It means that when accidents occur, injured parties are protected through effective reciprocal insurance cover arrangements across Member States.
Directive (EU) 2021/2118 (the “Sixth Motor Insurance Directive”) amends the MID by, inter alia, inserting Articles 10a and 25a to the MID. These Articles provide for a pan-EU motor insurance framework and require all Member States to have in place a compensation regime for motor insurance policyholders of insolvent insurance companies.
Prior to the Sixth Motor Insurance Directive, the Insurance Compensation Fund (“ICF”) framework in Ireland operated under a host-based system, meaning compensation in the context of insolvent insurers is paid from the Member State in which the insured risk is located. However, Articles 10a and 25a of the MID require that the compensation framework for motor insurance must now be funded on a home-based system, meaning that the home country of the insurer (where the insolvent insurer is authorised) bears the cost of claims in the event of insolvency.
The Motor Insurance Insolvency Compensation Act 2024 transposes Articles 10a and 25a of the MID and enhances Ireland’s existing domestic legal framework relating to the ICF for motor insurance insolvency so that potential Irish claimants can deal directly and efficiently with the national compensation body appointed pursuant to section 5 of the Act.
Section 26 of the Act amends the Insurance Act 1964, as amended, (the “1964 Act”) by the insertion of section 2A after section 2 of the 1964 Act. Section 2A authorises the Minister for Finance to prescribe, by way of regulations (the “Proposed Regulations”), “requirements for insurers (domestic) which carry on motor third party liability insurance in other Member States as regards contributions to the Fund for the purposes of providing eligible compensation”.
The Department of Finance now invites interested parties to make submissions in relation to the contributions to the Fund that will by this cohort of motor insurers, specifically:
i) the scope of the Proposed Regulations;
ii) the form of the Contribution; and
iii) the target level of funding
Submissions received in response to this public consultation will be taken into consideration when drafting the proposed regulations under section 2 of the 1964 Act as amended.
The consultation period will run until 24 December 2024. Submissions received after this deadline may not be considered.
If you wish to respond to this consultation, submissions can be made through the Department of Finance consultation portal - https://consult.finance.gov.ie
Responses to this consultation are subject to the provisions of the Freedom of Information Act 2014. Parties should also note that responses to the consultation may be published on the Department’s website.