Press release
Government Approval to publish the Insurance (Amendment) Bill 2018
Published on
Last updated on
The Minister for Finance, Paschal Donohoe T.D., has today announced that the Government has approved the publication of the Insurance (Amendment) Bill 2018.
The purpose of the Bill is to repeal and replace certain provisions of the Insurance Act 1964, as amended, to clarify the role of the Insurance Compensation Fund (ICF) and to implement the recommendations of the Review of the Framework for Motor Insurance Compensation in Ireland Report (2016); The Bill also provides for the retrospective compensation of 100% of third-party claims in respect of Setanta and Enterprise who are currently under liquidation, which was outside the scope of the 2016 review.
The Bill, when enacted, will increase the level of insurance compensation fund coverage for all future third party motor claims from its current 65% level to 100%[1] in order to bring it into line with the compensation levels paid out by the Motor Insurer’s Bureau of Ireland (MIBI). This additional coverage will be financed by the motor insurance industry through the establishment of an ex-ante fund into which industry will make regular contributions. This fund will be held and managed by the MIBI. The Bill also provides for the transfer of the administration of the ICF from the Accountant of the Courts of Justice to the Central Bank of Ireland, as well as a more formal role for the State Claims Agency in the event of a failure of an insurance company.
Welcoming the Government decision approving the publication of the Insurance (Amendment) Bill 2018, Minister Donohoe said:
“I am pleased to announce the publication of the Insurance (Amendment) Bill 2018. The Setanta insolvency and the subsequent Supreme Court ruling has highlighted an inequity between awards for third party claimants from MIBI in respect of uninsured or unidentified drivers, where personal injuries are compensated in full, compared with compensation from the ICF in the event of an insolvency where limits of 65% of the claim or €825,000 whichever is the lessor apply.
“Consequently, the Government decided in July 2017 to bring forward legislation to address the uncertainty this case has highlighted in relation to compensation arrangements for third party motor claimants in any future motor insurer insolvency. In January this year, I announced my decision that the State will ensure that Setanta and Enterprise third party claimants are compensated in full. Once enacted, the Bill will allow for the payment of 100% of the compensation due to these third party motor insurance claimants including the additional 35% to those who have settled their claims and have already received compensation of 65% of their claim subject to the limit outlined previously. I hope that my decision and the publication of this Bill will continue to facilitate and accelerate the settlement of those claims which are outstanding.
“The Bill will therefore provide greater certainty for both consumers and industry, regarding the insurance compensation framework in Ireland”
The Minister of State for Insurance and Financial Services, Michael D’Arcy TD, said:
“A key focus of the Government is on addressing the difference in compensation levels for third party motor insurance claimants between cases of insurer insolvency and the amounts paid by the Motor Insurance Bureau of Ireland to those involved in collisions with an uninsured driver. I welcome this Bill which aims to maintain confidence in the motor insurance system in Ireland.”
ENDS
Summary of the proposed Insurance (Amendment) Bill:
(a) to increase the level of insurance compensation fund coverage for all future third party motor claims from 65% to 100% for personal injuries and to €1,220,000 per claim for property, regardless of the number of claimants, in order to bring it into line with the compensation levels paid out by the Motor Insurer’s Bureau of Ireland (MIBI);
(b) to require that the increased coverage of the ICF be funded by a contribution from the motor insurance industry to cover this extra 35%;
(c) to provide a legal basis for motor insurers operating in the Irish market to contribute an amount equivalent to 2% of gross written motor premiums to an ex-ante fund to be held by MIBI in order to build up a fund to enable industry meet its 35% commitment should a motor insurer be liquidated in the future;
(d) to provide that where there is a shortfall in the industry ex-ante fund that the ICF act as a backstop and covers the amount outstanding. In such a situation, it is proposed that industry increase their contribution to their fund to an amount equivalent to 3% of gross written motor insurance premiums in order that the Exchequer is repaid as quickly as possible;
(e) to provide for the transfer of the administration of the ICF from the Accountant of the Courts of Justice to the Central Bank of Ireland;
(f) to provide for a more formal role for the State Claims Agency in the event of a failure of an insurance company resulting in a draw on the ICF;
(g) to amend the time limit for making applications to the High Court for payments from the ICF from once in any 6 month period to once in any 3 month period, to allow payments to be made more frequently.