Preasráitis
Ministers Donohoe and D’Arcy give update on Setanta Insurance and related cases
Foilsithe
An t-eolas is déanaí
Teanga: Níl leagan Gaeilge den mhír seo ar fáil.
Foilsithe
An t-eolas is déanaí
Teanga: Níl leagan Gaeilge den mhír seo ar fáil.
The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, along with Minister of State Financial Services and Insurance, Michael D’Arcy TD, have today (Tuesday) announced agreement in principle that the State will ensure that Setanta third party claimants are compensated in full. The detailed arrangements for such compensation will be elaborated in due course and are subject to further discussions to ensure no competition or legal issues arise.
This decision will also apply to another similar case – Enterprise Insurance. That case, while much smaller in scale and impact, has also meant that claimants, through no fault of their own, are left out of pocket by not being compensated fully through the Insurance Compensation Fund (ICF) mechanism.
Setanta Insurance was placed into liquidation by the Malta Financial Services Authority on 30th April 2014 and is being liquidated under Maltese law.
The liquidation of Setanta was the subject of a protracted court case as to whether the Motor Insurers’ Bureau of Ireland (MIBI) or the Insurance Compensation Fund (ICF) was liable in respect of third party motor insurance claims. The final judgment on this matter was delivered by the Supreme Court on 25th May 2017 and it overturned the previous decisions of the High Court and the Court of Appeal that MIBI was liable for such claims.
The consequence of the Supreme Court judgment is that the ICF has been deemed responsible for the payment of such third party claims up to 65% of the claim or €825,000 whichever is the lessor leaving a shortfall of 35%. Whilst some of this shortfall may be addressed in time from the assets of the liquidation – up to 22% – the Liquidator has indicated that this could take several years as all claims must first be settled before such assets could be distributed.
It is the Government’s view that 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.
The Bill, which is currently being drafted by the Department of Finance and the Office of Parliamentary Council, proposes to increase the level of Insurance Compensation Fund coverage for all future third party motor claims from its current 65% level to 100% in order to bring it into line with the compensation levels paid out by the 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.
The above provides the backdrop to the Minister’s decision in principle on this matter.
Speaking on the decision Minister Donohoe stated:
‘I have carefully considered the matter including recent legal advice I have received plus an update from the Liquidator, and on the basis of this I have come to the conclusion that if the State steps in to pay the 35% shortfall, it should be able to recover the bulk of what the third party claimants themselves would have received from the Liquidator. By taking this step now and compensating in full, it is hoped that this will encourage the settlement of outstanding claims as quickly as possible’.
Minister of State D’Arcy stated:
‘Officials at the Department of Finance are currently discussing with the Attorney General’s Office whether there are any competition or legal issues such as State aid associated with such an intervention and what if anything are the consequences of this. Once clarity is obtained on this matter, we will announce further details on how we intend to facilitate such payments to Setanta third party claimants’.
ENDS
Tuesday, 30th January 2018