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THE SUPREME COURT has ruled that the Irish State must be held liable for outstanding insurance claims in the aftermath of the collapse of Setanta Insurance.
Maltese-based insurer Setanta was wound up in April 2014. In the aftermath it was announced that those insured who had been struck by uninsured drivers would not be covered in the aftermath of the collapse.
Over 1,600 claimants have yet to be compensated following the collapse of Setanta, with the winding-up of the firm one of the major reasons cited regarding the inexorable rise of Irish premiums in recent times.
Today’s judgement was arrived at via a 5:2 decision by the seven Supreme Court justices and sees a prior ruling secured by the Law Society of Ireland overturned.
The key ruling in the judgement came from Justice Donal O’Donnell, who questioned the “Victorian certainty” of the decision previously arrived at by the High Court. That judgement can be read here.
The previous decision had ruled that the Motor Insurers’ Bureau of Ireland (MIBI) was to be held liable for the outstanding claims. Now that that ruling has been overturned, the compensation paid will instead come from the State’s Insurance Compensation Fund (ICF), which will account for 65% of the payouts outstanding, the remainder to be paid by the State Liquidator.
‘Payout restrictions must be lifted’
The Department of Finance has responded to the decision saying:
“The position now is that we have clarity in respect to payments that are to be made to Setanta policyholders. Based on today’s decision the Insurance Compensation Fund will now commence the process of making payments of up to 65% to affected policyholders. It is likely that in respect of third party claimants, a significant proportion of the balance of a claim will be met from the proceeds of the distribution of Setanta’s assets on completion of the liquidation process.”
Arising from the Supreme Court decision the Department of Finance is moving speedily to bring certainty to the structure of the compensation framework in the future, particularly in the event of a liquidation of an insurer that is providing motor insurance in Ireland. Draft Heads of a Bill for amendments to the relevant Insurance Acts are expected to be brought to Government by the Minister for Finance shortly. This legislation will reflect the judgement of the Supreme Court today and the recently published Department of Finance report on the reform of the Insurance Compensation Fund which will ensure 100% of third party motor claims will be covered in future.
Reacting to the Supreme Court ruling, Sinn Féin’s Pearse Doherty said that the 65% restriction regarding compensation from the ICF should be waived in this case, while calling for a drop in premiums:
“Those restrictions should be removed for Setanta customers who have had to wait so long,” he said.
I note the insurance industry has been using the uncertainty of the Setanta case as an excuse to justify premium increases and as an explanation as to why new entrants are not entering the market. I will be expecting to see a drop in premiums on the basis that that uncertainty should now be ended with the insurers’ case winning out.
Fianna Fáil’s finance spokesperson Michael McGrath likewise called for the ICF’s ceiling of €825,000 to be lifted.
“This cannot be allowed to stay as is,” he said.
Claimants must not be left to foot the bill. As I have said previously, the Government must ensure fairness is applied, and if this requires both policy and legislative change, then so be it.
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nonsense, tax payers take on banks liabilities now insurance liabilities. few year ago the European court ordered us to take on Waterford glass pension liabilities, jes,,its socialism when it comes to the small tax payer bailing everyone out, and when he/she needs a bailout its capitalism…………. Mmmmm!
@Dáithí Ó Raghallaigh: Dotty…only you could come up with that ‘logic’….Mmmmm
Surly it should be the taxpayer in Gibraltar paying the bill. If it was an Irish registered company I would have less of a problem.
@Paul: How does Gibraltar come into it ¿¡
@Fank Pulman: Yes – the company was based in Malta.
@Fank Pulman: thaught I read it was based there.
@Paul: that’s what happens when you read the headline only.
What was the Insurance Regulator at ?Asleep at the wheel again just like the Central Bank in relation to the banks .
Who lost their job in the regulators office over this fiasco ?
@tom houlihan: LOL, accountability in Ireland, you got to be joking.
@tom houlihan: Prisons are near full with regulators being rewarded for their diligence! We’re all expected to accept any old worm thrown our way! Snail’s next! EU snails!
@tom houlihan: Can’t understand ho w the bill falls on the Irish compensation fund. This company was presumably regulated and approved by the Maltese authorities and operated in Ireland and elsewhere under the EU financial passport system.
@tom houlihan: it seems to me every regulator in this country will never be held accountable actually they more likely to be awarded for their incompetence
@tom houlihan: regulated in Malta…..
Where did the story about the people not trusting the media go???
@gordon larney: fake news I suppose.
@gordon larney:
It was found to be unreliable so had to be removed.
@John Campbell: maybe you are right john, it said only 25% of Irish people trusted the media,,, I thought 25% was very high….
@gordon larney: Have you looked behind the couch ?
@gordon larney: Oh,those 25% were high alright…
Hey this insurance looks very cheap, almost too cheap, what could possibly go wrong?
Ahh sure this ruling only cements my emotional joy of being a fool of a tax payer. Just like the embarrassing Sean (skip free) Fitzpatrick joke.
Was the insurance company not incorporated in Malta….Was it not Maltese responsibility to regulate this company and pay compensation….
@John003: The domicility of a company does not transfer it’s liabilities to that country.
Here we go again … here we go again & again & again & again ..&&&&&
Yet more wine turns to water in Noonan hands. Begone, for good of ALL! Yes more lolly for legal buddies!
Oh great, so I’ll be getting a refund for my ridiculous insurance premium this year right…. eh right?
@Peter Pistolé: no you will getting another levy more than likely
Is this the reason our government didn’t make a peep when the insurance industry were and are ripping us off.
@David Murphey: there was another company, wrightway underwriting that had was nearly wound up and it was domiciled in gibraltar. Thats probably what you were thinking of
Well they cant use this as an excuse to up my insurance premium next year!
@Jimmy Farrell: they’ll think of some
thing….
How is this going to affect my insurance? Is it going to be like the Quinn debacle?
Isn’t there a Maltese compensation fund? This was a Maltese registered company. The Maltese tax payer should have to pony up for this.
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