Dáil Éireann Debate, Thursday - 16 July 2015
129. Deputy Sean Fleming asked the Minister for Finance the position regarding the payment of claims due by Setanta Insurance; the level of payments that are expected to be made; the approximate time frame for this matter to be dealt with; and if he will make a statement on the matter. [29606/15]
View answerSetanta Insurance Company Limited is a Maltese incorporated company. Setanta was formally placed into liquidation by the Maltese Financial Services Authority on 30th April 2014 when a liquidator was appointed under the provisions of the Maltese Companies Act 1995. The liquidation is proceeding according to Maltese law.
The liquidation of an insurance company is a legally complex and time consuming process. The Liquidator has advised that settlements and refunds of premiums can only be paid out by the Liquidator after all of the Company's liabilities are quantified. Since it could some time for a particular case to be finalised and, under the Statute of Limitations, claimants are given two years following an accident to make an initial claim, it may take some years before the liquidation process is completed. The Liquidator has informed my Department that based on current claims estimates, he does not expect to be in a position to meet more than 30% of the amounts due to Setanta creditors.
The Insurance Compensation Fund provides for payments to meet the liabilities of insolvent non-life insurers in certain cases where it is unlikely that claims can be met otherwise than from the ICF. Under the Insurance Act 1964, in a liquidation all ICF payments are subject to a limit of 65% of the amount due or €825,000, whichever is the lesser. In the immediate aftermath of the announcement of the liquidation of Setanta, my officials were informed by Insurance Ireland that the Motor Insurers' Bureau of Ireland had indicated that they intended to accept all third party claims. However, the MIBI obtained a legal opinion and, having considered it, they advised the Minister for Transport, Tourism and Sport in late July 2014 that the 2009 Agreement with him does not require the MIBI to satisfy awards against drivers covered by a policy of insurance where the insurer is unable to pay all or part of an award because of insolvency.
The respective roles of the Insurance Compensation Fund and the Motor Insurers' Bureau of Ireland in the compensation of former Setanta policyholders is currently a matter for decision before the High Court. The matter was heard by Mr Justice Hedigan on 13th/14th July 2015. There are no indications yet as to when the outcome of the case can be expected.
My Department and the Central Bank will in due course be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt and how the framework can be strengthened. However, since Setanta is a Maltese authorised company subject to prudential supervision by the Malta Financial Services Authority, any follow-up investigation on the regulatory issues surrounding the firm's failure falls under the responsibility of the MFSA as home regulator.
