Dáil Éireann Debate, Tuesday - 28 February 2017
222. Deputy Michael McGrath asked the Minister for Finance the motor insurance compensation framework in place at present in the event of a motor insurance firm being liquidated; and if he will make a statement on the matter. [10002/17]
Amharc ar fhreagraInsurance guarantee schemes provide last-resort protection to policyholders and beneficiaries when insurers are unable to fulfil their contractual commitments. They protect against the risk that claims will not be met in the event of a failure of an insurance undertaking.
The main insurance guarantee scheme in Ireland is the Insurance Compensation Fund (ICF) which covers the liabilities of insurance policyholders in the event of a failure of a non-life insurance undertaking (other than a health insurer).
The ICF is primarily designed to facilitate payments to policyholders in relation to risks in the State where an Irish authorised non-life insurer or a non-life insurer authorised in another EU/EEA Member State which is providing insurance in respect of risks within the State, goes into liquidation and the approval of the High Court has been obtained for such payments.
With the approval of the High Court, money may be paid out of the Fund to the liquidator of an insolvent insurer to meet claims (other than the refund of a premium) due to a natural person under a policy issued by the insurer, up to a limit of 65% of such claims and a ceiling of €825,000 per claimant. Payments from the Fund are made only where it is determined by the High Court that it is unlikely that the claim can be met otherwise than from the Fund.
The Deputy will also be aware that the High Court decision in September 2015, ruled the MIBI liable for third party motor insurance claims in the event of the liquidation of an insurance company. This decision was appealed by the MIBI, however in March 2016, the Court of Appeal dismissed the appeal. Subsequently, in April 2016, the Supreme Court made an order allowing an appeal to that Court. This appeal was heard by the Supreme Court in October 2016 and judgement was reserved. No date has been specified for judgement.
MIBI's main purpose is to pay financial compensation to innocent victims of uninsured and/or untraced vehicles. The MIBI compensates for death or injury to a person, or damage to property which is required to be covered by an approved policy of insurance under section 56 of the Road Traffic Act 1961. The amounts payable in respect of claims under the Road Traffic Act is 100% to a current limit of €1,220,000 per claim for property, regardless of the number of claimants. The limit does not apply in the case of personal injury.
Finally, the Review of the Framework for Motor Insurance Compensation in Ireland, which was published in June 2016, sets out the Joint Working Group's assessment of the current framework and makes recommendations to provide certainty regarding the compensation framework in Ireland. Its key recommendations are:
- The level of cover from the ICF for third party motor insurance claims be increased from 65% to 100% in line with that currently provided by the Motor Insurers' Bureau of Ireland.
- The increased coverage of the ICF be funded by a direct contribution to the ICF from the motor insurance industry. While the Review indicated that this would come via the Motor Insurers' Bureau of Ireland, to the value of 35% of the third party motor insurance claims, further discussions are ongoing with industry about options for alternative funding arrangements which would provide greater predictability about their financial exposure.
