Dáil Éireann Debate, Thursday - 23 November 2017
86. Deputy Michael McGrath asked the Minister for Finance the progress on the motor insurance compensation framework; the progress of legislation to protect policyholders and claimants in the event of a liquidation of a freedom of service insurance company; the extra protections that have been established since the Supreme Court decision on a company (detail supplied); and if he will make a statement on the matter. [49844/17]
Amharc ar fhreagraThe failure of Setanta Insurance in 2014 and the uncertainty that followed over the compensation arrangements for claimants highlighted weaknesses in the existing insurance compensation framework in Ireland. Following the placing of Setanta into liquidation, legal proceedings commenced between the Law Society of Ireland and the Motor Insurers Bureau of Ireland. In May of this year, the Supreme Court overturned a High Court decision deeming MIBI liable for the claims in respect of Setanta. The consequence of this is that the Insurance Compensation Fund (ICF) has been deemed responsible for the payment of claims subject to the limits set out in the Insurance Acts (65% or €825,000 whichever is the less).
The Review of the Framework for Motor Insurance Compensation in Ireland was completed in June 2016 and was approved by the Ministers of Finance and Transport, and noted by Government in July 2016. Its key recommendations were that:
- Coverage of the ICF would be extended to include third party motor insurance claims in the event of a liquidation of an insurer;
- The level of compensation from the ICF for third party motor claims to be increased from 65% to 100% in line with that currently provided by MIBI ;
- The increased coverage of the ICF to be funded by a direct contribution to the ICF from the motor insurance industry via the MIBI to the value of 35% of the third party motor insurance claims;
- Administration of the ICF to be transferred from the Accountant of the Courts of Justice to the Central Bank of Ireland;
- 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.
To implement these recommendations, heads of the Insurance (Amendment) Bill were approved by Government in July and then sent to the Office of the Parliamentary Counsel (OPC) for priority drafting and to the Joint Oireachtas Committee for pre-legislative scrutiny. My Department continues to work closely with the OPC and other relevant stakeholders to progress the drafting. This legislation will provide greater certainty for both consumers and industry and will ensure that 100% of third party personal injury motor insurance claims are covered ( for property claims it will be 100% up to a limit of €1,220,000) by the ICF in the event of any future insurance company failure.
At an EU level, it is important to note that the regulatory framework, underpinning the operation of insurance companies, has been strengthened with the introduction of Solvency II from 1 January 2016. This is a much more risk sensitive and demanding system, with increased capital requirements, which are consistent across all Member States. The role of supervisory authorities is also significantly enhanced, including provision for more cooperation between Member States.
These measures, at national and EU level, should make any similar failure of an insurance company in the future less likely, and provide certainty that if such an event were to occur, then 100% of third party motor personal injury motor insurance claims would be covered by the ICF.
