SETANTA INSURANCE UPDATE
It’s good news for third party claimants caught up in the long running saga involving Setanta Insurance. The Minister for Finance has this week said that the State will ensure that third party claimants affected by the collapse of Setanta Insurance are compensated in full.
The specific details of the scheme have yet to be announced but it comes as welcome news for claimants as they had been faced with receiving 65% of the value of their claims.
It is understood that around 1,600 claims are outstanding at a cost of around €90 million.
Setanta Insurance collapsed in April 2014 leaving potential claimants together with Setanta policyholders in limbo. Claimants were unsure whether they would ultimately be compensated by the Insurance Compensation Fund or the MIBI. An application to the Court was made by the Accountant of the Courts of Justice who has statutory responsibility for administering the Insurance Compensation Fund to determine the matter. The Court then directed that the Law Society of Ireland should act as claimant and the MIBI as respondent in the proceedings.
Ultimately the Supreme Court in Ireland found in favour of the Motor Insurers’ Bureau of Ireland (MIBI) meaning that the state and Irish taxpayers will foot the bill for compensating those with claims pending against Setanta insurance. This however was not the end of the road as the Compensation Fund is only obliged to pay 65% of the value of the claim and with it widely expected that there would be insufficient funds available following the liquidation, claimants were facing a shortfall in their damages. Hopefully these cases can now be concluded as expeditiously as possible although the Compensation Fund only issues payments every six months and whilst the Irish Government has agreed in principle to cover the shortfall the mechanics have not been specified at the moment.
It is unlikely that Setanta policyholders will receive any redress in respect of outstanding premiums but nonetheless this decision will come as a huge relief to many Setanta policyholders with claims pending against them. Prior to the announcement they were facing the prospect of being personally pursued for the shortfall in any claim being brought against them which understandably caused considerable distress to many. This decision by the Irish Government is welcome all round and the new legislation ensures a debacle of this nature never occurs again.