Setanta Insurance Update

On 4th September 2015, Mr Justice John Hedigan of the High Court ordered the Motor Insurance Bureau of Ireland (MIBI) to pay out on the 1,750 – 2,000 outstanding claims following the collapse of the Setanta Insurance Company last year.

The case arose due to the lack of clarity regarding who was liable to compensate those affected by the collapse of Setanta insurance. Initially it was anticipated that the Compensation Fund would deal with the claims but many argued that it was the responsibility of the MIBI. Eventually proceedings were brought by the Accountant of the Courts of Justice who has statutory responsibility for administering the Insurance Compensation Fund to determine the matter and the Court then directed that the Law Society of Ireland should act as claimant and the MIBI as respondent in the proceedings.

Setanta Insurance was a member of the MIBI, which had been set up by the Minister for Transport to meet claims against uninsured or untraced motorists.

Following the collapse of Setanta, solicitors immediately directed most claims to the MIBI and in some instances sought to join the MIBI as party to proceedings already issued or about to be issued. The MIBI claimed it did not have to satisfy awards against policy holders where the insurer was unable to pay all or part of the award because of insolvency and thus many claims have been in limbo since.

Mr Justice Hedigan said it was clear that the background to the MIBI agreements was the obligation to protect the innocent victims of uninsured drivers. He said that from the evidence and legal argument before the court it seemed to him that the wording of the 2009 MIBI Agreement meant that it had a liability to pay out in respect of claims against persons who had been insured by an insurer which had become insolvent.

It is estimated that the Setanta liability is around €90millon therefore it is more than likely that the MIBI will seek to appeal the decision.