Motor Insurers Insolvency Compensation Fund

Background Information

The Insurance Compensation Fund (“ICF”) was established under the Insurance Act 1964 (the “Act”) which was then amended by the Insurance (Amendment) Act 2011 (the “Amendment Act”). In the wake of the decision in the Setanta case, the Oireachtas made a number of changes to the insurance compensation framework in Ireland, particularly in situations where a motor insurer operating in the Irish market becomes insolvent. Amongst the main changes set out in the Insurance (Amendment) Act 2018 (the “2018 Act”) is to effectively increase the level of compensation payable through the ICF to 100%. The 2018 Act provides that in the case of third-party motor insurance claims, where an insurer is insolvent, the ICF will meet 100% of losses incurred.

The difference between the lower of (i) 65% of the claim or (ii) €825,000, being the current limit on compensation payable by the ICF, and the amount of the claim (the “Shortfall”) will be funded by the MIBI by way of an obligation to reimburse the ICF for the amount of the Shortfall. The 2018 Act imposes a statutory obligation on the MIBI to establish, maintain and administer an ex-ante fund to be known as the Motor Insurers Insolvency Compensation Fund (the “MIIC Fund”) which will be funded by contributions from its Members to meet the Shortfall.

Under the 2018 Act, commenced on 1 December 2018, it is envisaged that the MIIC Fund will build up to approximately €200 million, which monies will be invested until such times as the funds are called upon by the ICF to meet claims.

The contribution rate will be subject to an annual review by the Minister, no later than the 31 October each year, and may be varied between 0% and 3% depending on factors such as the amount held in the MIIC Fund and the likelihood of a call on the fund broadly in line with the following parameters:

  • 2% of gross written motor premiums until the MIIC Fund reaches €150 million
  • Reducing to 1% until the MIIC Fund reaches €200 million
  • Contributions to then be suspended (0%) until such time as there is a call on the fund
  • In the event of a significant call on the MIIC Fund and there being insufficient monies in the fund, the contribution can be increased to the equivalent of 3% of gross written motor premiums until the fund reaches €50 million, after which time a contribution equivalent to 2% of gross written motor premiums will again apply
  • The contribution rate cannot exceed 3% per annum

The 2018 Act also sets out the circumstances in which payments will be paid out of the MIIC Fund to the ICF.

Furthermore, section 3H (Failure to make contribution to MIIC Fund) of the Act (as amended by the 2018 Act) outlines the responsibility on the MIBI to collect the contribution from its Members as a contract debt through the courts in accordance with Section 3H(1) of 2018 Act and refer any failures of a vehicle insurer to make a contribution to the Central Bank of Ireland (“CBI”) for appropriate action. This could include preventing the vehicle insurer from issuing any policies as set out under Section 3H(6), and/or be guilty of an offence which is liable on conviction on indictment to a fine or to imprisonment of up to 5 years or both, as set out under Section 3I of the 2018 Act.


Members were required to submit a Declaration of all Motor Gross Written Premium (GWP), certified by an Auditor, to the MIBI no later than 30 June each year. In conjunction with the certified declaration, payment of the MIIC Fund Contribution is to be paid into the dedicated bank account no later than 30 June each year.

Changes to the contributions required from Insurers were introduced in by the Minister for Finance in November 2023. The impact of this is set out below:

  • Motor Insurers supervised by Central Bank of Ireland – writing Irish MTPL risks. MIICF contributions on all motor GWP will fall from 2% to 1% on 1 January 2024. This has been legislated for in SI 507/2023.
  • Motor Insurers supervised in other Member States – writing Irish MTPL risks. Motor Insurers that are supervised in other Member States and that write Irish MTPL risks on an FOS/FOE basis, the MIBI will no longer collect MIICF Contributions on Class 10 MTPL GWP from 23 December 2023, i.e., in practice, for 2023 MIICF contributions payable in June 2024, this will mean that for motor insurers who write Irish Motor Insurance risks on FOS/FOE basis, they will be required to provide a MIICF contribution of 2% x 12 months of all Motor GWP 1/1/2023 to 22/12/2023 to the MIBI and from 23/12/2023 to 31/12/2023 2% on GWP on Classes 1(d), 3 and 7 to the MIBI.

For the 2024 MIICF contributions, payable to the MIBI in June 2025, it will be 1% of Motor GWP Classes 1(d), 3 and 7.

Governance Arrangements

Responsibility for oversight of the MIIC Fund has been delegated by the MIBI Board to the Investment Committee. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities for the MIIC Fund, recommending the investment strategy, and reviewing the investment performance of the fund. Goodbody Advisory Services are the Investment Manager for the fund and have responsibility for investing and managing the portfolio in line with the Investment Strategy and Policy and the Risk Appetite Statement, as recommended by the Investment Committee and approved by the Board of Directors. The Investment Manager reports to the Investment Committee quarterly. MIBI also engaged an external audit firm to carry out agreed upon procedures on the MIIC Fund.

MIICF Annual Report

MIICF Report to Minister from 1 Jan 22 to 31 Dec 22

MIICF Report to Minister from 1 Jan 21 to 31 Dec 21

MIICF Report to Minister from 1 Jan 20 to 31 Dec 20

For more information on the MIICF please see our FAQ’s section at /members-area/faq.1834.html