The Motor Insurers’ Insolvency Compensation Fund (MIICF) has passed the €100m mark. According to figures released by the Motor Insurers’ Bureau of Ireland (MIBI), who manage the fund, as of the 30th September, the value of the MIICF portfolio stood at €110.8m.
The fund was set up to assist the Insurance Compensation Fund (“ICF”) in a situation where a motor insurer operating in the Irish market becomes insolvent.
The Insurance (Amendment) Act 2018 (“2018 Act”) imposes a statutory obligation on the MIBI to establish, maintain and administer an ex-ante fund to be known as the MIICF which is funded by contributions from its members.
Under the 2018 Act, commenced on 1 December 2018, it is envisaged that MIICF will build up to approximately €200 million, which monies will be invested until such times as the funds are called upon by the Insurance Compensation Fund to meet claims. The contribution rate is 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 MIICF and the likelihood of a call on the fund. The contribution rate parameters are set out below;
• The contribution rate is 2% of gross written motor premiums until MIICF reaches €150 million
• Once MIICF reaches €150m the contribution rate reduces to 1%
• When MIICF reaches €200m the contribution rate is suspended to 0%
• In the event of a significant call on MIICF and there being insufficient monies in the fund, the contribution rate can be increased to 3% of gross written motor premiums until the fund reaches €50 million, after which time the contribution rate will revert to 2% of gross written motor premiums
• The contribution rate cannot exceed 3% per annum
The Minister of Finance has confirmed that the contribution rate will remain at 2% for GWP written in 2023.
The total contribution amount collected from all members in June 2022 was €38.6m (June 2021: €38.8m).
The investment philosophy for MIICF is to ensure that the company invests with the intention of holding investments for the long term or until they are required for a liquidity event, e.g., a motor insurer insolvency. The overall principle is a low-risk strategy that endeavours to maintain capital preservation in a manner consistent with the MIBI’s risk appetite and considering operational, financial, capital and liquidity requirements. The funds are invested in low-risk liquid investments in line with the investment strategy and policy which is executed by the investment manager and oversight is provided by the investment committee.
In accordance with the 2018 Act, MIBI prepare a report to the Minister of Finance which is due to be submitted by 31 July each year. The report outlines the contributions received from members, an overview of the investment environment and most importantly the amount available to be paid to the ICF in the event of an insurer insolvency. In addition MIBI engage an external auditing firm to carry out agreed upon procedures to ensure MIBI are in compliance with the 2018 Act.
The 2021 Report to the Minister including the agreed upon procedures report was provided to the Department of Finance on 29 July 2022. The Department of Finance confirmed that the Report to the Minister was laid before the Oireachtas on 26 September 2022. The 2021 Report to the Minister is available on MIBI website, see the link here: MIICF
MIBI website also provides further information in respect of MIICF. See the link here: FAQ's