Average motor insurance holders to face estimated additional increase of €52.50 if liabilities remain
The Motor Insurers’ Bureau of Ireland (“MIBI”) is to appeal to the Supreme Court over the allocation of the Setanta Insurance Co. Ltd (“Setanta”) liabilities. Earlier this month when the Supreme Court agreed to hear the appeal, it described the issue involved as “a very serious one”. The MIBI has now lodged their formal Intention of Notice to Proceed with Appeal with the Court.
The case arises out of a High Court judgement which found that the MIBI was liable for claims against the Maltese registered Setanta following that company’s placement in liquidation. The MIBI maintains that these liabilities should pass to the State’s Insurance Compensation Fund, a practice previously established following the failure of PMPA and Quinn Insurance.
If liabilities are not transferred to the Insurance Compensation Fund, the MIBI believes it will result in an additional cost of approximately €52.50 to the average Irish motor insurance premium.
Speaking about the Supreme Court appeal, Patrick O’Brien, Chief Executive of the MIBI said:
“We are grateful that the Supreme Court has agreed to hear our appeal and we have decided to move forward with the case. Like the Supreme Court, we believe this is a very serious issue. As the implications of this case will have a significant impact on motor insurance policyholders, the motor insurance market as well as the ongoing operations of the MIBI, it deserves the judgement of the highest court in the land.
“Not only is this case adjudicating on a significant specific liability – it is also establishing a precedent which could have ongoing implications for the entire motor insurance sector in Ireland. If the current High Court ruling stands this will impact on the sector’s understanding of the role of the Insurance Compensation Fund. It will also mean a major shift for the MIBI beyond the purpose for which it was originally established. These are extremely serious considerations and are likely to require closer scrutiny by the industry and Government alike.
“On a more practical basis, it is worth noting that last year the MIBI provided €58.4million in funding for claims against uninsured/untraced drivers as per our legal remit. Our funding comes from our members, the various motor insurance companies operating in Ireland, and we estimate that these liabilities resulted in a cost of approximately €34 on the average annual motor insurance premium. The Setanta liabilities are expected to amount to approximately €90 million. On that basis, the estimated impact on the average motor insurance policy will be an additional €52.50.
We look forward to presenting the legal arguments to the Supreme Court in the course of our appeal and to establishing exactly how Irish law understands the responsibilities of the MIBI and the issues raised by the Setanta liquidation,” Patrick O’Brien concluded.
ENDS.
For further information contact Jimmy Healy on 087 6479104.
Notes for Editors:
The Court of Appeal made their judgment following an appeal taken by the MIBI against a ruling made by the High Court on liability for the losses caused by the failure of Setanta.
Historically the Insurance Compensation Fund has compensated victims impacted by insurance company insolvencies. The MIBI believes that the appropriate entity to compensate the victims impacted by the liquidation of Setanta is the Insurance Compensation Fund.
Setanta is a Maltese based insurer, which sold motor Insurance policies in Ireland, but was not subject to prudential regulation by the Central Bank of Ireland. It is now in liquidation and cannot honour, in full, the claims against its Irish policyholders.
It is estimated there are 1,750 claimants against Setanta Insurance and that the liabilities will reach approximately €90 million.
About The Motor Insurers Bureau of Ireland (“MIBI”)
The MIBI was established in 1955 by an Agreement between the Government and the companies underwriting motor insurance in Ireland for the purpose of compensating victims of road traffic accidents caused by uninsured and unidentified vehicles. All insurers underwriting motor insurance in Ireland are required to be members of the MIBI. The MIBI is funded entirely by motor insurance companies operating in Ireland and ultimately by premiums paid by all insured motorists. In the year ended December 31, 2014, the MIBI paid claims of €60.5m.
You can learn more by visiting www.mibi.ie