Monday, 6th November 2023
MIICF Contribution Rate change and ICF Levies
As per our communication of 11 October 2023, the Minister of Finance announced in his Budget 2024 speech, that for motor insurers regulated in Ireland, MIICF contributions on all motor GWP will fall from 2% to 1% on 1 January 2024.
From 23 December 2023, Ireland will no longer be collecting MIICF contributions nor charging the ICF levy on third party motor insurance ‘imported’ into Ireland, i.e., Irish motor risks written on a Freedom of Services (FOS) or Freedom of Establishment (FOE) basis.
The Department of Finance (DOF) have relayed that their clear legal advice is that to continue to charge the ICF levy on this cohort would not be permissible under the Motor Insurance Directive (MID) and to do so would represent a high degree of legal risk. Likewise, it is their view that unfortunately it is not possible to allow a longer implementation time.
In terms of legislating for these changes, the DOF intend to progress this in the Motor Insurance Insolvency Compensation Bill legislation, by 23 December 2023. In the event that it is likely that Ireland might miss this deadline, the Government will consider bringing forward a Statutory Instrument to deal with the ICF levy charged upon third party motor insurance ‘imported’ into Ireland.
For symmetry, the same position will apply to the MIICF levy charged upon third party motor insurance ‘imported’ into Ireland. The DOF would envisage a similar legislative process be applied. They have undertaken to keep the MIBI updated on developments.
The key message is, that the requirements under the MID to cease collecting ICF levies and MIICF on Class 10 Motor Third Party Liability (MTPL) GWP for FOS/ FOE inwards business will apply from 23 December 2023.
The DOF have confirmed these FOS/FOE changes will take effect just after 23:59 on Friday, 22 December 2023 in order to correctly align with the MID. Therefore the effective date for these changes is now 23 December 2023.
It should be noted the 2% ICF levy for the ‘imported’ motor cover will continue to apply upon the other motor insurance classes which comprise such premiums e.g., classes 1(d), 3 & 7. It should also be noted such FOS / FOE firms are also likely to be subject to an ‘export’ levy from the Member States where they are regulated.
Finally, the DOF will separately consider the matter of a levy on motor insurance ‘exports’ from entities regulated here across the EU post enactment of the Motor Insurance Insolvency Compensation Bill.
Impact for various categories of motor insurers*
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.
The 2% ICF levies remain unchanged.
Motor Insurers supervised in other Member States – writing Irish MTPL risks
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 these motor insurers who write Irish Motor Insurance risks on an FOS/FOE basis in 2024, their 2024 MIICF contributions, payable to the MIBI in June 2025, will be 1% of Motor GWP Classes 1(d), 3 and 7.
We have been advised by the DOF, that in practice, for 2023 ICF levies, this will mean that for motor insurers who write Irish Motor Insurance risks on FOS/FOE basis, they will be required to pay ICF levies of 2% x 12 months of all non-life GWP 1/1/2023 to 22/12/2023 to the Revenue Commissioners and from 23/12/2023 to 31/12/2023 2% on non-life GWP excluding class 10 GWP.
For insurers who write Irish Insurance risks on an FOS/FOE basis in 2024, their 2024 ICF levies, payable to the Revenue Commissioners, will remain at 2% on all non-life GWP excluding class 10 GWP.
Motor Insurers supervised by Central Bank of Ireland – writing MTPL risks in other Member States on a FOS or FOE basis
The DOF will separately consider the matter of a levy on motor insurance ‘exports’ from entities regulated here across the EU, post enactment of the Motor Insurance Insolvency Compensation Bill.
Should you require any further clarifications, please do not hesitate to contact us at member.services@mibi.ie
*Based on our interpretation of Department of Finance advices and SI 507/2023.