The Government has given its approval for the drafting of legislation to amend certain provisions of the Insurance Act 1964, in order to implement certain recommendations for reform of the Motor Insurance Compensation regime in Ireland.
It is intended that the Bill, will address the recent Setanta ruling, where the Supreme Court found the Insurance Compensation Fund (ICF) liable for third party claims (in lieu of the Motor Insurers Bureau of Ireland (“MIBI”)) arising from the insolvency of Setanta, the failed motor insurer. In doing so, it overturned the decisions in the High Court and the Court of Appeal.
The stark difference in compensation provisions (the MIBI effectively covers 100% of an award, whereas the ICF only covers 65%, with a cap of €825,000), was the basis for the Setanta case and it highlighted the need for the issue to be addressed.
Minister O’Donohoe stated that “the failure of Setanta and the uncertainty that followed over the compensation arrangements for claimants highlighted weaknesses with the current insurance compensation framework”.
The Insurance (Amendment) Bill 2017 will increase the level of insurance compensation fund coverage for future third party motor claims from 65% to 100%, resulting in it coming into line with the compensation levels paid out by the MIBI.
This will provide greater certainty for both consumers and the industry, regarding the insurance compensation framework in Ireland.
The Bill will also provide for the transfer of the administration of the ICF from the Accountant of the Courts of Justice to the Central Bank of Ireland and for a more formal role for the State Claims Agency in the event of a failure of an insurance company resulting in a draw on the ICF.
This Bill also deals with the issue of providing amendments in relation to the time limit for making applications to the High Court for payments from the ICF from once in any 6 month period to once in any 3 month period, to allow payments to be made more frequently.