Thursday 27 July 2017

Charlie Weston: Excuses for massive premium hikes disappearing faster than a boy racer

(Stock photo)
(Stock photo)
Charlie Weston

Charlie Weston

One of the many excuses insurers have made for hiking premiums has now disappeared. The collapse of Malta-regulated Setanta Insurance in 2014 caused mayhem in the insurance industry.

Some 1,700 claims have gone unpaid, valued at €95m, ever since.

According to the liquidator of Setanta, it can only meet 30pc of the cost of the claims.

Maltese regulators have walked away from the problem.

As a result, the courts here were asked to determine which fund should pay up.

Insurers had expected the State's Insurance Compensation Fund to cover the cost of claims for those insured with Setanta who had an accident, or drivers claiming off someone who was insured with the firm.

The Insurance Compensation Fund was set up to bail out insurers that collapse.

It has been used to plug the massive deficit in Quinn Insurance, and PMPA in the past. It is funded through a 2pc levy on home, motor and commercial insurance.

But the High Court decided the Motor Insurance Bureau of Ireland, which is funded by the insurance industry, should pick up the tab for the Setanta claims.

Insurers complained this exposed them to the situation where they would have to make financial provision in the event of any other insurer going bust.

The High Court had effectively sided with the Law Society, and dismissed arguments from insurers that the bureau was set up only to compensate victims involved in an accident with an uninsured or unidentified driver.

The Court of Appeal then upheld the High Court judgment, so the bureau took the issue to the Supreme Court. Now the Supreme Court has come down on the side of insurers.

That eases some of the pricing pressure on premiums, and so is good for drivers.

One by one, the excuses from the industry for gouging us on the cost of cover are disappearing faster than a boy racer on an open road.

Irish Independent

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