Failure to reduce motor insurance premiums 'would be breach of faith'
Motor insurance premiums should now come down after the uncertainty around the Setanta Insurance collapse was resolved in the courts.
A failure to reduce premiums would now be seen as a breach of faith by insurers, Minister for State Eoghan Murphy told the Oireachtas Finance Committee.
Mr Murphy said the Supreme Court judgment last week was a win for insurers who had complained that previous court rulings affected all insurance companies underwriting motor insurance here.
They claimed the previous rulings meant they had to make financial provision for any future collapses.
Sinn Féin's Pearse Doherty told the committee that insurance companies had been using the Setanta situation as the main reason to "fleece" motorists with exorbitant rises in premiums.
He asked Mr Murphy, who has been charged by the Government to push through reforms to control the cost of insurance, if premiums will now come down.
Mr Murphy said a huge uncertainty had now been removed for insurance companies.
The previous rulings had meant insurers had to put aside reserves on the basis that other insurers would collapse and they would have to bail them out.
"We now have a judgment and the uncertainty has been removed," he said.
"This should help to reduce premiums down."
He went on to say it would be seen as a "breach of faith" by the Government and consumers if insurance companies did not now lower premiums.
"The insurance industry has had a win here. It should have a positive impact on insurance premiums," he repeated.
The cost of motor insurance has gone up by 60pc in the past three years, with High Court and Appeal Court rulings on Setanta cited by insurers as one of the reasons for the hikes.
This is because those courts had said the Motor Insurers' Bureau of Ireland, which they fund, should pay Setanta claims.
Insurers complained that the previous rulings exposed them to a situation where they would have to make financial provision in the event of any other insurance company going bust.
Malta-regulated Setanta collapsed three years ago, with claims of €95m. The bust company has funds to pay a third of this, according to its liquidator.
But last week the Supreme Court sided with the industry-funded Motor Insurers' Bureau of Ireland. The judges said it was not liable for claims brought against Setanta.
The court's five-to-two majority decision means successful claims against Setanta will have to be met from the State's Insurance Compensation Fund.