Motor insurance premiums 'to rise by €50 each after court ruling'
Published 03/03/2016 | 02:30
Insurance companies have warned that motor premiums will rise further following an appeal court judgement.
The Court of Appeal has upheld an earlier judgement that the Motor Insurers' Bureau has to cover the €90m cost for the collapse of Setanta Insurance.
The decision could add an extra €50 to each premium, insurance experts said.
The Motor Insurers' Bureau of Ireland (MIBI) was put in place to compensate victims of road traffic accidents caused by uninsured and unidentified drivers.
The MIBI had argued that the €90m claims associated with the collapsed Setanta should be covered by the Insurance Compensation Fund, which traditionally compensates those impacted by an insurance company insolvencies.
The Law Society opposed the appeal. It said it was envisaged, in all the agreements governing the MIBI since it was set up in the 1950s, that it would have to pay out in the event one of its members becoming insolvent.
The Court of Appeal has upheld the original High Court decision.
Chief executive of the Motor Insurers' Bureau Patrick O'Brien expressed disappointment, and called for talks with the new Government to sort out the issue.
"This disappointing decision has significant implications for the MIBI and the wider motor insurance industry.
"We will be seeking urgent discussions with the incoming Government to clarify the respective roles of the MIBI and the Insurance Compensation Fund, in the eventuality of further insolvencies in the insurance sector."
Mr O'Brien said that if the MIBI is required to provide for these claims, which amount to an additional 150pc of its annual claims' budget, "this will have significant implications for insurers and can only further exacerbate the cost of premiums paid by insured motorists". Motor premiums have risen by 30pc in the past year.
Kevin Thompson, of Insurance Ireland, said premiums would rise, and the decision meant liquidation will become a viable option for imprudent insurers who will "dump" their losses on surviving insurers.