EU to probe collapse of Setanta Insurance
The European Commission will conduct a probe into the collapse of Setanta Insurance, the company that shut last week leaving thousands of drivers stranded without cover.
EU Commissioner for Internal Markets Michel Barnier confirmed that his office is to investigate the closure.
The insurer only operated in Ireland, but was licensed in Malta and regulated by the Maltese Financial Services Authority.
The decision to liquidate the insurer has meant 75,000 drivers have no cover and has left a huge question mark over how claims will be paid.
In a statement last week, Setanta said it was not in a position to confirm that any insurance claims would be met.
And even though the insurer is not regulated here, any claims that Setanta cannot pay will have to be met by compensation funds set up by the State.
MEP Pat 'the Cope' Gallagher secured the commitment for the EU probe.
An email from Mr Barnier's officials to the MEP states: "We are looking into the matter and will come back with a more thorough reply shortly."
Setanta made use of EU legislation, which allowed it to sell insurance here although it was regulated in another EU country.
The insurer had been winding down its business here since the start of the year, when it had 100,000 policyholders.
In a statement last week on its website, the company said it held a meeting of its shareholders and decided that "a solvent run-off is no longer possible".
This implies that it had insufficient reserves to meet claims made by its customers.
Mr Gallagher said: "It is necessary for the EU Commission and the Government to outline how an insurance company was allowed to operate in Ireland without the necessary funds.
"In the aftermath of the economic and financial crisis, the EU institutions established the European Insurance and Occupational Pensions Authority to oversee the supervision of the insurance sector in Europe. However, it appears that in reality we still lack adequate supervision and oversight of the financial sector in Europe."