Bust Setanta 'renewed driver policies' despite winding down
Published 19/04/2014 | 02:30
BUST insurer Setanta was renewing motor polices up until recently, despite promising not to do so after January this year, it has been alleged.
The Dublin-based company had said at the start of the year it was winding up its operations here and would neither take on new business nor renew existing policies.
On Thursday, it went further and decided to dissolve its operations in a move that left 75,000 drivers with no cover.
The firm said it would be unlikely to meet any claims made against it.
The Central Bank advised the firm's customers to immediately seek new cover after the insurer said it had decided that "a solvent run-off is no longer possible".
Now it has emerged that some drivers had been renewing their cover up to last month.
The insurer was a favourite of the 'man with a van' and small firm owners.
Jonathan Hehir of InsureMyVan.ie said he has provided emergency cover for a number of van drivers in the past two days who had only renewed their policies in March.
His brokerage has signed up 1,000 Setanta customers in the past two days.
"We have had a number of people who were sent out renewal notices by brokers, and renewed their cover as recently as March 10. This is even though Setanta had said it was not taking on new business this year," he said.
No one was answering the phones at Setanta's Blanchardstown offices in Dublin yesterday.
Customers of Setanta have been left confused about whether they have cover or not.
Although the company is regulated in Malta, the Central Bank here has ordered Setanta's liquidator to write to all policyholders to advise them of the situation and its implications for them.
"Setanta is not in a position to confirm that claims will be met in full since any and all claims will be subject to the relevant liquidation process. Policyholders should, therefore, make arrangements for alternative cover without delay," the Central Bank said.
Regulatory requirements in Malta are less onerous than here. The Malta Financial Services Authority said that Setanta had surrendered its insurance business licence to it.
"The company is immediately dissolved for all effects and purposes of law," it said, adding that a liquidator had been appointed.
The Maltese regulatory authorities did not respond to questions about when Setanta ceased renewing policies here.
If there are insufficient reserves in Setanta to meet claims, then unpaid claims will have to go through the Motor Insurers' Bureau of Ireland, set up by insurers and the Government to cover claims caused by uninsured and unidentified vehicles.
The bureau is funded by the industry, but this cost is passed on to consumers and adds around €31 to the cost of every motor policy.
But if the bureau is unable to meet the cost of claims, the state-backed Insurance Compensation Fund will have to be used to meet the claims.
A levy of 2pc is imposed on all insurance policies to pay for this compensation fund. It was set up to plug holes in the reserves of Quinn Insurance, which could cost up to €1.3bn.
There are fears this levy may have to be increased if there are a significant number of unpaid Setanta claims.