State fund to cover €40m claims bill owed to drivers following Setanta Insurance collapse
A State fund is set to cover the estimated €40m shortfall owed to hundreds of drivers following the collapse of Setanta Insurance.
Some 1,600 people with claims against the Maltese insurer have been left out of pocket as there is not enough funding left in the collapsed company to pay the claims.
Minister for Finance Paschal Donohoe said a State fund will now foot the bill associated with a shortfall of funds.
Setanta Insurance was placed into liquidation in 2014, which led to a long-running court case.
The Supreme Court eventually found that the Insurance Compensation Fund was liable for third party motor claims.
That judgement meant the Insurance Compensation Fund has to pay up to 65pc of any claim, or €825,000, whichever is the lower figure.
But this left a short to be paid from what was left from the liquidation. The liquidators said they did not have sufficient funds to meet all of the outstanding amounts.
Mr Donohoe has now said the State would step in to pay the shortfall.
“I have carefully considered the matter including recent legal advice I have received plus an update from the liquidator, and on the basis of this I have come to the conclusion that if the State steps in to pay the 35pc shortfall, it should be able to recover the bulk of what the third party claimants themselves would have received from the liquidator.”
He said that by taking this step now and compensating in full, it is hoped that this will encourage the settlement of outstanding claims as quickly as possible.
This decision also applies to the collapse of another insurer, Gibraltar-based Enterprise Insurance, which was smaller in scale and affected around 14,000 motorists.
The estimated cost of this intervention will be in the region of €35m to €45m and will be financed by the ongoing 2pc Insurance Compensation Fund levy in place to recover money owed from the Quinn administration.
This means it is highly unlikely that any Exchequer financing will be required.
What it does mean is that this 2pc levy which is due to run for another 10 years will be extended by about six to eight months.
No additional monies will have to be provided for by the Exchequer, the Department of Finance said.