Car insurance premiums 'should come down now uncertainty around Setanta collapse resolved'
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 judgement 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 judgement and the uncertainty has been removed. 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 do not now lower premiums.
The cost of motor insurance have gone up by 60pc in the last three years, with High Court and Appeal Court rulings on Setanta cited by insurers up to now as one of the reasons for the hikes.
This is because those courts had said the Motor Insurance Bureau, 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 only 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 is 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.
The liquidator of Malta-registered Setanta, which sold insurance exclusively in Ireland before it collapsed in 2014, says there are 1,750 claims that have yet to be paid out.