Thursday 27 June 2019

Homeowners could face huge bills as another insurance firm collapses

Finance Minister Paschal Donohoe. Photo: Steve Humphreys
Finance Minister Paschal Donohoe. Photo: Steve Humphreys
Charlie Weston

Charlie Weston

Hundreds of homeowners have been left without insurance cover if their homes develop structural defects following the failure of a Danish insurer.

Alpha Insurance filed for bankruptcy earlier this year. It had 12,000 customers here.

Last week, 50,000 drivers had to get alternative insurance cover when another Danish insurer, Qudos, went into liquidation.

Now it has emerged that the failure of Danish-regulated Alpha has left 1,600 homeowners here unable to get alternative insurance.

The homeowners were covered for structural defects insurance, which was bought for them by the developers of their homes.

Fianna Fáil finance spokesman Michael McGrath said the homeowners were left in the lurch and were vulnerable if their homes developed defects.

"This specific issue surrounds latent defect or structural warranty insurance, which is typically taken out by the developer and protects the homeowner if major structural issues with the property emerge," he said.

Mr McGrath said the 1,600 homeowners were unable to get alternative cover.

"It is my understanding that homeowners are unable to take out replacement insurance themselves," he added.

He said this threatens to leave affected homeowners completely exposed if serious structural issues with their house emerge.

The lack of such cover can restrict homeowners in selling their house.

He called on the Central Bank to clarify the matter.

It is understood insurers are reluctant to take over a structural defects policy once a house has been constructed.

Homeowners affected who had structural insurance with Alpha Insurance were advised to contact the developer who built their house and to ensure that alternative cover has been arranged.

Mr McGrath added: "This is yet another example of a breakdown in regulation in the European insurance market. Only last week another Danish regulated insurance company, Qudos, went into liquidation and we are still coming to terms with the failures of Enterprise and Setanta."

He said major reform is needed at a European level to protect customers and claimants when insurance companies fail.

In a Dáil reply to the Fianna Fáil TD, Finance Minister Paschal Donohoe said owners of properties unable to get new cover should contact the developer of their property.

Should there be a claim on a policy, there may be assistance available from the Danish Insurance Guarantee Fund in the first instance.

If such an application were unsuccessful, there may then be recourse to the Irish Insurance Compensation Fund, the Finance Minister said.

The Central Bank said Alpha Insurance has published country specific information for policyholders, including Ireland, on its website at Alphagroup.dk/ireland.

It said that while full compensation from the bankruptcy estate is unlikely, partial refunds may be available.

The website gives information on how to claim premium refunds and other claims. The Danish Guarantee Fund may also cover premium refunds for some private insurances depending on the specifics of each case, the Central Bank said.

Irish Independent

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