Insurance firms told to pay more into fund to bail out bust rivals
INSURANCE companies will have to pay more into a fund that bails out insurers that collapse, under proposals made by a Government officials.
Third-party motor claims due to the liquidation of an insurer should be met in full by the Insurance Compensation Fund (ICF), the officials recommend.
The ICF was put in place to compensate those impacted by an insurance company insolvency.
It is funded through a 2pc levy on home, motor and commercial insurance. However, the fund only pays 65pc of a claim. Now a joint working group established last year by the Department of Finance and the Department of Transport, Tourism and Sport has recommended that insurers pay more into it so it meets 100pc of the value of claims.
And coverage of the fund should be extended to meet third-party claims, according to the 'Review of the Framework for Motor Insurance Compensation in Ireland'.
The review group, made up of Government officials, was put in place in response to the collapse in 2014 of Malta-based Setanta Insurance.
Setanta's failure led to a legal dispute over who should pick up the cost for the 1,700 claims that could cost €95.2m to settle.
It was initially expected that the ICF fund would cover the cost of the Setanta claims, but the Court of Appeal decided the Motor Insurers Bureau should pay out. This decision is being referred to the Supreme Court.
Finance Minister Michael Noonan said the new recommendations, once implemented, will give greater certainty to motorists.
"Importantly, for insured motorists this will facilitate speedier payments and a simplification of the claims procedure," he said. Motor premiums rose almost 40pc last year, and are up 70pc in the last three years.