The handling of the Setanta Insurance debacle by those responsible for the legislative protection in Ireland and consumer protection in Malta has been below par, to say the least. While everyone is aware of the myriad of legal wrangling and complexities that exist around the liquidation of a company - particularly when it's regulated in a different country - it is Setanta Insurance customers who have been cast adrift.
While lost premiums caused consternation when the collapse of Setanta Insurance came to light, it's the far bigger sums of money involved in the claims that are the real issue. About 2,000 claims with a total value of €35 million are on the books of the Setanta Insurance liquidator, according to the Joint Oireachtas Finance Committee.
When you're involved in a car crash that was your fault the person you crashed into can claim the full cost of their financial loss against you, which could amount to tens of thousands or even millions of euro. Having insurance indemnifies you, so this liability transfers to the insurance company. For Setanta customers, that liability remains with them. So anyone they crash into is perfectly within their right to extract that debt from them - even if it costs the Setanta customer everything they have.
Months have now passed and still no clarification has been given as to the handling of outstanding Setanta Insurance claims. Some of the questions which still need to be answered include whether or not a Setanta Insurance policyholder can be personally sued - and how much the delay in dealing with the issue is costing the taxpayer and Setanta policyholders.
At the very least, at this late stage, a dedicated claims-handling division should have been set up to deal with enquiries and manage the claims. That way, those out of pocket would at least have someone to contact.
There are so many entities and bodies in the mix in relation to this situation, including the liquidators, the financial regulators in both Malta and Ireland, the insurance lobby group, Insurance Ireland, the Motor Insurance Bureau of Ireland (MIBI), and of course the State. It was the State which agreed to the EU legislation that allowed Setanta Insurance to be regulated in one country while conducting the majority of its business in another country.
Policyholders and claimants simply don't know where to turn. At this point, regardless of who is going to end up paying for Setanta insurance claims, one of these authoritative bodies needs to step up, take charge and be the central point of contact for those affected.
It seems reasonable that the MIBI could assume this role. Although they have now stated that they will not be in a position to pay out any form of compensation to claimants, there seems to be no reason why they cannot take control of the issue in an effort to resolve it and alleviate the worries of policyholders and claimants who, through no fault of their own, have been affected by the collapse of Setanta.
There is absolutely no doubt that the longer this is drawn out, the more costly it will become. Who those costs will fall to is still unknown - but it may well be the Irish taxpayer.
Sunday Indo Business