Thursday 19 July 2018

Zurich subsidiary to help out customers of insolvent insurer

Fianna Fail finance spokesman Michael McGrath Photo: Collins
Fianna Fail finance spokesman Michael McGrath Photo: Collins
Charlie Weston

Charlie Weston

A subsidiary of insurance giant Zurich is set to cover the cost of replacing customer premiums following the collapse of insolvent Enterprise Insurance.

Gibraltar-regulated Enterprise went bust on Friday after its regulator ordered it to cease business and to stop making any payments.

It operated here under the Wrightway brand, a company owned by Zurich.

The 14,000 motorists insured with Enterprise have been advised to seek alternative cover immediately. Technically their policies are still in place, but there is unlikely to be any money to meet payments if they are involved in an accident and have to make a claim.

Last night Wrightway confirmed it will make an ex gratia payment to its brokers to pass on to their policyholders, which is equal to the value of the premiums from now until the end of their current policy contracts.

This will ensure policyholders get a payment to put towards the cost of replacement cover. With the benefit of this payment, brokers can seek out an alternative insurer for affected policyholders.

In a statement, Wrightway added that it will "continue to work closely with its broker clients over the coming days to support their efforts in dealing with this situation".

Policyholders are advised to contact their broker for further information and advice.

It is just the latest problem to hit the insurance sector, which has seen premiums shoot up by almost 40pc since last year.

The Enterprise Insurance policies were branded "Wrightway Smart, motor insurance for private cars".

Wrightway is a separate entity from Enterprise and services a network of over 300 brokers. Zurich in Ireland has no ownership of Enterprise Insurance.

Enterprise was regulated from Gibraltar but operated here under EU freedom of movement for services rules.

Fianna Fáil finance spokesman Michael McGrath called for an urgent review of these so-called passporting rules. There was a need for changes especially when firms regulated in smaller EU states collapse and the cost has to be borne by drivers here, he said.

Finance Minister Michael Noonan has said in the past he is open to looking at changes to the rules.

Meanwhile, motorists frustrated with insurance costs say they would be open to installing 'black box'-style devices in their cars. An AA Motor Insurance survey of over 8,400 motorists has revealed six out of 10 would support the technology, which lets insurers see where you drive and when, monitor speed, acceleration and braking.


What happened?

Enterprise Insurance, which had 14,000 Irish drivers on its books, is insolvent. Its regulator in Gibraltar has told it to stop making any payments.

I have a policy with Enterprise. Am I covered?

Technically, yes. The policies are still in force until a liquidator is appointed to the firm and tells motorists it is cancelling the policies. However, if you have an accident there is no money to pay out on a claim.

What happens next?

Wrightway – which had an agreement with Enterprise Insurance to distribute motor cover across its network – has decided to make an ex gratia payment to its brokers to pass onto their policyholders.

This will ensure policyholders receive a payment to put towards the cost of replacement cover.

This all sounds familiar?

When Setanta Insurance collapsed there was a dispute about which fund should cover the cost of claims. The insurance industry had expected the Insurance Compensation Fund to be used. So far, €1.33bn has been drawn down from this fund to bail out Quinn Insurance.

However, the Court of Appeal recently decided that the Motor Insurers Bureau of Ireland should fund the €92m Setanta claims. The Supreme Court will decide on the dispute in the autumn. In the meantime, Setanta claims have not been paid. 

Is my insurer regulated outside the country?

A number of insurers operating here are using EU ‘passporting’ rules to sell insurance, but are regulated in other EU states. 

Most of these, such as Aviva, are prudentially regulated in the UK. But others are regulated from small EU countries such as Malta and Gibraltar.

You can check where your insurer is regulated by looking at the list of insurers operating here on the Central Bank’s website:

Who do I contact for more information?

If you still have unanswered questions, make contact with Wrightway Underwriting, the Wexford firm owned by Zurich Insurance through which Enterprise operated in this country. Call Wrightway on (053) 916 7100.

You can also try contacting the Gibraltar Financial Services Authority Commission on 00 350 200 40284, or email Affected motorists can also call Enterprise on 00 350 200 50150.

Irish Independent

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