Fiasco as 75,000 drivers must get new cover
Business leaders and politicians have demanded a complete overhaul of insurance regulation in the wake of the collapse of motor insurer Setanta.
As around 75,000 motorists with cover from Setanta Insurance – including many business people and van drivers – were urged to seek alternative policies, experts warned home, motor and business insurance premiums are set to rise to help fund claims in the wake of the collapse.
Setanta also warned that it may not be able to pay out claims after a decision was taken to dissolve the business.
The Central Bank – which pointed out the firm was not regulated here as it was authorised in Malta – moved to urge policyholders to "make arrangements for alternative cover" swiftly.
"This is nightmare stuff," said Mark Fielding, CEO of ISME, which represents medium and small businesses. "I'm just exasperated and quite upset. We need to look at the whole regulation area.
"If a business is carrying out business in Ireland it's up to the regulator to keep an eye on it. It doesn't matter where the business got its licence," Mr Fielding added.
Fianna Fail spokesperson on jobs Dara Calleary is also demanding a complete overhaul of the regulatory system.
"How can a company be allowed to come into the market and trade and then walk away while placing a huge financial burden on its clients," he asked.
Mr Fielding said in a conservative estimate the collapse of Setanta would affect several hundred of their members.
"You have guys with four, five and seven vans on the road who now have to find another six months' insurance.
We have been inundated with calls from people panicking about this.
"These are guys trying to make ends meet and they are saying to us 'this is all I need'" he warned.
ISME sent an urgent letter to Minister Richard Bruton asking him to ensure that those who now had to find insurance elsewhere would not be charged excessively for the new insurance.
Mr Calleary said there were now 75,000 people heading into a bank holiday weekend without any insurance cover for their car or van.
"It's unacceptable that as it stands these consumers are simply being told to pay again and they are left with absolutely no protection."
Around 75,000 drivers with cover from Setanta Insurance – including many business people – have been warned that it may not be able to pay out claims after a decision was taken to dissolve the business.
Customers have now effectively been left without any insurance cover and any claims submitted to Setanta Insurance are now unlikely to be paid.
Setanta Insurance, authorised in Malta, was the insurer of choice for the "man with a van" and small firms, but also covered car drivers.
These people are now effectively uninsured after it said it does not have the funds to pay for claims and has appointed a liquidator.
Chairman of the Consumers Association Michael Kilcoyne said everyone with insurance will end up paying for the debacle.
"One way or the other, we will all end up paying for this. The levy on every general insurance policy will have to be increased."
Insurance expert and lawyer David Curran, of Holohan Law, said the state-backed Insurance Compensation Fund will have to be used to meet the claims.
It may end up having to be raised from 2pc, he said.
A spokesman for the Department of Finance confirmed the Insurance Compensation Fund may have to cover unpaid Setanta claims.
The Malta Financial Services Authority and the Central Bank here had refused to comment to this newspaper in the past few days on speculation Setanta was closing.
The Dublin-based insurer had been winding down its business here since the start of the year, when it had 100,000 policyholders.
The Central Bank here said it did not regulate Setanta, but will still require the company to notify all policyholders of what is going on.
"Setanta is not in a position to confirm that claims will be met in full since any and all claims will be subject to the relevant liquidation process.
Policyholders should, therefore, make arrangements for alternative cover without delay," the Central Bank said.