The Motor Insurance Bureau of Ireland (MIBI) must pay out on its 1,750 outstanding claims following the collapse of the Setanta Insurance Company last year, a High Court judge ruled yesterday.
Mr Justice John Hedigan, in a reserved judgment, said that following the liquidation of Setanta on April 30, 2014, approximately 1,750 claims by and against Setanta policyholders remained in existence.
He said an issue had arisen as to who was liable to cover these claims - the MIBI or the Insurance Compensation Fund - and the Law Society had asked the court to determine the matter.
Judge Hedigan said Setanta was a Maltese-registered company and at an extraordinary general meeting in April last year decided to surrender its insurance business licence and be immediately dissolved.
The company was a member of the MIBI, which had been set up by the Minister for Transport to meet claims against uninsured or untraced motorists, and at the time had issued approximately 75,000 motor insurance policies, all of which had been cancelled from May 29, 2014.
He said there still remained approximately 1,750 claims in existence by and against Setanta policy holders which had been potentially eligible for payment by the MIBI.
The President of the Law Society had written to the MIBI stating that solicitors had been inundated with queries from concerned Setanta customers as to the consequences of the liquidation.
The MIBI claimed it did not have to satisfy awards against policy holders where the insurer was unable to pay all or part of the award because of insolvency.
The Department of Transport shared the MIBI's view and the Minister for Transport suggested policyholders should pursue claims with the liquidator of Setanta.
Judge Hedigan said it was clear that the background to the MIBI agreements was the obligation to protect the innocent victims of uninsured drivers.
This obligation had been placed on insurers in return for the introduction of compulsory insurance in 1932.
He said that from the evidence and legal argument before the court it seemed to him that the wording of the 2009 MIBI Agreement meant that it had a liability to pay out in respect of claims against persons who had been insured by an insurer which had become insolvent.
In his view this liability of the MIBI had been apparent and accepted since at the very least 1964 if not 1955. Judge Hedigan stated that the MIBI was liable to pay out in respect of claims against persons who were insured with Setanta at the time of its liquidation.