Setanta liquidation: Irish Supreme Court finds in favour of MIBI
The Law Society of Ireland v The Motor Insurers’ Bureau of Ireland [25.05.17]
In a decision which will be greatly welcomed by Irish motor insurers, Ireland’s Supreme Court has overturned the Court of Appeal’s decision in finding the state funded Insurance Compensation Fund (ICF) rather than the Motor Insurers’ Bureau of Ireland (MIBI) will now have to cover the costs of claims arising from the collapse of Setanta Insurance Company Limited (Setanta).
In a 5:2 majority decision, the Supreme Court rejected the claimant’s argument that the meaning of a series of agreements between the government and the MIBI - culminating in the 2009 Agreement - extended to third party claims against motorists who had become uninsured through the insolvency of their insurer.
The Setanta claims will now fall to be met by the state guaranteed ICF. Under the terms of its rules, this means the process of making payments of up to the cap of 65% of relevant claims, or €825,000, whichever is the lesser will begin. The ICF has previously dealt with and settled claims arising from other failed insurance companies such as PMPA and Quinn Insurance.
The total costs of the claims are estimated at €90 million and the MIBI would have been liable to pay for the full value of successful claims had the Supreme Court not found in its favour. The MIBI had argued that the Court of Appeal decision would have likely led to a levy being placed on future Irish motor policies to cover the cost of the Setanta claims.
Following the Supreme Court’s decision, the government is working towards bringing certainty to the compensation framework structure, particularly in the event of the liquidation of an insurer providing motor insurance in Ireland. This will likely entail reform of the ICF to ensure 100% of third party motor claims against drivers who are uninsured by reason of insolvency of their insurers, are covered in the future.
Relation item: Ireland: Setanta liquidation