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Insurance premiums could spike by €50 if ruling stands, insurers warn

The High Court ruled last September that the Motor Insurers’ Bureau of Ireland was liable for claims left behind by Setanta Insurance.

Image: Shutterstock/Konstantin Yolshin

IRISH MOTOR INSURERS are launching an appeal against a ruling relating to the liabilities of defunct Setanta Insurance that could see increases for Irish policyholders.

The Motor Insurers’ Bureau of Ireland (MIBI) is predicting increases of €52.50 on average if the non-profit organisation is made liable for the 1,750 claims left behind following the liquidation of Setanta.

Following a High Court judgement last year, the MIBI is set to bring the issue to the Supreme Court – after it agreed to hear the case earlier this month.

The ruling in September centred around whether it would be the MIBI or the Insurance Compensation Fund that would cover the claims left over by Setanta.

Who should be making the payments?

Prior to its collapse, the Maltese-registered insurer had been a member of the MIBI – an organisation set up by the government in 1955 to compensate victims of road traffic accidents caused by uninsured or unidentified motorists.

The issue with increases in motor insurance premiums relates to the way that the MIBI is funded.

By law, all companies in the State involved in underwriting motor insurance are required to be members and contribute to funding claims proportionate to how big a market share they have.

So the MIBI’s basic point here is that if they have to make a hefty payment to Setanta’s old customers, the money will have to come from somewhere – with that somewhere being their current customers.

In his judgement last September, Justice John Hedigan said that it was his interpretation of the 2009 MIBI Agreement that the organisation had a liability to pay out on claims for customers who had been insured by an insurer who had become insolvent.

‘A major shift’ 

In its statement the MIBI has said that the outstanding claims should be paid from the State’s Insurance Compensation Fund.

Speaking about the Supreme Court appeal, chief executive of the MIBI Patrick O’Brien said:

If the current High Court ruling stands this will impact on the sector’s understanding of the role of the Insurance Compensation Fund.
It will also mean a major shift for the MIBI beyond the purpose for which it was originally established. These are extremely serious considerations and are likely to require closer scrutiny by the industry and government alike.

Read: Setanta Insurance customers will finally get the money they’re owed

Also: ‘It’s time we asked questions’: Some drivers’ insurance premiums are up 400%

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