Issued Friday, 4 September, 2015. Insurance Ireland today said it has serious concerns regarding the decision of the High Court in relation to Setanta Insurance and stated that the judgement has far-reaching implications. The Insurance Compensation Fund, which was established in 1964, has historically intervened in the event of insurance company insolvencies. The role of the MIBI (Motor Insurers' Bureau of Ireland), on the other hand, is to compensate the victims of uninsured or untraced drivers. (e.g. when someone who has deliberately not purchased motor insurance goes on to injure someone in a road traffic accident.)
The MIBI is maintained by levies imposed on motor insurers operating in the Irish market. The cost of uninsured driving amounts to approx. €60m per annum, which equates to €30 on the average motor premium. This judgment alone adds approx. another €90m to that bill, and this does not include the potential cost of future motor insurer insolvencies.
Any motor insurer wishing to operate in the Irish market must be a member of the MIBI. The position following this judgement is that:
- Every motor insurer, no matter how prudent, will be underwriting the least prudent motor insurer in the market.
- This reality will have to be factored into insurers’ solvency and capital considerations.
- Liquidation becomes a viable option for imprudent insurers who will be able to “dump” their losses on surviving insurers.
- Motor insurers in Ireland will struggle to obtain capital within their groups in order to operate in the Irish market, given that motor insurers in Ireland are now expected to become guarantors for their competitors.
- There will be upward pressure on premiums and a risk of motor insurers exiting the Irish market.
The decision will have severe financial and other implications for the viability of the Irish motor insurance market.
For further information contact:
Jane O’Driscoll, Insurance Ireland, Tel: 01 6761820 / 087 9795369
Nuala Buttner, Q4 Public Relations, Tel: 01 4751444 / 085 1744275