Not all Setantas are the same.
The Minister for Finance had some good news this week for Setanta third party claimants – not to mention the defunct insurance company’s unfortunate policy-holders – when he announced an agreement in principle that the State would ensure that compensation claims would be paid in full. The proposed scheme – once it clears all state aid and competition law obstacles – will also apply to claims against Enterprise Insurance which likewise shut down leaving thousands of policy-holders without cover and claimants unpaid.
The announcement means that, at long last, there is an end in sight to many years of anxiety suffered by claimants and policy holders, the former worrying that their rightful claims would not be paid in full, the latter facing the prospect of personal ruin in situations where the value of the claim against them exceeded their ability to pay it.
It was often pointed out during the course of the Setanta debacle – and was acknowledged again by the Minister in his announcement – that the victims of motorists who wilfully or negligently drove without insurance were compensated 100% for their injuries through the MIBI while, in contrast, those involved in an accident with a Setanta motorist – a supposedly insured motorist – faced the possibility that their claim would, at best, be only partially covered. This left the innocent Setanta policy-holder personally liable for the balance of the claim, which in some cases could be enormous.
The liquidation of Setanta was the subject of protracted court proceedings, ultimately decided by the Supreme Court in May 2017. The court held that the Insurance Compensation Fund (ICF) was responsible for the payment of third party claims up to 65% of the claim or €825,000, whichever was the lesser, leaving, in most cases, a shortfall of 35%. While there was some hope that the liquidation of the Maltese-registered insurer would eventually yield up to 22%, it was the policy-holders against whom the claims were made who were immediately on the hook for the deficit.
While the news is positive from the point of view of claimants and defendant policy holders, it is not so good for the average motorist who will be required to pay for an extended period the 2% insurance levy to the ICF, the fund initially set up to cover the costs of the collapse of Quinn Insurance. As a result of the newly-announced Setanta compensation fund, the ICF is due to last an additional eight months or so beyond its initially anticipated span. The fund is expected to expire in 2028 or thereabouts, provided there are no more insurance failures in the meantime.
Watch this space.
The announcement means that, at long last, there is an end in sight to many years of anxiety suffered by claimants and policy holders, the former worrying that their rightful claims would not be paid in full, the latter facing the prospect of personal ruin in situations where the value of the claim against them exceeded their ability to pay it.
It was often pointed out during the course of the Setanta debacle – and was acknowledged again by the Minister in his announcement – that the victims of motorists who wilfully or negligently drove without insurance were compensated 100% for their injuries through the MIBI while, in contrast, those involved in an accident with a Setanta motorist – a supposedly insured motorist – faced the possibility that their claim would, at best, be only partially covered. This left the innocent Setanta policy-holder personally liable for the balance of the claim, which in some cases could be enormous.
The liquidation of Setanta was the subject of protracted court proceedings, ultimately decided by the Supreme Court in May 2017. The court held that the Insurance Compensation Fund (ICF) was responsible for the payment of third party claims up to 65% of the claim or €825,000, whichever was the lesser, leaving, in most cases, a shortfall of 35%. While there was some hope that the liquidation of the Maltese-registered insurer would eventually yield up to 22%, it was the policy-holders against whom the claims were made who were immediately on the hook for the deficit.
While the news is positive from the point of view of claimants and defendant policy holders, it is not so good for the average motorist who will be required to pay for an extended period the 2% insurance levy to the ICF, the fund initially set up to cover the costs of the collapse of Quinn Insurance. As a result of the newly-announced Setanta compensation fund, the ICF is due to last an additional eight months or so beyond its initially anticipated span. The fund is expected to expire in 2028 or thereabouts, provided there are no more insurance failures in the meantime.
Watch this space.
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