Car insurance premiums are likely to fall “in the short to medium term” following a Supreme Court ruling over the Setanta Insurance collapse, writes Conall Ó Fátharta, Irish Examiner.
A junior minister said while the Department of Finance was not in a position to make a demand of any insurance company as to how they price their product, “it will be seen as a breach of faith” if companies were not willing to drop prices as a result of last week’s ruling.
A judgment has overturned previous court findings the Motor Insurers’ Bureau of Ireland (MIBI) should pick up the bill as a result of the demise of the insurance company. The MIBI is funded by the insurance industry.
Minister of state Eoghan Murphy yesterday told the Oireachtas committee on finance, public expenditure and reform that the recent decision of the courts “removes a major uncertainty” from the industry.
He expects the court’s decision “to be reflected in pricing” of premiums.
Mr Murphy said the Government was not in a position to react to calls it fully compensate those affected by the Setanta collapse.
As a result, claimants will now be compensated by the State’s Insurance Compensation Fund (ICF) for only 65% of the claim, up to a maximum of €825,000. Claimants will also be entitled to a further sum from the Setanta liquidation but current indications suggest there would not be sufficient funding available to cover the 35% gap.
Insurers had argued previous rulings were contributory factors in premiums rising as they had to make financial provisions, in the event of the MIBI providing cover for claims in the event of an insurance company collapsing in the future.
Minister Murphy said the implications of the ruling needed to be considered carefully before deciding on the best way forward.
However, he said the Government was prioritising payments to be made by the ICF and that this would happen “as soon as possible”.
“There are 1,639 outstanding third-party claims.
“The first tranche of payments that are going to be made, and these are rough figures at the moment because we are still working through this, is roughly 250 payments. They will be made up of Personal Injuries Assessment Board orders to pay roughly about 155, court orders roughly 61, other settled cases roughly 34. These will be verified by the State claims agency very shortly,” the minister said.
Sinn Féin’s Pearse Doherty said the minister had “given literally no clarity whatsoever” to the thousands of people waiting years for information on payments. He also claimed insurance companies had been using the Setanta collapse to “fleece” consumers.
Fianna Fáil’s Michael McGrath criticised the Government for refusing to step in to assure those affected by the Setanta collapse that 100% of the claims would be covered. He also read a letter received by someone awaiting a payment from their solicitor who had noted the consequences of the judgment “were not good” and that the situation was “a total mess”.
“People have been hung out to dry here, Minister, that is the reality. People could be held personally liable for any shortfall as a result of a claim,” he said.
Responding to a number of anecdotes from committee members about exorbitant price hikes from constituents, Mr Murphy said: “We all have anecdotes and anecdotes go in either direction.” The minister said he had become “a sort of focal point” for people complaining about premium hikes and had been approached in public situations, like weddings, by people wishing to vent their anger about the cost of motor insurance.
This story first appeared in the Irish Examiner.