The Irish taxpayer could be left to pay the outstanding claims of Irish policyholders of collapsed Danish insurer Qudos through the Insurance Compensation Fund (ICF).
It has emerged that, due to a change in Danish law in May of this year, the Danish Insurance Guarantee Scheme will not be liable to meet Irish claims if Qudos is declared bankrupt after January 1, 2019.
The insurer, which had 50,000 Irish customers, collapsed last month. It is understood that there are around 1,400 outstanding claims in relation to Irish policyholders, but this is subject to confirmation.
These claims have been estimated as amounting to around €10m.
On December 4, Qudos published further information that it is no longer paying insurance claims.
The Central Bank then issued a statement strongly recommending, based on the uncertainty around the payment of claims, that affected customers should contact their insurance broker to arrange alternative insurance cover.
Responding to a parliamentary question from Fianna Fáil's finance spokesperson Michael McGrath, Finance Minister Paschal Donohoe said his officials had been in contact with Danish Finance Ministry and was awaiting clarification on whether or not outstanding Irish claims would be met.
"I understand that the Danish liquidators are currently continuing their review of the company with a view to determining its underlying financial position," he said.
Mr Donohoe then pointed out that, should this not be possible, Irish claimants "may instead be eligible for cover from the Irish Insurance Compensation Fund, subject to its terms and conditions and the particular circumstances of the case".
The ICF was set up to protect policyholders whose claims couldn’t be met by their insurers in cases where the companies had become insolvent.
Fianna Fáil's finance spokesperson Michael McGrath said the fact that some ICF payouts are capped meant people could be "left out of pocket".
"This is potentially a very serious development. Because of a change in the law in Denmark back in May, there is now a distinct possibility that the final bill for covering all of this will rest with the Irish authorities and, in effect with Irish policyholders.
"But, it also has an effect on claimants because there remains a cap in the amount that the ICF can pay. In a lot of cases, the cap is 65% or €825,000 whichever is the lesser.
In the case of a third party motor insurance claim, that cap was removed by recent legislation so the claim would be covered in full but in the case of home insurance, for example, there remains a cap in place at 65% so, in other words, claimants could be left out of pocket," he told RTÉ.