The dispute centres on whether or not the Motor Insurers’ Bureau of Ireland (MIBI) is liable for claims of the Maltese-registered insurer, which went into liquidation last April.
A challenge to the attorney general’s advice that MIBI would not foot part of the potential €90m bill has been thrown into doubt after the Law Society expressed concern.
The matter is now set to be thrashed out in the High Court.
The liquidator of Setanta Insurance, Paul Mercieca, told the Oireachtas finance committee yesterday he expects the sale of the insurer’s assets to cover just 30% of the cost of claims.
If MIBI — established in 1955 to compensate victims of road traffic accidents caused by uninsured vehicles — is found to be liable, customers are in line for the shortfall to be covered in full by the bureau.
Although the bureau only covers third-party claims, these make up more than 85% of the 1,669 total.
If, however, the original situation, whereby the Insurance Compensation Fund, which can pay out a maximum of 65% of a claim, comes into play again to make up the remainder, customers are likely to lose out.
The finance committee, before which the liquidator and representatives of the Department of Finance appeared alongside the Courts Service Accountant who manages the Insurance Compensation Fund, heard the parties to the High Court case were yet to be determined.
It is expected the Law Society will be one party with either MIBI, the Department of Transport, the Department of Finance, or the attorney general to be the opposing party.
This, Rónan Hession of the Department of Finance, said was most likely to be MIBI.
Mr Mercieca outlined how the claim situation has deteriorated badly since last April with the total liability potentially rising to €90m.
To date, the claims estimate has worsened considerably from €28m last year to €53m at the end of March.
A number of factors contributed to the huge increases, including the emergence of numerous new claims, further “deterioration” of existing claims and additional associated costs.
Fianna Fáil TD Michael McGrath said the situation was “a mess”, while his Sinn Féin counterpart Pearse Doherty, echoing his comments, said the High Court action would have a significant effect on customers.