Motor insurers dispute liability

A seven-judge Supreme Court is hearing the Motor Insurers’ Bureau of Ireland’s appeal against decisions that it is potentially liable for claims brought against collapsed insurer Setanta.

Because all motor insurers operating here must be members of the MIBI, the decisions by the High Court and Court of Appeal effectively mean all insurers entering the Irish market must undertake an “enormous potential liability”, Paul Gallagher SC, for the MIBI, said.

“That cannot be correct,” he added.

As a result of the court decisions, the MIBI has been “left captive” and its members obliged to give guarantees even concerning insurers whom they believe will not last, he said.

If a guarantee of “such enormous proportions” was to be given, one would expect that to be done by statute but it was not, he said.

A priority hearing of the appeal was granted by the Supreme Court due to the implications of last May’s decision by the Court of Appeal rejecting the MIBI’s arguments it should not be held liable.

That ruling affected all insurance companies underwriting motor insurance here, the Supreme Court noted.

The MIBI maintains the State-backed Insurance Compensation Fund should pick up the Setanta bill, as happened in the cases of PMPA and Quinn Insurance.

The liquidator of Maltese-registered Setanta, which sold insurance policies exclusively in Ireland before it collapsed in 2014, has determined the cost of claims could run to about €90m, with the number of claimants estimated at 1,750.

Last March, the Court of Appeal upheld a High Court finding that the MIBI, which has 40 insurers as members, was potentially liable for the cost of these claims.

The MIBI is operated under the terms of a 2009 agreement between the Government and companies underwriting motor insurance in Ireland to deal with claims related to uninsured drivers. The core issue in the appeal is the interpretation of that agreement.

If the court finds the MIBI is liable, it will consider how that impacts on the power of the High Court to approve payments out of the Insurance Compensation Fund if the High Court believes that is the only way of meeting such claims.

The Law Society is opposing the MIBI appeal and contends the MIBI agreement envisaged it would pay out if a member became insolvent.

The appeal continues today.