The future of 14,000 motor insurance policies in Ireland is in confusion after the Enterprise Insurance Company, which is regulated out of Gibraltar, was declared insolvent.
Established in 2004, the insurer only started selling car policies here through a brokerage network less than three years ago.
It emerged late yesterday that Gibraltar regulators who had been monitoring the firm’s finances over recent months were informed of “a significant deterioration in the company’s position”. Its authorisation to do business across Europe, including in Ireland, has been revoked.
Irish insurance brokers said the sudden closure revived fears over the debacle surrounding Malta-regulated Setanta Insurance, which collapsed over two years ago and left many Irish policy holders stranded.
“As an insurance broker I am concerned this is another example of an insurance company, this time licensed out of Gibraltar, and selling in Ireland,” said broker Patrick Quinlan.
Chief executive of the Motor Insurers’ Bureau of Ireland, David Fitzgerald said the closure “will be a cause of great concern and this is likely to be exacerbated by the confusion in the market about what will happen next”.
The Central Bank, which does not regulate Enterprise Insurance, said it will ask the Gibraltar regulators to contact Irish motor policyholders directly.
“Any policyholder who has concerns about their policy should contact their broker in the first instance,” it said.
Coincidentally, the news came on the day the Government announced steps that it says will strengthen the compensation protections when an insurer fails.
The recommendations of the Report of the Review of the Framework for Motor Insurance Compensation in Ireland, released by Finance Minister Michael Noonan, are designed to ensure customers with third party insurance will have full cover in the event of liquidation of an insurer.
Currently, the Insurance Compensation Fund (ICF) covers 65% of the claim cost but the report recommends this be increased to 100%. The increased coverage will be funded by the motor insurance industry via a contribution to the Motor Insurers’ Bureau of Ireland.
The report also recommends administration of the ICF be handed over to the Central Bank and that insurers be required to provide more detailed information on customer policies to help improve Garda enforcement.
The report was produced in the wake of the collapse in 2014 of Setanta Insurance, which has led to a dispute over who should pick up the tab for the 1,700 open claims that could cost up to €95.2m to settle. The motor insurance industry reacted angrily to the report’s recommendations.
Insurance Ireland said they would “expose insurers to the unlimited liabilities of a failed competitor”, posing “a systemic risk to the motor insurance market”.
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