Motorists are facing yet another hike in insurance premiums to cover the cost of the €90m in outstanding claims left following last year’s collapse of Setanta Insurance Company.
The Motor Insurers’ Bureau of Ireland, the body which is responsible for compensating victims of road traffic accidents caused by uninsured and unidentified vehicles, has been ordered by the High Court to bear the cost of 1,750 outstanding claims by and against Setanta policyholders.
MIBI said the ruling will “undoubtedly” put upward pressure on premiums and increase the risk of motor insurance companies pulling out of the Irish market.
Insurance Ireland said in the past the Insurance Compensation Fund had intervened in the event of insurance company insolvencies.
“The MIBI is maintained by levies imposed on motor insurers operating in the Irish market,” an Insurance Ireland spokesman said.
“The cost of uninsured driving amounts to approximately €60m per annum, which equates to €30 on the average motor premium. This judgment alone adds approximately another €100m to that bill.”
It said the judgment would mean every motor insurerwould be underwriting the least prudent player in the market and liquidation would become a viable option for imprudent insurers who would be able to “dump” their losses on surviving insurers.
Ciaran Phelan of the Irish Brokers Association welcomed the clarity around claim payments, with innocent third parties involved in accidents with Setanta policyholders now able to get their claims settled in full — as opposed to a payout of just 65% as would have been the case from the Insurance Compensation Fund. But he said the ruling would only exacerbate rising premiums.
Ken Murphy, director general of the Law Society of Ireland, said: “This ruling provides a route to justice for people who have suffered injury and loss, in many cases this has been life-changing, through no fault of their own.”
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