Policy holders to pick up Setanta tab

Thousands of policyholders left out of pocket following the collapse of Setanta Insurance will not receive any assistance from the Motor Insurance Bureau of Ireland (MIBI).

Policy holders to pick up Setanta tab

Concerns that the MIBI might not pick up the tab for third-party claims surfaced in June and the Irish Examiner has seen documents which confirm those fears.

One former policyholder faced with forking out towards the cost of a €52,000 award made against him received a letter from the MIBI effectively stating that it had no role to play.

The MIBI said it had received legal advice that the MIBI Agreement (2009) “does not require the MIBI to satisfy awards against drivers covered by a policy of insurance where the insurer is unable to pay all or part of an award due to insolvency”.

The Malta-registered Setanta Insurance was liquidated in April and all policies were cancelled by the liquidator with effect from May 29.

At the time it went into liquidation, Setanta had approximately 75,000 policyholders, two-thirds of which were commercial motor insurance policies and one-third of which were private motor insurance policies.

Concerns have also been raised about who is entitled to access the Insurance Compensation Fund (ICF), set up to facilitate payments to policyholders where an insurer goes into liquidation. However, the fund only pays out on claims where an individual is involved and not corporate bodies — raising questions about the implications for companies which took out commercial motor insurance policies. Even for individuals who can access the fund, the ICF only pays out 65% of the total claim — or €825,000, whichever is the lesser.

A former Setanta policyholder who spoke to the Irish Examiner and who is in the process of being sued on foot of an accident, which he admits was his fault, said he now faces forking out 35% of a €52,000 award.

“This is despite the fact that I always had insurance. It was the financial regulator and the central bank that failed in their duties by allowing an insurance broker to operate without sufficient funds to compensate injured parties,” he said.

Fianna Fáil Finance spokesman, Michael McGrath said it was high time the situation was clarified on behalf of the at least 2,000 claimants caught up in the collapse of Setanta Insurance “who are still awaiting information on whether their claims amounting to €35m will be honoured”

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