On 29 September 2026, the Central Bank of Ireland (the Central Bank) announced a reduction in the Insurance Compensation Fund Levy (the ICF Levy) from 1% to 0% which will take effect from 1 January 2027.
The Insurance Compensation Fund was established under the Insurance Act 1964 to facilitate payments to eligible non-life policyholders where their insurer enters liquidation (or administration in certain circumstances). The ICF Levy is funded by non-life insurers based on gross premiums received for risks falling within the scope of the ICF, including home and motor insurance (as applicable). The Central Bank reviews the financial position of the Fund annually and determines the appropriate contribution payable by non-life insurers.
The reduction marks the lowest rate at which ICF Levy has been set since it was reintroduced in 2012. This follows the reduction from 2% to 1% earlier this year, when the levy was lowered for the first time in over a decade (see our article here).
The reduction is a positive development for insurers and policyholders alike and reflects the improved financial position of the Insurance Compensation Fund. It also marks an important milestone in the aftermath of the administration of Quinn Insurance in 2011, with the Exchequer loan advanced to support the Fund now fully repaid.
Reduction to 0%
Following its annual review of the Fund, the Central Bank concluded that its financial position no longer requires support from industry contributions. The Central Bank based its assessment on the full repayment in September 2026 of monies owed to Exchequer along with the Central Bank’s projection that the Fund will record a surplus by the end of 2026.
While the contribution rate has been reduced to 0%, insurers should note that the levy framework remains in place. The Central Bank will continue to review the Fund annually and may require industry contributions to resume if its financial position changes.
Implications for Insurers and Policyholders
Although the ICF Levy is an industry contribution, some insurers pass the cost of the levy on to policyholders as a separately identified charge. Where the ICF Levy is separately identified and passed on to policyholders, insurers should ensure that any such charge is removed with effect from 1 January 2027 and that any necessary updates are made to their policyholder documentation and processes accordingly.
This also applies to existing policies paid by instalments extending into 2027 where the ICF Levy is expressly identified in the policy. The 1% contribution will continue to apply to relevant premiums received before that date.
Next Steps
Relevant insurers impacted by the levy reduction should carefully review the formal notice issued by the Central Bank under Section 6 of the Insurance Act 1964. They should also review their policy documentation and processes ahead of the effective date of 1 January 2027. Particular attention should be given to policies spanning the effective date or paid for by instalments.
If you would like to discuss this topic further, please contact a member of the Insurance Department.
Contributed by: Ellis Witcher
