The government has approved the drafting of the Insurance (Amendment) Bill 2017 (the “Bill”) which will increase the liability of the Insurance Compensation Fund (the “Fund”) in relation to third party motor claims.
The Fund primarily exists to make payments to policyholders in relation to risks in Ireland where a non-life insurer authorised in Ireland or authorised in another EU Member State goes into liquidation. Currently, in these circumstances the Fund, with approval from the High Court, will pay up to 65% of the claim or €825,000 (whichever is the lesser amount).
The government is proposing that the law be amended to increase the level of coverage available under the Fund to 100% for third party motor claims specifically. For all other claims, the maximum amount recoverable by a claimant under the Fund will remain at 65% of the claim or €825,000.
This change will implement the recommendations of the Review of the Framework for Motor Insurance Compensation in Ireland and will follow the judgment of the Supreme Court in The Law Society of Ireland v the Motor Insurers’ Bureau of Ireland, which arose from the liquidation of Setanta Insurance Company Limited.
The proposed increase to 100% of the value of the claim will bring the rules into line with the compensation levels paid out by the Motor Insurer’s Bureau of Ireland. This additional coverage will be paid by the Fund and be recouped from the motor insurance industry within one year. It is proposed that it will be recouped through the establishment of an ex-ante fund into which the motor insurance industry will make regular contributions.
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