With the imminent reform in Ireland’s insurance compensation fund, motor insurance premiums are forecast to rise as providers will see themselves contributing 2% of gross written premiums for the fund.
The cost is expected to be passed on to policyholders through higher premiums, according to a report by The Irish Times. The expanded fund will be used for liquidation of motor insurance companies in Ireland.
The report said the Insurance (Amendment) Bill 2017 aims to adjust the level of cover to consumers of insolvent insurers – from the current level of 65% to 100%.
The compensation issue stemmed from the case of Setanta Insurance, whose liquidation back in 2014 couldn’t afford outstanding claims. The Supreme Court of Ireland ruled that the claimants should be compensated out of the State’s Insurance Compensation Fund.
“The failure of Setanta and the uncertainty that followed over the compensation arrangements for claimants highlighted weaknesses with the current insurance compensation framework. These have been recognised in the Review of the Framework for Motor Insurance Compensation in Ireland Report – which was endorsed by Government last year,” said Minister for Finance Paschal Donohoe as quoted by the report.
He said the new legislation will provide greater certainty for both consumers and the industry when it comes to Ireland’s insurance compensation framework.
Meanwhile, a probe into alleged cartel activity in the Irish motor insurance industry is currently underway. The European Commission has confirmed that unannounced inspection of insurance providers and brokers have been carried out amid concerns that firms may have engaged in anti-competitive practices in breach of European Union antitrust rules.
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