Setanta Insurance, a company registered in Malta that offered motor insurance in Ireland, collapsed in 2014 and left outstanding claims of €90 million unpaid. The firm was not regulated by the Irish Central Bank but was authorised to provide cross-border insurance services under the rules of the single market. Irish motorists, most likely, will now pay for Setanta’s liabilities via a once-off €50 increase in average insurance premiums. This price hike comes in addition to an anticipated significant rise in car insurance premiums this year which reflects the escalating cost of accident claims.
The Court of Appeal has decided that the Motor Insurance Bureau of Ireland rather than the Insurance Compensation Fund should meet the cost of claims resulting from Setanta’s insolvency. Either way, it seems, the motorist will pay ever higher premiums for car insurance – up by 30 per cent in the year to January. The cost of home insurance, partly reflecting the impact of flooding, has increased by seven per cent in the same period. Minister for FinanceMichael Noonan recently promised an overall review of insurance costs in consultation with the Central Bank and other departments; a challenge that now awaits the formation of a new government.
The European Commission has told Fine Gael MEP Deirdre Clune that it is not responsible for the supervision of European insurance companies that trade in other member states. However, it does suggest that a new EU regulatory framework, introduced in January, should enable more effective regulation of their activities. Supervisors have been given greater powers to monitor the solvency of insurance companies. They can intervene more quickly if required. And where cross-border activities are involved – as in Setanta’s case – they can share information with the relevant authorities.
But would these new regulatory powers – if introduced much sooner and applied rigorously – have saved Setanta from insolvency and spared motorists the cost of having to pay for that company’s mistakes?
The Court of Appeal has decided that the Motor Insurance Bureau of Ireland rather than the Insurance Compensation Fund should meet the cost of claims resulting from Setanta’s insolvency. Either way, it seems, the motorist will pay ever higher premiums for car insurance – up by 30 per cent in the year to January. The cost of home insurance, partly reflecting the impact of flooding, has increased by seven per cent in the same period. Minister for FinanceMichael Noonan recently promised an overall review of insurance costs in consultation with the Central Bank and other departments; a challenge that now awaits the formation of a new government.
The European Commission has told Fine Gael MEP Deirdre Clune that it is not responsible for the supervision of European insurance companies that trade in other member states. However, it does suggest that a new EU regulatory framework, introduced in January, should enable more effective regulation of their activities. Supervisors have been given greater powers to monitor the solvency of insurance companies. They can intervene more quickly if required. And where cross-border activities are involved – as in Setanta’s case – they can share information with the relevant authorities.
But would these new regulatory powers – if introduced much sooner and applied rigorously – have saved Setanta from insolvency and spared motorists the cost of having to pay for that company’s mistakes?
