The Irish government has agreed upon the outline of the insurance amendment bill 2017. Minister for Finance, Mr Paschal Donohoe outlined yesterday “The failure of Setanta and the ambiguity that followed over the compensation arrangements for claimants emphasised weaknesses with the current insurance compensation framework.”
The new legislation will implement the recommendations of the report written by the Framework for Motor Insurance Compensation, therefore greater certainty for both consumers and industry will be provided, concerning the insurance compensation framework in Ireland.
As well as seeking clarity on the insurance compensation framework in Ireland, the Bills key objective, when enacted, will be to increase the level of cover to clients of insolvent insurance companies to 100 per cent instead of the existing level, currently at 65 per cent.
This will bring it into line with the compensation levels paid out by the Motor Insurer’s Bureau of Ireland (MIBI).
In addition, this increase will be backed by the insurance industry with safety measures implemented to protect the industry in the unfortunate event a motor insurer finds itself in liquidation. A legal basis will also be delivered for motor insurers functioning in the Irish market to contribute an amount equal to 2% of gross written motor premiums to an ex-ante fund which will be held by MIBI enabling the industry to meet its 35% commitment.
The Central Bank of Ireland and the State Claims Agency will now have an official role regarding administering the funds if any insurance company finds itself in financial difficulty.
A time limit for making applications to the High Court for payments from the ICF will also be amended to any 3-month period, enabling payments to be made more frequently.
The press release which can be found here, summaries main changes which the Bill will follow.
By Colleen Ward -Trainee Solicitor.