John Perry (Sligo-North Leitrim, Fine Gael) | Oireachtas source

I thank the Deputy for raising this very important matter. I apologise on behalf of the Minister, Deputy Noonan, who has a very important engagement at this time.

At the outset, the Deputy should note that Setanta Insurance Company Limited is a Malta-incorporated company which was both authorised and prudentially supervised by the Malta Financial Services Authority. While its financial position is not supervised by the Central Bank of Ireland, as the Central Bank has no role in that regard, the firm is supervised by the Central Bank for conduct of business rules - that is, consumer protection obligations. The Central Bank is in contact with the Malta Financial Services Authority in regard to Setanta Insurance, the impact on policyholders and the provision of relevant and appropriate information.

Under EU law which governs non-life insurance, an insurer is required to inform the regulator in its home member state - its home regulator - that it intends to pursue business in another member state. The home regulator must then provide the host regulator with a certificate attesting that the insurer covers the EU solvency capital requirement, as well as the nature of the business which the insurer intends to undertake. The insurer may start to pursue business from the date that the certificate is communicated to the host regulator, in this case the Central Bank of Ireland.

Setanta was regulated at EU level in accordance with a directive known as Solvency I, which currently places requirements on the amount of regulatory capital European insurance companies must hold against unforeseen events.

The Minister for Finance understands Setanta met its EU regulatory obligations up until its insolvency and was, therefore, entitled under EU law to trade across EU borders up to that point.

On 16 April the MFSA determined that the company was insolvent. This means that Setanta does not have sufficient funds to be able to honour its full obligations towards claimants, policyholders and other creditors. It was formally placed in liquidation by the MFSA on 30 April and Mr. Paul Mercieca was appointed as liquidator. Officials of the Department of Finance, together with officials of the Central Bank, met the liquidator and his representatives in Ireland on 7 May and the Central Bank is in ongoing contact with him regarding the position of Setanta policyholders. The liquidator has confirmed that all policyholders who have not already done so should arrange alternative cover without delay as claims are unlikely to be paid in full. He has issued letters to policyholders informing them that their insurance cover will be cancelled within seven to ten days in accordance with their policy documents. This process has commenced and there were less than 20,000 policies with Setanta Insurance on 27 May. It is expected that all remaining policies will be cancelled this week in line with the terms of the policies. In the circumstances, the Minister for Finance continues to strongly advise policyholders to make alternative insurance arrangements without delay and that they should contact their insurance broker or an insurer directly to seek alternative cover. This is also the advice of the Central Bank. The liquidator has advised that arrangements are in hand for policyholders to obtain their no claims bonus certificates from Setanta. Insurance Ireland has informed me that these certificates will be honoured by other insurers and we are aware that many insurers are being flexible surrounding requirements for documents.

In addition, the Insurance Ireland declined cases agreement is available to policyholders of Setanta. The current declined cases agreement was drawn up in 1981 and is adhered to by all motor insurers in Ireland. The Minister for Finance is informed that under the agreement, the insurance market will not refuse to provide insurance for an individual seeking insurance if he or she has approached at least three insurers and has not been able to obtain cover from them. The Minister understands Insurance Ireland is also making information available to those who have queries, complaints or difficulties regarding this matter through its service at (01) 6761914 or by email at info@insuranceireland.eu.

With regard to Setanta premiums and claims, the position on each policy is for the liquidator in the first instance to decide in due course. Department of Finance officials and the Central Bank will remain in close contact with the liquidator and the Minister for Finance has asked that public statements be provided to clarify matters for policyholders and claimants.

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