Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move:

“That Dáil Éireann:

notes:

— that almost three years on from the collapse of Setanta Insurance in April 2014, some 1,666 open claims remain unsettled at an estimated cost of up to €95.2 million;

— that the liquidator of Setanta Insurance, which was prudentially regulated in Malta, has said he will not be in a position to meet more than 30 per cent of claims;

— the enormous and lasting damage caused to people's lives by the unacceptable delay in settling claims;

— that while people’s lives are on hold, a Supreme Court judgment is awaited on who will foot the bill for the collapse of Setanta Insurance;

— the collapse last year of Enterprise Insurance, which was prudentially regulated in Gibraltar, affecting 14,000 motor insurance customers with over €6 million in claims outstanding;

— that the failure of foreign-regulated motor insurance firms is directly pushing up the cost of insurance for motorists in Ireland;

— that under European Union (EU) ‘Freedom of Services’ rules an insurance company can be prudentially regulated in any member state and can avail of the 'passporting' provisions to sell insurance business in Ireland;

— that the Central Bank of Ireland has raised concerns about certain motor insurance firms prudentially regulated in Gibraltar and selling motor insurance business in Ireland;

— that the Department of Finance published in July 2016 the Report of the Review of the Framework for Motor Insurance Compensation in Ireland but there remains no agreement with the insurance industry on the implementation of the new proposals including the respective roles of the Insurance Compensation Fund and the Motor Insurers’ Bureau of Ireland;

— that in the event of another collapse of a firm selling motor insurance, there is still no agreement as to who is responsible for meeting the cost of claims and, above all else, no clarity for consumers; and

— that there are 23 insurance firms presently on the Motor Insurers’ Bureau of Ireland membership list as of February 2017 who are listed as ‘Freedom of Services’ firms including ten which are prudentially regulated in Gibraltar;

calls on the Central Bank of Ireland to:

— undertake an awareness campaign to ensure that motorists are fully informed about the different regulatory status of firms selling motor insurance in Ireland and that consumers are aware of the difference between prudential regulation and regulation for conduct of business purposes;

— formally raise any concerns it may have with the relevant European authorities so as to ensure that the system of regulation of insurance firms across member states involves common standards which are applied consistently; and

— address any staffing and resourcing issues which may currently restrict its ability to supervise and regulate the insurance sector; and

calls on the Government to:

— provide the necessary resources from the Insurance Compensation Fund to ensure the liquidator can address all outstanding claims without further delay, pending the Supreme Court judgment on who is responsible for the cost of outstanding Setanta Insurance claims;

— consider taking legal action against the Maltese and Gibraltar authorities for losses arising from inadequate regulation of Setanta Insurance and Enterprise Insurance respectively;

— finalise the Motor Insurance Compensation Framework so that there is absolute clarity on the respective roles of the Insurance Compensation Framework and the Motor Insurers’ Bureau of Ireland in the event of the future collapse of motor insurance firms selling in Ireland;

— provide an urgent update as to when the final bill for the collapse of Quinn Insurance will be known and the implications for the future application of the Insurance Compensation Fund levy of two per cent;

— raise concerns at EU level about 'regulatory shopping' by United Kingdom (UK) based financial services firms seeking to preserve access to the EU following Brexit;

and

— clarify the impact Brexit will have on the motor insurance market in Ireland, including the issue of 'passporting' in from the UK and Gibraltar.

The reason we decided to table the motion this afternoon relates to the collapse of Setanta Insurance in April 2014 and the mishandling of the fallout from the collapse. Following the collapse of Setanta Insurance more than 1,600 people with outstanding claims are none the wiser today than when the company collapsed in April 2014. That is a disgraceful position. The Government sat on its hands and shafted those people. They are the forgotten people.

I spent this afternoon ringing all the individual claimants for whom I had contact details who were in touch with me or the Fianna Fáil Party in recent years. Some of the stories I heard are absolutely harrowing. In one case the accident concerned goes back to October 2010.

5 o’clock

Setanta Insurance contested that claim so it was not dealt with by the time it collapsed in April 2014 and it is now caught up in the liquidation of Setanta Insurance and the legal dispute about who is ultimately responsible for settling that claim. Another case involved an accident that happened in December 2012 where a driver was hit from behind. He has been in and out of work since then with very serious injuries and has undergone a number of medical procedures. Again, there has been no clarity for him or his family as to when that claim will be settled. He has not yet received a red cent arising from an accident that happened in December 2012. I have a number of such cases that I could read into the record of this House. We must collectively deal with this situation urgently. It is not acceptable that almost three years on from the collapse of Setanta Insurance, we are awaiting a court decision to deal with the issue.

What we are calling for in this motion is for the necessary funds to be provided by the insurance compensation fund to the liquidator of Setanta Insurance to deal with the outstanding claims and to look after the people who are caught up in this. The Supreme Court judgment will go one of two ways. It could find that the insurance compensation fund is responsible in which case, if the Government accepts our motion, the Government will already have paid out and the people will be looked after. Alternatively, the court could find that the Motor Insurers Bureau of Ireland, MIBI, is responsible in which case, the insurance compensation fund can recoup those funds from the MIBI.

Last year saw the collapse another firm called Enterprise Insurance. This company had a smaller presence in Ireland but is important nonetheless with about 14,000 policyholders and outstanding claims estimated to be over €6 million. Even today, as we are here on 1 March 2017, there is no agreed framework in place to deal with a scenario where a motor insurance firm collapses. The motorist caught up in the collapse of an insurance firm in Ireland faces a situation where the maximum payout they will get for their claim is 65% under the insurance compensation fund subject to an overall limit of €825,000. The balance is not being provided for and they will be seriously out of pocket. That situation potentially exposes every single motorist in this country because the notion of the collapse of a motor insurance firm is not that far-fetched. It has happened a number of times in this country over the past number of years. The Government published a new motor insurance compensation framework in July 2016 but no agreement has been reached with the industry, there has been no legislation to put those proposals into effect and so we are still in limbo. That is a crazy situation for this Government to stand over and it must be dealt with. The manifestation of that is there for all of us to see in the cases of Setanta Insurance and Enterprise Insurance. Heaven forbid if any other company was to collapse.

The other dimension to this is the fact that Setanta Insurance was regulated in Malta and Enterprise Insurance was regulated in Gibraltar. If one looks at the list of motor insurers on the MIBI list of those allowed to sell into Ireland on a freedom of services basis, one will find 23 firms according to our research. Those firms are prudentially regulated in another EU member state but are allowed to sell business into Ireland. For some reason, ten of them are prudentially regulated in Gibraltar. We know that the Central Bank has raised concerns with the authorities in Gibraltar about the ongoing licensing of firms there thereby enabling them to sell business into Ireland and other EU member states. This EU-wide system of regulation of motor insurance companies will only work if a common standard of regulation is consistently applied across all the member states. There is no evidence that this is the case. Why else would the Central Bank raise such concerns with the authorities in Gibraltar? We have Solvency II and the European Insurance and Occupational Pensions Authority but I am not satisfied that there is a common standard of regulation in Ireland today. This issue needs to be dealt with.

Consumers here are not being made aware of the distinction between firms that are prudentially regulated in Ireland and those that have their regulation passported in. When we all hear the advertisements saying that a motor insurance company is regulated in Ireland for conduct of business purposes, we assume that firm is regulated here, the Central Bank is crawling all over it and everything is okay but that is not the case. If the firm is only regulated here for conduct of business purposes, the Central Bank is not the prudential regulator and is not assessing the underlying financial health of that insurance company, its solvency and whether or not it has put sufficient reserves aside to deal with future claims. The Central Bank needs to conduct an awareness campaign to ensure that motor insurance consumers in Ireland are fully informed of that distinction. It needs to raise at a European level the issue of a common standard of regulation across the EU and deal directly with authorities in Gibraltar and any other member state where it has a concern about the nature and standard of the regulation.

We are calling for the Government to intervene and look after the people who are caught up in the collapse of Setanta Insurance and Enterprise Insurance. We are calling on the Government to finalise the motor insurance compensation framework to ensure that we have certainty and clarity in the event of the collapse of another motor insurance provider otherwise we are all exposed and will be dealing with many more individual cases down the line. We want clarity on how long the insurance compensation fund will require a 2% levy from all non-life insurance consumers in respect of the cost of Quinn Insurance.

The overall issue here concerns people in limbo. They are watching this debate hoping for answers. They are hoping against hope that this Government will finally act and help them. It is completely unacceptable that several years after the collapse of an insurance company, there is no certainty about who is paying out. I have heard of cases where solicitors on behalf of the liquidator of Setanta Insurance have advised Setanta Insurance policyholders that they could be held personally liable for the cost of that claim in the event of there being an ultimate shortfall in the liquidation. It is not good enough and must be dealt with.

See this speech in context