Dáil debates

Tuesday, 29 September 2015

Other Questions

Insurance Compensation Fund

3:40 pm

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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124. To ask the Minister for Finance if he will provide an update on the liquidation process at Setanta Insurance; and the estimated total cost to the State through the use of the insurance compensation fund, and any legal costs arising from same. [32879/15]

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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I am seeking to discover what is to become of the hundreds of people who are in insurance limbo in the context of the problems relating to Setanta Insurance. Many of these people have suffered delays due to legal inaccuracies and confusion at Government level. What are the costs to the State of this?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The liquidation of an insurance company is a legally complex and time-consuming process.  Setanta is a Maltese incorporated company and, therefore, the Setanta liquidation is being carried out under Maltese law. Progress in the liquidation of Setanta has been awaiting the outcome of the High Court case of the Law Society of Ireland v. the Motor Insurers Bureau of Ireland.  As this case is still sub judice, there are certain matters upon which I am not in a position to comment at this time.  I will, however, respond to the Deputy's question as best I can within these constraints.

The Setanta liquidator informed me that he has made the following progress. The number of open claims was 1,696 at the end of August. The claims reserves position stands at between €87.7 million and €95.2 million. The liquidator will accept new claims up until May 2016, two years after the insurance policies issued by Setanta were cancelled. Final settlements can only be paid out after all of the company's liabilities are quantified, including claims. On foot of work already done, the liquidator was in a position to move quickly to start the process of paying claims in the event that the insurance compensation fund, ICF, had been deemed liable.

It has proven difficult to settle claims in advance of the High Court judgment because there is a lack of clarity as to whether the MIBI or the ICF is to be held liable.  There is a cap on payments from the ICF of 65% per claim or €825,000, whichever is less.  This cap does not apply in the case of payments by the MIBI. The liquidator continues to await a final outcome to the High Court case.  On 4 September 2015 the High Court held that the MIBI is liable in respect of claims against the policy holders of Setanta.  The matter has been further listed for 13 October 2015, when the matter of costs will be dealt with.  I understand that after that point the MIBI will have a further 28 days to consider an appeal.

The State has no direct liability for costs, but may advance funds to the ICF which would be recouped. The ICF is financed through contributions received from non-life insurance companies in respect of risks in the State, up to a maximum of 2% of gross written premium.  Legal costs for administration of the fund are also charged on the fund itself. The MIBI is also funded through industry contributions.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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I welcome the developments in respect of this issue and the fact that the High Court has ruled the MIBI liable for this. When my colleague, Deputy Pearse Doherty, raised this issue with the Minister a great many months ago, the Minister said, on the record, that he felt the MIBI would be called upon, saying "The Motor Insurers' Bureau of Ireland, MIBI, has indicated that it intends to accept all third party claims connected to Setanta policies." The insurance industry then piped up and proffered legal advice and, suddenly, there was a backtracking by the State which then said the insurance compensation fund would be called upon.

In fact, if one reads the letters from the Law Society, which were published, it is striking that both the insurance industry and the Attorney General's office cite unambiguous legal advice on the issue. It is 19 months since Sinn Féin raised this with the Minister and it is now time to do something for these individuals. One Law Society letter cites an example of a very ill gentleman with a shortened life expectancy who is awaiting a payout of €400,000. He remains in this legal limbo and he will not be paid until the end of this process. Why is there confusion within government and why is it there a delay on the government side? When will some level of compensation be given to these individuals?

3:50 pm

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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There is no confusion within government. I set out clearly in my reply that there were two possible sources of compensation and it ended up in the High Court. The court has decided that MIBI is the responsible agency but that could be appealed. There is a further hearing in the court on 13 October to decide on costs and then there will be 28 days for MIBI to decide whether it will proceed. It has been a difficult situation for the policyholders but it was not the State that caused the delay; it was the legal proceedings that were being taken.

The Deputy asked when the first compensation payments would be made. It is not clear yet as the court case must be fully resolved but it is close to being resolved at this stage.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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There is confusion on this because the Attorney General's office contradicted the Minister's initial opinion in this House that it would be the MIBI. The advice of the Attorney General's office has proved inaccurate because of the High Court decision. Urgency is not something, obviously, one associates with the Government's approach and accuracy is not something that we would necessarily associate with the Attorney General's office. Why did the Minister change his view? Did he object to the Attorney General's intervention? Would he apologise on behalf of the Government regarding the delay and confusion involved? Will he review his interactions and those of the Department of Transport, Tourism and Sport with the Attorney General's office regarding this debacle?

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Deputy should reserve that kind of commentary for the chapel gate in the forthcoming general election where, I am sure, he will impress his constituents no end. I cannot answer allegations; I have set out what is the position.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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These are not allegations: they are facts.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The position is being resolved with all due speed but the matter is before the courts. I do not intervene in a process that is before the High Court.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Sinn Fein)
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Will the Minister review his interactions-----

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I call Deputy Michael McGrath on the next question.