Michael McGrath (Cork South Central, Fianna Fail)
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37. To ask the Minister for Finance his views on the fact that, almost three years on from the collapse of a company (details supplied), 1,666 claims are still not dealt with; the position regarding the implementation of the motor insurance compensation framework announced in July 2016; and if he will make a statement on the matter. [1726/17]

Michael McGrath (Cork South Central, Fianna Fail)
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This is a long-running sore for many former Setanta policyholders. As the Minister knows the insurer collapsed in April 2014 and unfortunately almost 1,700 claimants remain hanging in limbo with their outstanding claims estimated to have an overall potential cost of about €95 million. This is a very serious issue in the lives of many people who have been largely forgotten about while the issue is playing itself out in the courts, currently before the Supreme Court. I ask the Minister for his views on how those with outstanding claims associated with the collapse of Setanta Insurance can be assisted.

Michael Noonan (Limerick City, Fine Gael)
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Setanta was placed in liquidation by the Malta Financial Services Authority on 30 April 2014. This liquidation is being carried out under Maltese law. As of 31 December 2016, the number of open claims is 1,664. Progress in the liquidation has been delayed due to court proceedings in the case of Law Society of Ireland v.the MIBI. The current position is that we are awaiting the outcome the MIBI appeal which was heard before the Supreme Court in October 2016.

A small number of additional claims are not affected by the court proceedings and are being processed by the Office of the Accountant of the Courts of Justice. The Insurance Compensation Fund has recently been able to make 65% payments totalling €608,085 on first-party claims made by Setanta policyholders for comprehensive insurance claims. These payments are possible as they are first-party claims which come within the ICF remit, rather than third-party claims delayed by the Supreme Court proceedings. The liquidator for Setanta has informed me that cClaims provision required stands at between €87.7 million and €95.2 million; Setanta policies were cancelled in May 2014. The two years allowable under the Statute of Limitations to lodge claims has expired so the claims figures will not increase further; the liquidator reports that it is proving difficult to settle claims in advance of the outcome of the MIBI appeal; and the liquidator continues to be of the view that he will not be in a position to meet more than 30% of claims.

With regard to the implementation of the motor insurance framework, work on the heads of a Bill is progressing with a view to bringing them to Government in the second quarter of this year. The key change to be proposed is that the level of cover from the ICF for third-party motor insurance claims will increase from 65% to 100%, in line with that currently provided by MIBI. The increased coverage will be funded, to the value of 35% of the third-party motor insurance claims, by a direct contribution to the ICF from the motor insurance industry. Discussions are ongoing with THE industry about funding arrangements to meet this obligation.

Michael McGrath (Cork South Central, Fianna Fail)
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There are many human stories behind the collapse of Setanta insurance, one of which was brought to my attention last week. A gentleman had an accident in 2012 when his vehicle was hit from behind by a driver who was insured by Setanta. Unfortunately for him, the claim was not concluded by the time the company collapsed in April 2014 and it remains not concluded. He says that he is thousands of euro out of pocket between medical expenses and loss of earnings. He is unable to work much of the time because of injury. His solicitor is getting nowhere with it and until the Supreme Court issues its decision in respect of the MIBI-ICF case, this issue and that of many other claimants will not be resolved.

The Minister announced the motor insurance compensation framework last July. It is hotly contested by the industry. If something like this happens again and an insurer that passports in its services under EU law collapses, we are still in limbo as to who is ultimately responsible, which is a real concern.

Michael Noonan (Limerick City, Fine Gael)
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It is one downsides of the Single Market that a company regulated in Malta can sell insurance freely here and is subject to Maltese regulation. Changes are now being made. The underlying framework is now strengthened with the introduction of the Solvency II directive on 1 January 2016. The system is now much more risk-sensitive and demanding, with increased capital requirements which will be consistent across all member states.

The role of the supervisory authorities is significantly enhanced, including provision for more co-operation between member states. It should make a Setanta-type scenario less likely in the future, but it does not solve the problem of those affected. It is important that we get the ruling of the Supreme Court as early as possible. The hearing took place in October last.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his reply. It is a sorry saga from which I hope lessons are learnt - not just in Ireland but elsewhere in Europe. It shows that an EU-wide system of regulation is only as strong as its weakest link. The Central Bank needs to ensure that when firms passport in their services into Ireland and are only regulated here for conduct of business purposes that is made known to the consumer loud and clear because when people hear an advertisement that such a financial services is regulated here for conduct of business purposes, they assume it means it is fully regulated here in Ireland, but, of course, it does not.

It may be prudentially regulated in another European Union country and if that country's system of regulation is not up to standard, it can create a terrible mess in this country at huge cost to people who will be directly affected. The Central Bank of Ireland needs to ensure that the public are aware of the distinction between conduct of business purposes regulation and prudential regulation because in this case and in other cases where we have had difficulties, the insurer was not prudentially regulated in Ireland. People would not have known that.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy makes a very fair point. We have had bad experiences with insurance companies back as far as PMPA and more recently Quinn Insurance, Setanta and various other ones we could mention.

It is certainly a situation of caveat emptorwhen one is taking out insurance because the lowest premium does not always come from the best insurer.

Pat Gallagher (Donegal, Fianna Fail)
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The next group of questions is Nos. 40, 58, 67 and 317. Due to time constraints, I can only allow 30 seconds for the introduction of Question No. 40 and will allow Deputy Curran to pose one supplementary question.