Dáil debates

Wednesday, 5 July 2017

Ceisteanna - Questions (Resumed) - Priority Questions

Insurance Compensation Fund

2:10 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

19. To ask the Minister for Finance his plans to ensure that all outstanding claims associated with the collapse of a company (details supplied) in 2014 are met in full through the Insurance Compensation Fund, the proceeds from the liquidation process and a contribution from the industry if necessary; and if he will make a statement on the matter. [31611/17]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I am like a broken record on the issue of Setanta Insurance, but this is because there is a deep injustice here affecting almost 1,600 claimants who, more than three years since the collapse of Setanta Insurance, still do not know whether they will get 100% of their claims met either through the Insurance Compensation Fund, the proceeds from the liquidation or a contribution from the insurance industry. They need and deserve clarity and I hope the Minister of State, Deputy D'Arcy, can provide it today.

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Supreme Court delivered its judgment on 25 May 2017 and overturned the previous decisions of the High Court and the Court of Appeal that the Motor Insurers' Bureau of Ireland is liable in respect of third party motor insurance claims made against the policyholders of Setanta Insurance. The consequence of this is that the Insurance Compensation Fund, ICF, has been deemed responsible for the payment of such third party claims.

As the judgment has been delivered, it is now possible to begin the process of making payments in accordance with the provisions of the Insurance Act 1964, as amended. Payments can only be made from the ICF with the approval of the High Court, and only if it appears to the High Court that it is unlikely that the claim can be met otherwise than from the ICF. If satisfied, the High Court can order payments out of the ICF up to 65%, or €825,000, whichever is the lesser, due to relevant third party claimants.

The liquidator has confirmed to the Department that, as of 20 June 2017, the number of open claims is 1,578. The Office of the Accountant of the Courts of Justice and the State Claims Agency are working with the liquidator to progress the making of payments to these claimants.

In this regard, there are currently 324 claims ready for settlement and have been validated by the State Claims Agency. The process for bringing these claims to the High Court for approval has commenced but a date has yet to be agreed.

Over and above the 65% ICF, insurance compensation fund, payment, it is expected that a proportion of the balance of money due to third party claimants will be met from the proceeds of the distribution of Setanta’s assets on completion of the liquidation process. However, it is not possible to say definitively at this stage what proportion of the claims this will amount to. Current indications are that this is unlikely to be sufficient to cover the entire 35% gap, however.

2:20 pm

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Minister of State for his reply. The system has failed the people in question. Of course, the company itself failed the people and has principle responsibility. The system of regulation and also the State failed them. Those involved have had their lives put on hold due to accidents, some of which happened well before the liquidation of Setanta in 2014. Some involve serious injuries and the Minister of State knows of one particular case in which fatalities were involved. There are court awards of which not one cent has yet been paid. This is fundamentally unfair.

We need to hear something new from the Minister of State. I have not even heard him or the Government say that it is their objective that these people will get 100% of their claims met. We know 65% of claims will be met from the ICF, while the liquidation process will deliver some surplus, perhaps meeting up to 30% of claims. Will the Minister of State meet with the insurance industry to agree a way of ensuring the claimants involved will get 100% of their claims met?

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As I said, 324 cases have been concluded. The legislation is clear that within six months they will receive 65% of their payment from the ICF. The issue is the shortfall following this ICF payment. We do not know what amount will be gathered from the liquidation process.

The State simply cannot intervene at this stage. We are awaiting an up-to-date actuarial process on the information involved. The information we are operating on at the moment dates back to 2014. When we get the actuarial information, we will see exactly how much of the 35% shortfall it may involve. The State is not committing to or against anything. We will review it and see what the shortfall will be. However, we do not know what it is and we cannot commit to an open-ended shortfall at this moment.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The picture is not open-ended because the process of new claims has closed and there is a figure in terms of the overall potential liability. We know the ICF will pick up 65% of the bill. Will the Minister of State ask the insurance industry if it has any proposals to resolve the situation and also seek an update from the liquidation process?

The Minister of State spoke about the Towers Watson actuarial report which goes back to 2014. We were told that up to 30% of the outstanding claims may be met. If 65% comes from the ICF and up to 30% from the liquidation process, then the shortfall will be modest. It will be a stain on the industry if these people do not get 100% of their claims met. I want to hear from the Minister of State today that it is the Government's objective to work with all the stakeholders involved, namely the liquidator, the insurance compensation fund and the industry, to ensure the people caught up in this mess will not ultimately be out of pocket as a result.

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I will give a commitment that I will work with everybody to achieve the best possible result. However, the information we have is clear. If the Government attempts to step into the conversation at this stage, potentially the liquidator could reduce the amounts it will make available to claimants. The Government would then subsequently have to pick up a further amount. I would not like that to happen.

We will see what the amount is when the new actuarial process has concluded. We have given a commitment that we will review the matter and do the best we can for those caught up in this. There are over 1,500 cases. Of these, 324 will move quickly over the next couple of months. That is the start of the process. The Government could not do anything until the Supreme Court case was over. It is now over and we are keeping matters under review.