Kieran O'Donnell (Fine Gael)
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I welcome the Minister of State, Deputy D'Arcy, who has responsibility for financial services and insurance. I wish to raise the issue of Setanta Insurance and Enterprise Insurance. It is now nearly four years since Setanta went into liquidation. It was regulated in Malta but, under the European passport, it was able to operate in Ireland. Many of my constituents in Limerick were motor insurance policyholders with Setanta. A large number of them would have paid motor premiums for a full year and, in effect, were shortchanged by Setanta.Many of them still await refunds. On Tuesday last, the Minister of State and the Minister for Finance, Deputy Donohoe, gave hope to Setanta Insurance and Enterprise Insurance policyholders, particularly third-party claimants, to the effect that they might receive recompense more quickly than would be expected in a liquidation process. Under the Supreme Court ruling, the insurance compensation fund, ICF, will be responsible for those payments rather than the Motor Insurers Bureau of Ireland, MIBI. As Members are aware, the latter pays 100% of the value of claims but the insurance compensation fund only pays 65%. Up to 22% of the outstanding 35% may be recouped during the liquidation process but that may take several years. The Government has stated that, in principle, the State will account for the outstanding 35% and will then pursue the possible collection of 22% from the liquidation.

When is it expected that discussions with the liquidator and other bodies and stakeholders will take place and when will the Government be in a position to pay third-party claimants? How many third-party claimants are involved? What is the position in terms of compensation for those who paid their insurance for a full year but were only insured for a portion thereof, thus losing the remainder of their premiums? How much does the Minister of State anticipate the compensation relating to Enterprise Insurance will cost the State? Will the payment be a cost to the State? From where will the net difference between the 35% and 22%, which is 13%, come? What contingency plans does the Government have to ensure that people will get paid, that third-party claims will be repaid quickly and that individuals may receive refunds in respect of their premiums in situations similar to this - whereby insurance companies are regulated outside the jurisdiction but selling policies here and, like Setanta, they fail and go into liquidation - in the future?

Michael D'Arcy (Wexford, Fine Gael)
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I thank Senator O’Donnell for raising this matter. It is an opportunity to put on the record of the House where things stand in this regard. He is aware that a Supreme Court ruling in May of last year overturned the Court of Appeal and High Court rulings that the MIBI was liable for such claims. The Supreme Court clarified that the ICF is liable for third-party claims, subject to a limit of whichever is the lesser of 65% or €825,000. It is expected that the balance due to claimants, 35%, will be paid from the proceeds of the distribution of assets on completion of the liquidation process. Following a request from the Minister, Deputy Donohoe, for an actuarial review, this is estimated to be in the region of 22% of the value of claims, thus leaving a shortfall of approximately 13%. However, the liquidator has made it clear that no payments can be made from the assets of Setanta to third-party claimants until the final claim is settled. That is a very important point. This creates further uncertainty for such claimants.

The Setanta insolvency and the subsequent Supreme Court ruling have highlighted an inequity between awards for third-party claimants from the MlBl in respect of uninsured or unidentified drivers, whereby personal injuries are compensated in full, compared with compensation from the ICF in the event of an insolvency. That is particularly unfair. The Senator is aware that the Insurance (Amendment) Bill 2017 is soon to come before the Houses and I will appear before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach for pre-legislative scrutiny in respect of it next week. As I said, the Minister for Finance requested an actuarial review of the situation. It was also necessary to obtain legal advice as any Government intervention to compensate third-party claimants beyond the 65% limit could result in the Government having a lower status in the creditor hierarchy and thus significantly reduce the amount it could recoup from the liquidator. That was a very major concern at the time. That provides the backdrop to the Minister for Finance’s intervention on Tuesday.

The next step is to give consideration as to whether there is a competition and state-aid issue associated with the final implementation of this decision. That is a very live concern. The Department of Finance is currently working with the Office of the Attorney General on the issue. The House may rest assured that the Government is prioritising this matter without delay and if a legislative approach is required, it will approve the necessary provision as soon as possible. This will most likely be addressed through the Insurance (Amendment) Bill. I hope the Bill will be passed in 2018.

It is important to remember that, in the absence of a settlement by a third-party claimant, no payment can be made by the ICF. This is a matter over which the Minister for Finance has no control. However, the Deputy can rest assured that once the detailed arrangements for facilitating the full compensation have been agreed, the Minister will give an indication of the likely timeline for payment, including the payment of the additional 35% to those who have already been paid 65%.

Kieran O'Donnell (Fine Gael)
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I thank the Minister of State. The main issue, particularly in regard to third-party claimants, of whom there are approximately 1,500, is a timeline for payment. The Minister of State has indicated that he expects a legislative approach will be required and that amendment of legislation or new legislation will be needed. In terms of the payment by the State of the 35% - with the subsequent recoupment from the liquidator of Setanta - when will the Setanta third-party claimants receive their cheques?

Michael D'Arcy (Wexford, Fine Gael)
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As stated, the Government is conscious of the need to satisfactorily conclude the full compensation to Setanta third-party claimants as soon as possible. Through its announcement on Tuesday, the Government has indicated its willingness to facilitate this issue. It is important to remember that no payment can be made in the absence of a settlement by a third-party claimant. In this regard, the current position is that the liquidator for Setanta Insurance has informed the Department that as of 31 December 2017 there were 1,577 active claims, of which 573 claimants have been paid compensation from the ICF, subject to the 65% limit. Subtracting 573 from 1,577 gives the total number of outstanding claims. The liquidator has also advised that preparatory work is under way in respect of 275 claims to the value of approximately €5.8 million with a view to the accountant to the High Court making an application before the end of March. This means that just over 700 claims will be settled, with the remainder unsettled.

The Minister for Finance and I hope that the announcement will encourage a more rapid settlement of claims as third-party claimants can now work on the basis that they will be compensated in full. Another benefit of the decision is that it should immediately take the pressure off policy holders, some of whom have been pursued for the shortfall by third-party claimants. It is a particularly unfair situation for people who correctly and legally got insurance with a correctly and legally regulated entity, met all aspects the law required and, through no fault of their own, have been pursued for an accident for which the insurance company should be paying.

I wish to briefly mention the payment schedule for third-party claimants that has been raised on several occasions by Members. The existing legislation provides that claims can only be paid every six months.It has been asked if anything can be done to speed up this process. The answer, unfortunately is "No", six months is in the current legislation and nothing can be done. This difficulty has, however, been recognised as under the amending legislation, which is currently being drafted, this period will be reduced to three months.

The Senator can be assured that we are doing everything we can to bring this matter to a conclusion. It is a very unsatisfactory situation that the insurance compensation fund, ICF, does not conclude in the same way as the Motor Insurers' Bureau of Ireland, MIBI. Hopefully the Insurance (Amendment) Bill 2015, which I believe is before the finance committee next week, will help to address any future issues such as those that arose in the Setanta Insurance situation. It is, unfortunately, a slower process than we would like. There is very little we can do about that without amending the legislation.