Pearse Doherty (Donegal South West, Sinn Fein)
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16. To ask the Minister for Finance the length of time customers at Setanta Insurance will have to wait to have their claim processed; and the legislative or regulatory measures he is proposing to prevent a repeat of the Setanta situation. [37044/14]

Michael Noonan (Limerick City, Fine Gael)
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With regard to Setanta, you will appreciate that a liquidation of an insurance company is a legally complex and time consuming process.  In general terms, under the Statute of Limitations, claimants are given two years following an accident to make an initial claim.  However, it could take several years for a particular case to be finalised.  Setanta is a Maltese incorporated company and, therefore, the Setanta liquidation is being carried out under Maltese law. The Setanta Liquidator is currently examining a range of factors in order to estimate the cost of claims and the extent to which claims can be met in the Setanta liquidation.  The Liquidator has advised that settlements can only be paid out after all of the company's liabilities are quantified, including claims.

The Insurance Compensation Fund (ICF) provides for payments to meet the liabilities of insolvent insurers in certain cases where it is unlikely that claims can be met otherwise than from the ICF.  Under the Insurance Act 1964 claims by bodies corporate or unincorporated bodies are not covered by the ICF, except where there is a liability to or by an individual.  In addition, all ICF payments are subject to a limit of 65% of the amount due or €825,000, whichever is the lesser.  Management and administration of the ICF is under the control of the President of the High Court acting through the Office of the Accountant of the Courts of Justice.  The Accountant of the Courts of Justice is currently engaging with both the Setanta Liquidator and his legal advisors to put in place an appropriate mechanism to commence making applications to the High Court in accordance with the Insurance Act 1964.  I understand that at the moment the Accountant is not in a position to put a timeline on when the first applications will be made.  Procedures for processing claims and the timing of payments, including the question of advance payments from the ICF, is a matter for the President of the High Court.

The day to day responsibility for the supervision of Irish authorised financial institutions is a matter for the Central Bank of Ireland which is statutorily independent in the exercise of its regulatory and supervisory functions.  However, since Setanta is a Maltese incorporated company, under EU passporting rules, its financial position is not supervised by the Central Bank. However the Bank is responsible for supervising for conduct of business rules. Furthermore, EEA insurance regulators are members of the European Insurance and Occupational Pensions Authority, EIOPA, and are required to comply with the general protocol relating to the collaboration of the insurance supervisory authorities of the member states of the European Union. This general protocol statement was issued in 2008 and is under review by EIOPA.

The current legal and regulatory framework for the provision of insurance in the European Economic Area, and the supervision of that activity, is prescribed by European Union Law in the Life and Non-Life Insurance Directives.  Since the relevant legislation is EU determined, there may be limits  as to what can be done in the short-term.  The matter has, however, been raised with the European Commission and it has indicated that it will also review whether any issues raised relating to the regulatory and legislative framework require action.  It is too early as yet to consider whether legislative measures.

Following negotiations that were completed at European level in November, 2013, a new regime known as Solvency II will commence on 1 January 2016.  This will strengthen the EU regulatory framework. The Solvency II EU Directive sets out new, stronger EU-wide requirements on capital adequacy and risk management for insurers with the key aim of increasing policyholder protection.  The new regime will also ensure greater cooperation between supervisors. 

With regard to domestic legislation, my officials are taking note of how the ICF framework is responding to current requirements. My Department and the Central Bank will in due course be reviewing the overall circumstances relating to Setanta and report to me on what lessons can be learned and how the framework can be strengthened.