Michael Collins (Cork South West, Independent)
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160. To ask the Minister for Finance if compensation has been sought by the Government from Malta arising from the unpaid claims of a company (details supplied); if compensation has been sought from Gibraltar arising from the unpaid claims of a company (details supplied); if a strategy is in place to prevent the same from happening again; and if he will make a statement on the matter. [21928/17]

Michael Noonan (Limerick City, Fine Gael)
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Setanta Insurance was placed into liquidation by the Malta Financial Services Authority in April 2014 and this liquidation is being carried out under Maltese law. Progress in the liquidation has been delayed due to court proceedings in the case of Law Society of Ireland v the Motor Insurers' Bureau of Ireland (MIBI). The focus of the court action is to determine whether it is the Insurance Compensation Fund (ICF) or the MIBI which is responsible for the payment of third party claims. No date has been specified for the judgment in relation to the MIBI appeal to the Supreme Court, which was heard in October 2016. It should be noted that first party claims are not affected by the court action and are being processed by the Office of the Accountant of the Courts of Justice.

A liquidator was appointed in October 2016 to Enterprise Insurance, which is a Gibraltar incorporated company and, therefore, the Enterprise liquidation is being carried out under the laws of Gibraltar. I am advised that a letter has been received from the Government of Gibraltar outlining that there are currently 233 live claims from Irish policyholders with a reserve value of €7.4m. However, the reserve figure is under review. Wrightway Underwriting Ltd have been appointed to manage claims to enable the liquidator to adjudicate and admit them as insurance claims in the liquidation. Claims are therefore being actively managed.

In relation to the question of compensation being sought from the governments of Malta and Gibraltar, it should be noted that both countries are common law jurisdictions. The legal unit of the Department of Finance is of the view that an action against the Maltese or Gibraltar regulators would likely be difficult. However, in order to establish this definitively it would be necessary to seek legal advice from Maltese and Gibraltar lawyers as well as to seek to establish further information in respect of any failures in their legal duties on the part of the regulators which might give rise to such a compensation claim. The Department of Finance’s legal unit does not consider that there is sufficient likelihood of a successful action being brought to justify the costs which would be incurred in seeking such advice and information.

Regarding any proposal to take such legal action, it should also be noted that the two companies concerned availed of the ‘passporting’ provisions of the European Union “Freedom of Services” rules in order to sell insurance business in Ireland. This allows an insurance company prudentially regulated in any Member State to operate throughout the Union and is an important aspect of Ireland’s obligations as an EU Member State. While there have been cases, such as the liquidations of Enterprise and Setanta, which have caused difficulties, Ireland has also positively benefitted from these EU rules through, for example, the building up of our large life insurance sector.

In response to the liquidation of Setanta Insurance and the subsequent uncertainty in relation to compensation arrangements, a Review of the Framework for Motor Insurance Compensationwas initiated with a report published in July 2016.Work is well underway on the implementation of the review’s recommendations; in particular the drafting of the Heads of Bill is being progressed and is on course to be  submitted to Government for approval for publication by the end of Q2 2017. This once enacted will bring clarity on the respective roles of the ICF and the MIBI in the event of the future collapse of a motor insurer.

More generally, insurers operating throughout the EU are regulated according to the set of demanding standards required by the Solvency II Directive. This took effect in Ireland on 1 January 2016. The Government is supportive of the principle of the freedom to provide services across the European Union and is of the view that the legislative framework underpinning this principle is robust. Additionally the Central Bank has informed me that it works closely with relevant foreign National Competent Authorities and EIOPA (the insurance European Supervisory Authority), which has identified as one of its key strategic objectives 'to improve the quality, efficiency and consistency of the supervision of EU insurers and occupational pensions.' The Central Bank of Ireland fully supports EIOPA's work in this regard and has actively engaged with it in its revision of the General Protocol which will enhance the exchange of information between supervisory authorities.