Michael McGrath (Cork South Central, Fianna Fail)
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247. To ask the Minister for Finance the status of resolving the outstanding claims associated with a company (details supplied); the position on the liquidation of the company; the estimated shortfall in November 2017; the payouts made by the Insurance Compensation Fund to date; the authorisation date of the next ICF payments; and if he will make a statement on the matter. [46884/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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Setanta Insurance was placed into liquidation by the Malta Financial Services Authority on 30 April 2014. As it was a Maltese incorporated company, the liquidation is being carried out under Maltese law.

As the Deputy is aware, 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 (MIBI) was 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, the process of making payments in accordance with the provisions of the Insurance Act, 1964, as amended, has commenced. Under the current legislation payments can only be made out of 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 claimants. 

To date, there have been two applications to the High Court for the payment of compensation from the ICF in relation to Setanta Insurance. An Order was granted in the High Court in October 2016 in relation to first party claims at a cost to the ICF of €608,085.14. Subsequent to the Supreme Court judgment, an Order was granted in the High Court in July 2017 in relation to third party claims at a cost to the ICF of €6,479,336.85. Therefore, the total amount paid out of the ICF to date in relation to Setanta Insurance is €7,087,421.99.

The Liquidator has informed my Department that, as of 30 September 2017 - the latest information available -, there are 1,576 active claims, of which 573 claimants have been paid compensation from the ICF subject to the 65%/€825,000 limits. The process of settling claims is still ongoing and are subject in some cases to complex negotiations between all relevant parties. The Liquidator is currently working on settled claims and preparing them for inclusion in the next application to the High Court, expected to be made in February 2018.

Over and above the 65% ICF 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. An actuarial report, commissioned by the Liquidator, estimates the claims reserves at 30 June 2017 at between €105.9 million and €112.9 million. This is an increase from the first report in 2014, which estimated the claims reserves at between €87.7 million and €95.2 million.

A consequence of this is that based on this actuarial report, the liquidator now estimates that he will not be in a position to meet more than 22% of the claims out of the assets of the liquidation, rather than the not more than 30% of claims figure previously indicated.

In addition, the Deputy should note as previously indicated that there is a legal concern that any Government intervention could undermine the priority status of claimants in the liquidation. The Department of Finance has therefore sought legal advice on the impact on the State's ability to recover from the liquidated company if it were to compensate third party claimants. 

Once this legal issue is clarified, the Government will be in a better position to consider its overall position on the liquidation process.