Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

At the outset, it is important to note that as Minister for Finance, I cannot direct insurers as to the particulars of settlement offers they should either make or accept in settling claims, including for hire purchase insurance claims, as that is a decision for them considering the merits and specifics of each individual case.

However, in order to understand the nature of such Hire Purchase insurance claims, my officials contacted Insurance Ireland (the representative body for insurance providers in this country).  In their reply, Insurance Ireland stated that when a vehicle is written off due to an accident or is stolen and not recovered the insurance company will make a settlement based on the value of the car (referred to as total loss settlement).  However, if the car is under finance, there may be a difference between the value of the car at the time of the loss and the total amount of finance owed under the finance agreement (often this is impacted by the depreciation of the car and interest rate attached to the credit facility amongst other factors).  They confirmed that the insured loss is the value of the car at the time of the loss not the total amount of finance (including any deposit paid for the car), and that it is very likely that the cost of finance outstanding on a car will be considerably in excess of the value of the car.  They mentioned that this is particularly the case when there is also a requirement for a final payment included in the finance contract. 

Insurance Ireland also noted that there are insurance products available, which are referred to as GAP (Guaranteed Asset Price) or RTI (Return to Invoice) insurance, which compensate the customer for the gap between the value of the car at the time of the loss and the cost to replace the car.  However, they noted that this cover does not tend to be sold as part of a traditional motor policy, instead they are sold by the finance providers (in many instances these will be vehicle manufacturers and retailers). Therefore, Insurance Ireland advises that consumers review the finance documentation they received when they purchased the finance for the car with a view to understanding if they were offered GAP cover and if the potential risks associated with same was explained to them at the time of purchasing the finance.

In addition to the above, it is worth recalling that the Central Bank of Ireland’s Consumer Protection Code was introduced in 2006 and revised in 2012.  It requires firms to act honestly fairly and professionally in the best interest of consumers, and to act with due care and diligence.  The Code contains specific requirements in respect of the handing of claims, such as requiring firms to have certain procedures in place as well as requirements around the provision of information to consumers on claims.  While the Central Bank of Ireland does not adjudicate on individual consumer complaints, the Code sets out how a regulated entity must engage with a consumer on complaints, which includes complaints around the handing of insurance claims.

In situations where a person is not satisfied with the actions of an insurance provider in terms of the settlement of a claim, it is advisable that that person make a complaint to the firm's internal complaint resolution process.  The Consumer Protection Code requires that if after 40 days the complaint has not been resolved to the customer’s satisfaction, the regulated entity must inform the consumer that they may refer their complaint to the Financial Services and Pensions Ombudsman (FSPO). 

The FSPO is a statutory official who acts as an independent arbiter of disputes, which consumers may have with their insurance company or other financial service provider.  The FSPO can be contacted either by email at info@fspo.ie or by telephone at 01-5677000.  Investigations by the FSPO are free of charge to the complainant. 

Finally, Insurance Ireland also operates an Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance, which can be accessed at: feedback@insuranceireland.eu.