Setanta Insurance Ireland Limited

30/04/2014

On 16 April 2014, Setanta Insurance Ireland Limited announced that they were surrendering their Insurance Business Licence to the Malta Financial Services Authority and ceasing business with immediate effect.

On 16 April 2014, Setanta Insurance Ireland Limited (Setanta) announced that they were surrendering their Insurance Business Licence to the Malta Financial Services Authority and ceasing business with immediate effect.

It is noted that a Maltese liquidator has been appointed with an initial creditors meeting taking place in Valletta on 30 April 2014. The liquidation of an Insurer is an unprecedented event, with approximately 75,000 policyholders affected and with over a thousand claims in being, (either just arising or already notified to the insurer, going through the PIAB process, currently going through the court or settled by way of agreement or judgement). There is provision in Irish law for such events by way of the Insurance Act 1964 and The Insurance (amendment) Act 2011 which established the Insurance Compensation Fund as well as the 2009 Motor Insurer’s Bureau of Ireland Agreement dated 29 January 2009 (the 2009 MIBI Agreement) and made between the Bureau and the Minister for Transport. This provides for the compensation of victims of uninsured drivers who are involved in an accident.

The Insurance Compensation Fund is maintained and administered by the President of the High Court through the Accountant of the High Court. The primary objective of the fund is to facilitate payments to policyholders within the jurisdiction where an Irish or EU authorised non-life Insurer goes into liquidation and Irish policyholders are affected. An application to the Fund can be made by the Accountant of the High Court seeking distribution of funds due to policyholders up to a maximum of 65% of any sums due to a policyholder, capped at €825,000.

As Setanta is now in liquidation and all policies of insurance have been cancelled, a situation has now arisen where former policyholders of Setanta who are subject to personal injuries claims are deemed to be uninsured.  Plaintiffs’ solicitors should give due regard to their professional obligations and take appropriate steps to protect their clients’ interests pending determination of the liquidation and the involvement of the Insurance Compensation Fund.

In matters where orders have not been made, practitioners should consider joining MIBI. In such cases, it is important to comply with section 2 of the 2009 MIBI Agreement by joining MIBI to all proceedings in being or notifying the MIBI on matters which have just occurred or are going through PIAB.

In the first instance, correspondence should be sent to Setanta seeking confirmation within 28 days of indemnity and confirmation that they will be in a position to satisfy any judgment or Order to Pay issued. Correspondence should be sent by registered post to MIBI advising of the circumstances and enclosing a copy of any correspondence with Setanta.

The detail of any notification should be in accordance with 3.14 of the 2009 MIBI Agreement.

3.14 A claim shall not be deemed to be notified to the MIBI unless all the following information is supplied or good cause is shown as to why it is not available:

  • 3.14.1 name, date of birth, PPS number and address of claimant.
  • 3.14.2 registration of vehicle alleged to be uninsured and where available
  • the type and make of such vehicle.
  • 3.14.3 name of Garda Station to which the accident has been reported.
  • 3.14.4 reason why the claimant considers the vehicle to be uninsured.
  • 3.14.5 what steps have been taken to establish insurance position?
  • 3.14.6 name and address of owner and/or driver of the uninsured vehicle.
  • 3.14.7 date and time of accident.
  • 3.14.8 place of accident.
  • 3.14.9 brief description of accident.
  • 3.14.10 if any other vehicle(s) involved, its registration number, and where
  • available the type and make of such vehicle.
  • 3.14.11 name and address of owner and/or driver, and insurance details.

Compliance with 3.14 is a condition precedent to MIBI’s liability.

Secondly, practitioners may consider an application to PIAB seeking to join MIBI as co-respondent (in addition to the driver and/or owner in the normal way) and if proceedings have been issued, upon receipt of the appropriate authorisation, MIBI should then be joined as a co Defendant to proceedings already issued.

Any practitioner acting in the defence of a matter involving a former policyholder of Setanta should bear in mind that upon the involvement of MIBI, a mandate in favour of the MIBI will have to be signed by the Defendant. There is a reimbursement provision contained in the mandate whereby the uninsured defendant agrees to reimburse MIBI and this is also at section 9 of the 2009 MIBI Agreement. Practitioners should be very wary of the consequences were they to allow a Defendant to sign up to any MIBI mandate with a reimbursement provision where heretofore they held a valid policy of insurance in accordance with their statutory obligations and should not advise clients to sign such a mandate.

Practitioners should keep abreast of developments as the ability of Setanta to meet any or all claims remains unclear. We are hoping for some clarification from the MIBI and/or the Insurance Compensation Fund in due course.