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Bill on insolvent insurers is published
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31 May 2024 / legislation Print

Bill on insolvent insurers is published

The Government has published a bill that transposes part of an EU directive on motor insurance into Irish law.

The directive sets up a mechanism to compensate victims of road-traffic accidents in cases where the responsible insurer is insolvent.

Last year, the European Commission took the first step in infringement proceedings against Ireland over delays in transposing the directive.

The Department of Finance says that the Motor Insurance Insolvency Compensation Bill 2024 will provide protections and allow for “timely compensation” for Irish motor-insurance policyholders in the event of an insurer going insolvent.

Compensation body

The bill formally appoints the Motor Insurance Bureau of Ireland as the body with responsibility for dealing with claims arising from accidents where the relevant insurance undertaking is insolvent.

It also provides the compensation body with access to funding from the Insurance Compensation Fund established under the Insurance Act 1964 in order to pay such claims.

The bill sets out the framework for the presentation and processing of such claims – including a provision that claimants should receive payment of compensation within three months from the date their offer of compensation is accepted.

‘Home’ system

The Minister for Finance Michael McGrath described the establishment of a compensation body as “a positive development for consumers”.

He added that a crucial component of the bill and the EU directive was a move away from a ‘host’ system to a ‘home’ system for insurers.

“This now means that if an insurance company is based in another EU member state and selling into the Irish market, it will ultimately fall on that member state to pay if the insurer goes insolvent. Irish policyholders will not have to foot the bill in such instances,” the minister stated.

Minister of State Neale Richmond said that customers could now go directly to the Motor Insurance Bureau of Ireland, rather than having to wait for the liquidation process.

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