‘Beggars belief insurance firm traded as it did’

Judge says State should make up shortfall or else Setanta-insured motorists could be liable for €15.5m

‘Beggars belief insurance firm traded as it did’

A judge said yesterday it “beggars belief” that the collapsed Maltese-registered insurance company, Setanta Insurance, was allowed trade here in the manner it did.

Judge Gerald Keys made his comment at Ennis Circuit Court yesterday.

He said the State should intervene to make up for any shortfall in insurance payouts to road traffic victims as it allowed Setanta trade here in the first place.

As a result of a Supreme Court decision in May overturning a ruling that the Motor Insurers’ Bureau of Ireland would be liable for any third-party claims against Setanta, the Insurance Compensation Fund will now pay out 65% of claims.

Liquidators for Setanta state they will not be in a position to meet more than 22% of the remaining 35%, resulting in the Setanta insured motorists facing the prospect of having to pay out the remaining 13% to injured parties.

Judge Keys said: “This is an extraordinary situation.”

Based on the outstanding 13%, Setanta-insured motorists could be liable to pay out €15.5m from their own pockets if pursued by the injured parties for the shortfall.

The judge contrasted the predicament faced by those Setanta drivers to an MIBI claim “where uninsured drivers who deliberately or negligently drive without insurance and crash into someone and the injured parties in those cases are compensated 100%”.

“It seems to me something is seriously wrong somewhere.”

The judge’s comments came as Finance Minister Paschal Donohoe yesterday confirmed estimated claims of 1,576 road traffic victims from the collapsed Setanta Insurance now stand at between €105.9m and €112.9m.

Mr Donohoe said the fresh estimated cost of claims by actuarial consultants, Willis Towers Watson, has increased from the previous 2014 estimate of between €87.7m and €95.2m.

In a written Dáil reply to Fianna Fáil finance spokesman Michael McGrath, the minister said the liquidator for Setanta Insurance had informed him, as at August 31, there are 1,576 active claims. Among those, 573 claimants have been paid compensation.

Mr Donohoe said as a consequence of the new claims estimate, the liquidator now estimates he will not be in a position to meet more than 22% of the claims out of the assets of the liquidation once all matters in the liquidation have been concluded, rather than the ‘not more than 30%, claims’ figure previously indicated.

Mr Donohoe said a High Court order on July 24, in relation to 324 claims, paid out €6.5m from the ICF being 65% of the total value of the settled claims in accordance with the legislation.

He told Mr McGrath: “My department is currently considering the implications of this actuarial report.

“In addition, there is also a legal concern that any government intervention could undermine the priority status of claimants in the liquidation.

“The Department of Finance is, therefore, seeking legal advice on the impact on the State’s ability to recover from the liquidated company if it were to compensate third-party claimants.”

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