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Motor Insurers’ Bureau of Ireland Successfully Overturns Court of Appeal Decision

The Supreme Court announced yesterday, 25 May 2017, that the Motor Insurers’ Bureau of Ireland (“MIBI”) was successful in their appeal, overturning the Court of Appeal’s decision in October last year that held the MIBI potentially liable for unpaid claims owed by an insolvent Maltese-authorised insurance company, Setanta Insurance Company Limited (In Liquidation).  The Supreme Court ruling rejects the Law Society of Ireland’s argument that the agreement between the Government and MIBI extended beyond claims against uninsured drivers and provided that the MIBI would pay claims where an insurer became insolvent.

Following this judgment, Setanta claims may instead fall to be met by the state-guaranteed Insurance Compensation Fund (“ICF”).  The ICF is maintained and administered under the control of the President of the High Court acting through the Accountant of the Courts of Justice.  Its function is to compensate people for claims against insolvent insurance companies, who are authorised by the Central Bank of Ireland or in this case by another Member State regulator.

The main arguments in this case surrounded the interpretation of an agreement between the Government and the MIBI which covers claims relating to uninsured drivers.   A distinguishing factor between a claim taken against the MIBI and the ICF is that claimants can recover 100% of the claim amount from the MIBI, while a claim from the ICF cannot exceed 65% of the claim.  Further, recovery from the ICF is capped at €825,000 per claim.  The ICF has dealt with previous insurer failures including PMPA and Quinn Insurance whose claims were settled from the ICF.

This decision will affect all insurance companies underwriting motor insurance in Ireland.