Sensible approach to Setanta mess removes one excuse for higher premiums – Doherty
Sinn Fein Finance Spokesperson Pearse Doherty TD has said the recommendations in the first report of the review on the cost of insurance will, if implemented, remove one excuse for higher premiums the industry has been using. He welcomed the recommendation as representing a “sensible approach which is in line with what I have been calling for” and hoped that the move will lead to a drop in insurance premiums sooner rather than later.
Deputy Doherty said:
“The report today maps out a way to remove one of the excuses insurers have been using to justify high premiums. It is in line with what I have been calling for. There will no longer be the uncertainty of a sudden call on insurers’ funds if a competitor goes out of business. The insurers had told me this uncertainty was creating anxiety that required reserves and was putting off possible new entrants into the market. That excuse is no longer valid given what is signalled in the report.
“This was a key argument used by insurers to justify massive increases in premiums. If that is true, this plan to remove it should see premiums drop sooner rather than later. The review group now needs to get down to the next step of looking at the other reasons for the huge jumps in the price of motor insurance including examining the business model and underlying sustainability of the industry.
“It is now over two years since Setanta insurance went bust, leaving 75,000 policy holders high and dry. For those who were in the process of making claims, that was only the start of a very long drawn out process that is still being played out in the Courts today. Today’s report marks a much belated attempt by government to sort out the mess Setanta left in its wake.
“The approach taken by the working group is a sensible one. Legal changes should provide clarity as to the responsibilities of the Insurance Compensation Fund and the Motor Insurers’ Bureau of Ireland in cases of future insurers going bust for third party claims. The 65% cap on what the ICF can pay out for third party claims will be lifted too. Ultimately, it is the driver who will pay whether through a levy to the ICF or in our premiums to the companies who fund the MIBI. At least now there should be clarity with the primary role of the ICF meaning a sense of stability can be restored.”