Law Society argues MIBI liable for claims after collapse of Setanta

The Law Society has argued that the Motor Insurers' Bureau of Ireland (MIBI) is liable for hundreds of outstanding claims following the collapse of Setanta Insurance in 2014.

The MIBI maintains it is not liable for the claims and wants the Court of Appeal to set aside a High Court decision that it must pay out in respect of claims against persons insured with Setanta at the time of its liquidation.

The case has important implications for motor insurance premiums as well as parties involved in claims concerning Setanta.

In submissions for the Law Society, Brian Murray SC rejected the MIBI’s arguments that the High Court judgment was flawed.

It was envisaged, in all the various agreements governing the MIBI since it was established in the 1950s, that it would have to pay out in the event one of its members became insolvent, counsel said.

The MIBI had failed to show it was not liable to pay out in the event judgment was obtained against the holder of a policy issued by an insolvent motor insurer member of the MIBI, counsel submitted.

The appeal, being heard by the president of the Court of Appeal, Mr Justice Seán Ryan, Ms Justice Mary Finlay Geoghegan and Mr Justice Gerard Hogan, opened on Tuesday and is expected to conclude on Thursday.

Uninsured drivers

The High Court was asked to determine whether the MIBI, which is operated under the terms of an agreement between the Government and those companies underwriting motor insurance in Ireland to deal with claims related to uninsured drivers, or the Insurance Compensation Fund was liable for the claims.

Following Setanta’s liquidation some 1,750 claims by and against Setanta policyholders remained valid.

In its appeal, the MIBI claims the High Court decision raises “very significant difficulties” for the MIBI and its members. The MIBI is now “co-guarantor” of rival firms over which they have no entitlements to any information or details about prior to the insolvency, it argues.

The case was initially brought by the Accountant of the Courts of Justice who has statutory responsibility for administering the Insurance Compensation Fund. The High Court subsequently directed the Law Society act as the claimant and the MIBI should be the respondent. The Accountant of the Courts of Justice is neutral in the proceedings.

Setanta was a member of the MIBI, which covers the cost of claims related to uninsured drivers claimed through levies imposed on customers.