The Government has published details of a Bill that will see the formation of a new body to compensate injured parties in a timely manner in the event an insurance company becomes insolvent.
The new body will be known as the Compensation Body, and the new law will provide it with recourse to funding from the Insurance Compensation Fund.
The Government said the Motor Insurance Insolvency Compensation Bill 2024 is designed to “enhance and streamline” the existing legal framework relating to the Insurance Compensation Fund into a “one stop-shop” for motor insurance insolvency.
This is so claimants can deal efficiently with the Compensation Body, rather than dealing with different liquidators or motor insurance companies and receive payment of compensation three months from the date their offer of compensation is accepted.
Minister for Finance Michael McGrath described the Bill as “a vital piece of legislation” that will “further protect” both customers and injured parties when an insurer goes insolvent.
“The Bill builds upon the existing insurance compensation framework currently in place within the State,” he said.
“The establishment of a compensation body with a centralised function to compensate policyholders and injured parties is a positive development for consumers, making it easier for claimants to seek compensation following a motor insurance failure.”
The Bill, which transposes an EU directive, will also allow drivers to travel freely across the EU with similar levels of compulsory insurance.
Mr McGrath described this as a “crucial component” of the Bill, which will see a move away from what is known as the “host” based system to the “home” based 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,” he said.
“Irish policyholders will not have to foot the Bill in such instances. We have seen in past where insurers have failed, claimants have been left completely in the lurch while the liquidation process goes on.
“This important legislation will ensure injured parties will get their just compensation in a timely manner and I look forward to bringing it through the Oireachtas in the weeks ahead.”
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
