Supreme Court agrees to hear MIBI appeal over liability for Setanta collapse

Court finds issue is ‘very serious’, affecting cost of insurance to the public and the ability of insurers to foresee and manage risk

 

The Supreme Court has agreed to hear an appeal by the Motor Insurers Bureau of Ireland (MIBI) against rulings it is liable for claims made against collapsed insurer Setanta.

The resolution of the issues raised in the appeal, concerning whether or not the MIBI is liable or potentially liable for the Setanta claims, affects all insurance companies underwriting road traffic insurance in Ireland, the court said.

It was clear the issue is “a very serious one”, impacting upon the cost of insurance to the public generally and the manner in which insurance companies are able to foresee and to provide for their liabilities on a year to year basis, it added.

The comments were made in a published written determination of the court, comprising the Chief Justice Susan Denham, Mr Justice Peter Charleton and Ms Justice Iseult O’Malley.

It clears the way for an appeal against a Court of Appeal finding that the MIBI is liable for claims against those insured by Setanta. A hearing date for the appeal will be fixed later.

The liquidator of Maltese-registered Setanta, which sold insurance policies exclusively in Ireland before it collapsed in 2014, has determined the cost of claims could run to about €90 million, with the number of claimants estimated at 1,750.

Last March, the Court of Appeal found the MIBI, which has 40 insurers as members, was potentially liable for the cost of these claims. The MIBI is operated under the terms of a 2009 agreement between the Government and those companies underwriting motor insurance in Ireland to deal with claims related to uninsured drivers.

The MIBI maintains the State-backed Insurance Compensation Fund should pick up the Setanta bill, as it had previously in the cases of PMPA and Quinn Insurance.

After an appeal is decided by the Court of Appeal, an appeal to the Supreme Court may be brought only with the latter’s permission. MIBI’s application for a Supreme Court appeal was resisted by the Law Society on grounds including the matter merely involved application of “mundane legal principles of contractual interpretation”.

In its determination, the Supreme Court said, while it was certainly necessary to properly construe the MIBI Agreement of 2009 and various related agreements, the fact that agreement is provided for in particular laws took the case outside the realm of a matter not of general public importance.

The impact of a decision can also affect whether the case is of general public importance, it added.

Subject to further decisions at a case management conference, the court agreed to permit an appeal on specified points, including whether the MIBI Agreement may properly be construed so as to impose liability, or potential liability, on the insurance underwriters party to that agreement to pay out on claims against persons insured with Setanta.

If the court finds the MIBI is liable, it will consider how that impacts on the power of the High Court to approve payments out of the Insurance Compensation Fund if the High Court believes that is the only way such claims can be met.

The Law Society, in opposing the MIBI’s appeal to the Court of Appeal, had argued it was envisaged, under the MIBI agreements, it would have to pay out if a member became insolvent.