Court approves €20m-plus payouts to meet Setanta shortfall

The High Court has approved payments of more than €20 million out of the Insurance Compensation Fund to meet a 35 per cent shortfall in awards concerning motorists insured by the collapsed Malta-based insurer Setanta Insurance. The payment orders were sought by the State Claims Agency and were granted on Monday by the President of the High Court, Mr Justice Peter Kelly. They relate to 1,268 eligible claims and will involve total payments of €20,647,966, representing an additional 35 per cent of money due. The application arose from the collapse in 2014 of Setanta which, at the date of liquidation, had about 75,000 policy holders.

In court documents, Ciarán Breen, director of the SCA, said eligible claims by Setanta policy holders can be divided into claims caused as a result of an accident, known as first-party claims, and claims by third parties against Setanta’s policies. This was the fourth High Court application since 2016 for approvals of payments out of the fund concerning Setanta, he said.

The court had previously sanctioned payment out of the ICF of 65 per cent due under Setanta policies. Mr Breen said the Insurance Acts had previously capped payments out of the fund at 65 per cent of the sum claimed, or €825,000, whichever is less, but the Insurance Amendment Act 2018 had modified the statutory cap in some respects.

Policy holders

While limitations still applied to first-party claims, the limitations which previously applied to third-party claims and third-party legal costs do not apply, he outlined. Various audits of Setanta’s claims files had been carried out and reports prepared, and the liquidator of Setanta had said it was likely he would be in a position to meet less than 22 per cent of the insurance claims. This application was seeking court approval for the payment out of the ICF of sums representing 35 per cent of the eligible claims approved, he said. The claims included claims against Setanta policy holders or legal fees associated with such claims, he said. Certain own damage claims are still subject to the statutory cap of 65 per cent, he said. This application also incorporated some €133,084 due to the Department of Special Protection in respect of recoverable benefits.

The judge made orders approving separate payments out of the fund of some €3.5 million; €4.13 million and €13.05 million. On foot of those orders, the SCA will make the payments due to the affected persons or their solicitors. The ICF liability arose following a Supreme Court ruling last year in which it was found the Motor Insurers Bureau of Ireland, which compensates victims of uninsured driving, would not be liable for 100 per cent of the Setanta awards. In seeking the orders on Monday, Andrew Walker, for the SCA, said the application was under the Insurance Act 2018 in circumstances where the SCA is operating the Fund on behalf of the Central Bank.