The High Court ruled that the Motor Insurers’ Bureau of Ireland (MIBI) is liable to pay qualifying claims against people insured by Setanta Insurance when the company entered liquidation. The court also said the Insurance Compensation Fund cannot pay such a claim unless it appears that MIBI is unlikely to meet it despite that obligation.
Mr Justice Hedigan gave the ruling on preliminary issues in proceedings brought by the Accountant of the Courts of Justice, who administers the Fund. The Law Society of Ireland acted as claimant and MIBI as respondent by court order; the Accountant took a neutral position. The court was asked to construe the 2009 MIBI Agreement and determine how any MIBI liability affected the High Court’s power to approve Fund payments. It did not decide individual claims or order payments in this judgment.
Setanta, a Malta-registered insurer, entered liquidation in April 2014. It had issued about 75,000 motor policies covering risks in Ireland. The judgment records that roughly 1,700 to 2,000 claims by and against Setanta policyholders remained and could potentially qualify for Fund payments.
The Law Society argued that the 2009 Agreement’s broad wording covered unpaid judgments arising when an insurer became insolvent. MIBI argued that the agreement covered a limited class of cases, including uninsured or stolen vehicles and unidentified or untraced drivers, and did not extend to insurer insolvency. It said the statutory Fund was the appropriate route for claims against insolvent insurers.
The judge relied on the agreement’s provisions covering judgments that remained unpaid after 28 days, “whatever may be the cause” of the judgment debtor’s failure to pay. He considered that wording alongside the history of earlier MIBI agreements, the treatment of claims following the 1963 liquidation of Equitable Insurance Company, provisions in MIBI member documents, and statements in MIBI’s 2012 directors’ and auditors’ reports. He also concluded that the EU decision in Csonka did not prevent Ireland from providing compensation beyond the minimum required by EU directives.
The court answered the first preliminary question in the affirmative, finding MIBI liable for claims against people insured with Setanta when it entered liquidation. It answered the second by holding that Fund payments under section 3 may not be approved unless the High Court considers MIBI unlikely to meet the claim despite its obligation. The ruling did not establish that every Setanta-related claim qualifies for payment or determine the amount payable in any individual case.