The Court of Appeal dismissed the Motor Insurers’ Bureau of Ireland’s appeal over whether its 2009 agreement with the Minister for Transport could cover claims against drivers insured by Setanta Insurance Company Ltd., which went into liquidation in 2014. The court affirmed the High Court’s order with modifications, declaring only that the MIBI had potential liability and making no declaration on how the Insurance Compensation Fund should be used.
Setanta, a Maltese-registered insurer, had issued about 75,000 motor policies covering risks in Ireland. The judgment said claims arising from its policies were estimated at 1,700 to 2,000, with insufficient funds expected to meet them. The Accountant of the Courts of Justice had asked the High Court to decide whether claims should be met by the statutory Insurance Compensation Fund or the MIBI under its agreement with the Minister.
The High Court ruled in September 2015 that the MIBI was liable in respect of claims against people insured with Setanta when it entered liquidation, and that Fund payments could not be approved unless the MIBI was unlikely to meet a claim. The MIBI appealed, arguing that the agreement did not cover insurer insolvency and that applying it that way would create serious financial and regulatory consequences for member insurers. The Law Society of Ireland supported the High Court’s reading.
The appeal focused on clause 4.1.1 of the 2009 agreement. It requires the MIBI, subject to the agreement’s provisions, to satisfy certain judgments or Injuries Board orders that remain unpaid after 28 days, “whatever may be the cause of the failure of the judgment debtor.” The Court of Appeal held that the wording was broad enough to cover a driver whose insurer had become insolvent, and found nothing in the agreement clearly excluding such claims.
The judgment acknowledged concerns about assigning judgments to the MIBI, which might then pursue a driver who had complied with the legal requirement to obtain insurance. It described the potential unfairness as troubling but said that it did not justify reading an unstated restriction into the agreement. It also noted that claimants must comply with the agreement’s conditions; whether a particular failure to comply defeats a claim would depend on the circumstances.
The court did not make a general declaration about the Insurance Compensation Fund. It said that the statutory jurisdiction operates under the conditions set by legislation and that it was not appropriate for the court to prescribe a general rule. The outcome therefore confirms potential MIBI liability under the agreement, subject to its terms, while leaving the Fund question for determination under the statute.