The decision of the Supreme Court has issued in relation to the collapse of Setanta, a Maltese registered insurance company which wrote motor policies for vehicles in Ireland.
It was clear that as a result of the collapse of Setanta, it would not be in a position to discharge the claims against its policyholders which in the normal course of events, would have been discharged by it.
The Motor Insurers Bureau of Ireland (“MIBI”) was named in the case as it was argued that because Setanta could not meet its obligations, claimants were dealing with claims where the defendant was essentially “uninsured” at least to some extent and in those circumstances, the MIBI should be liable to meet any obligation which could not be met by Setanta. The MIBI argued that it should not be liable to meet the uninsured claims resulting from the collapse of Setanta, contending that the Insurance Compensation Fund (“ICF”) should be liable instead of the MIBI. Under the relevant provisions, the ICF is only liable to pay 65% of the full value of the claim up to a maximum of €825,000.00. Consequently, claimants would be far better served if the MIBI was found liable as opposed to the ICF.
The High Court held that the MIBI, and not the ICF, was liable to discharge the uninsured Setanta claims. That decision was appealed by the MIBI to the Court of Appeal which affirmed the High Court decision with a slight variation, in that it found that the MIBI was “potentially” liable to pay court awards and settlements which would otherwise have been payable by Setanta The decision of the Court of Appeal was appealed to the Supreme Court by the MIBI.
The Supreme Court has overturned the Court of Appeal’s decision. The Supreme Court found that the MIBI is not liable to discharge the uninsured Setanta claims. This means that claimants will be seeking payments from the ICF and will be subject to the restrictions mentioned above which govern payments from the ICF. Claimants will have the option of trying to recover any shortfall from the liquidator of Setanta and/or from the Setanta policy holders directly but the chances of recovering successfully in this fashion are thought to be remote.
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