Setanta Insurance Company Limited

Setanta Insurance Company Limited (“Setanta Insurance”) sold insurance policies in Ireland for seven years. The company was set up under Maltese law and in April 2014 was put in to voluntary liquidation in accordance with Maltese law. A legal issue has emerged in respect of policyholders and those seeking issue to claims against Setanta Insurance policyholders.

The appointed liquidator is at present in the process of recognising Setanta Insurance’s assets and establishing the extent to which each claim can be met by those assets. In accordance with Maltese law, this process must be completed and from there the liabilities of the company must be quantified, following this the liquidator will then, where possible, be in a position to issue settlements to claimants. The liquidator advised that there is likely to be a shortfall between the funds available to Setanta Insurance and the actual value of claims made. As the liquidator has not completed the quantifying process, the total value of funds is unknown and it is further unknown whether any claims may be settled by Setanta Insurance alone. The Accountant of the Courts of Justice (“The Account”) indicated that in the case where Setanta Insurance is not in a position to issue payments, an application will be made to the Insurance Compensation Fund (“the fund”).

Section 2 of The Insurance Act 1964, as amended by the Insurance (Amendment) Act 2011 established the Insurance Compensation Fund, stating that the fund shall be administered by the President of the High Court “acting through the Accountant of the Courts of Justice”. Subsection 7 details that claimants may be entitled to compensation where their claims pertain to an “Irish-authorised insurance company in liquidation or an insurance company authorised in the European Union, which carries on business in Ireland, and which has gone into liquidation”. In relation to the current situation, The Accountant has commented that on a prima facie level claims made by a Setanta policyholder and claims made against an individual holding a policy issued by Setanta are eligible to receive compensation from the fund. The Accountant further noted that a maximum value of 65% of the claim may be recovered from the Fund; a maximum of €825,000. Reasonable and necessary additional costs incurred during the process of the claim may only be sought, the onus rests on the claimant to show that the cost was required in order proceed with the claim. The Accountant retains the power to reject an expense claimed by a claimant, in this situation the entire application will not fail, the expense claimed will not be accounted in the application.

The Accountant will be in a position to initiate proceedings on behalf of those affected by the cease in business of Setanta Insurance once a judicial determination is handed down in respect of the Insurance Compensation Fund. At present the Accountant is currently working with legal advisors and Counsel to prepare the first batch of claims. There is currently no date set for this Hearing.

In order to assess whether an application is eligible for compensation from the fund the Accountant will work closely with the liquidator in order to process claims faster and settle claims where possible through the funds available to Setanta Insurance. Where the claim requires compensation from the fund the Accountant has proposed to seek aid from the State Claims Agency in order to process claims quicker. All claims must be subject to an insurance policy issued by Setanta Insurance that was valid at the time the accident occurred in which the claim pertains to. The accident must have also occurred before the 26th of May 2014 in relation to private vehicles and the 29th May in relation to commercial vehicles as it was on these respective dates the insurance policies issued by Setanta were cancelled. The Accountant must be satisfied that both these requisites are met before the claim may be submitted to the President of the High Court.

The Accountant has expressed concerns in relation to the prospective volume of claims and has advised that it may be a number of years before each claim is dealt with and satisfactorily resolved. In order to ensure timely handling of each case the Accountant further proposed that payments and awards be transferred electronically to claimants and that no cheques will be issued, he did however note that in situations where the claimants has legal representation the money will be first electronically transferred to their solicitors and from there the solicitor will issue the settlement to their client by means instructed.

Claim Process:

1. The appointed Liquidator of Setanta Insurance must be notified, as the liquidator must recognise all liabilities pertaining to Setanta Insurance.

2. The liquidator will validate the claim if it is either:-

a. A valid insurance policy previously covered by Setanta Insurance,
b. A claim eligible to be compensated for the Insurance Compensation Fund in accordance with the relevant legislation.
c. The claim is in a final stage either through court order, Injuries Board assessment or a settlement agreement reached before liquidation.

3. If the claim can be settled by funds available to Setanta Insurance the liquidator will move to do so, if Setanta is not in a position to issue the payment the claim will be forwarded to the Accountant and an application will be made seeking settlement from the fund.

4. An application to the Insurance Compensation Fund can only be made once every six months. As a result, multiple claims will be made at one time. The Accountant of the Courts of Justice has proposed to first make an application in respect of claims that satisfy category C above and subsequently then deal with cases in chronological order.

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Contact Eoin McGlinchey, our expert financial misselling solicitor, to discuss your claim or phone us on 01-5313800.