Minister McGrath and Minister Richmond publish the Motor Insurance Insolvency Compensation Bill 2024
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From: Department of Finance
- Published on: 31 May 2024
- Last updated on: 12 April 2025
Minister for Finance Michael McGrath and Minister of State for Financial Services, Credit Unions and Insurance have published the Motor Insurance Insolvency Compensation Bill 2024, which transposes Articles 10a and 25a of EU Directive 2009/103/EC.
This Bill will provide protections and allow for timely compensation for Irish motor insurance policyholders in the event of an insurer going insolvent.
Welcoming this, Minister for Finance Michael McGrath commented:
“The Motor Insurance Insolvency Bill 2024 is a vital piece of legislation that will further protect both customers and injured parties when an insurer goes insolvent.
"The Bill builds upon the existing insurance compensation framework currently in place within the State. The establishment of a compensation body with a centralised function to compensate policyholders and injured parties is a positive development for consumers, making it easier for claimants to seek compensation following a motor insurance failure.
"A crucial component of this Bill and the EU Directive is the move away from what is known as the ‘host’ based system to the ‘home’ based system for insurers. This now means that if an insurance company is based in another EU Member State and selling into the Irish market, it will ultimately fall on that Member State to pay if the insurer goes insolvent. Irish policyholders will not have to foot the bill in such instances.
"We have seen in past where insurers have failed, claimants have been left completely in the lurch while the liquidation process goes on. This important legislation will ensure injured parties will get their just compensation in a timely manner and I look forward to bringing it through the Oireachtas in the weeks ahead.
The Minister of State with special responsibility for Financial Services, Credit Unions and Insurance, Neale Richmond, said:
“This government has made real progress in implementing insurance reform and this Bill will build on this work by further protecting motor insurance policyholders if an insurer goes insolvent.
"Ultimately, this Bill means that if you have an accident and an insurer involved is insolvent, the Motor Insurance Bureau will ensure that you will be protected and you will receive your compensation.
"Rather than dealing with liquidators, customers will go directly to the Motor Insurance Bureau of Ireland who will handle these claims, and will ensure that customers receive their compensation within three months of the offer.
"Crucially, the cost of these claims will be met by the home country of the insurer, meaning that Irish insurance customers will not be footing the bill for insolvencies outside of Ireland.
"This Bill is a positive development for anyone who holds motor insurance in Ireland and is a further testament to the government’s commitment to insurance reform.”
Notes
The principal purpose of the Bill is to transpose Articles 10a and 25a of Directive 2009/103/EC ((the “Motor Insurance Directive”, as amended pursuant to Directive (EU) 2021/2118). The Bill will establish in legislation a body with responsibility for dealing with claims arising from motor vehicle accidents where the relevant insurance undertaking is insolvent (known as “Comhlacht na hÉireann um Chúiteamh Mótair”, or the “Compensation Body”). The Bill formally appoints the Motor Insurance Bureau of Ireland to this role.
The Bill will provide the Compensation Body with recourse to funding from the Insurance Compensation Fund established under the Insurance Act 1964 (the “Insurance Compensation Fund”) in order to pay motor vehicle liability claims in an efficient manner in accordance with the Motor Insurance Directive.
It will set out the framework for the presentation and processing of such motor vehicle liability claims to the Motor Compensation, including that claimants should receive payment of compensation within three months from the date their offer of compensation is accepted.
This legislation will enhance and streamline the existing legal framework relating to the Insurance Compensation Fund (“ICF”) into a 'one stop-shop' for motor insurance insolvency so that claimants can deal efficiently with the Compensation Body, rather than dealing with different liquidators or motor insurance companies and receive payment of compensation 3 months from the date their offer of compensation is accepted.
A major change is the move from the current ‘host’ based system for motor insurers under the ICF (Ireland currently only covers risks within Ireland), to the ‘home’ based system as required by the Directive. This change was partially addressed through SI 658/2023. This is also to be achieved under the Bill by, inter alia, establishing the ‘home based regime’ in legislation and authorising the Minister to introduce regulations to establish a funding mechanism to require Irish authorised insurers exporting motor policies across the EU to contribute towards the cost of insolvency compensation as they are now within scope under the ‘home basis’.