Press release
Ministers welcome signing of order to reduce Motor Insurers Insolvency Compensation Fund levy from 2% to 1%
Published on
Last updated on
Published on
Last updated on
Minister for Finance and Minister of State for Financial Services, Insurance and Credit Unions welcome signing of order to reduce Motor Insurers Insolvency Compensation Fund levy from 2% to 1%.
Following the Budget day announcement, the Minister for Finance Michael McGrath and the Minister of State for Financial Services, Insurance and Credit Unions Jennifer Carroll MacNeill have jointly welcomed the signing into law of the reduction of the Motor Insurers Insolvency Compensation Fund annual percentage rate from 2 to 1 per cent.
Minister for Finance Michael McGrath commented:
“The Motor Insurers Insolvency Compensation Fund levy is an important part of the infrastructure underpinning the motor insurance market in Ireland providing for third party claims where an insurer is insolvent. Given the current strong financial position of the Fund I am pleased to sign the order confirming a reduction in the levy from 2% to 1%.
"This will benefit up to 2.2 million policy holders on renewal from 1 January 2024. To be able to do so in the midst of the current cost of living challenge highlights the motor insurance market is improving. A reduction in the annual percentage rate will reduce the level of motor firm’s contributions by about €20 million next year and in turn have a direct impact on the cost of insurance for motorists.”
Jennifer Carroll MacNeill, Minister of State for Financial Services, Insurance and Credit Unions said:
“Government is determined to maintain lower insurance prices for motorists. Now that we can cut this levy in half, it will serve as an additional boost for motorists who have seen premiums fall by over 40 per cent on average since 2016.
"There has been an unprecedented package of government-driven insurance reforms and we are now at an important inflection point with the opportunity for both new entrants and incumbent insurers to expand their risk and create more competitive choices for all consumers of insurance in Ireland.”
The MIICF is an ex-ante fund established in 2018 to collect contributions from motor insurers in order to fund the increase in compensation for third party motor claims from 65% to 100% in cases where an insurer is insolvent.
The objective of the MIICF is that that compensation levels payable from the ICF for third party motor insurance claims as a result of a motor insurer insolvency are equivalent to the compensation levels paid out by MIBI if a motorist is involved in a collision with an unidentified or uninsured driver.
The 2018 Act requires motor insurers to contribute a set percentage of gross written motor insurance premiums annually to the MIICF until the Fund reaches €200 million. At that stage, contributions are to be suspended (0%) until there is a call on the Fund. The contribution rate is subject to annual review by the Minister for Finance, and can be set between 0% and 3%, depending on factors such as the amount in the Fund, or the likelihood of a call being made on it.