In January 2014, the Malta Financial Services Authority (“MFSA”) announced that Setanta Insurance Company Limited (“Setanta Insurance”) had ceased carrying on insurance business. As a result, no new business or renewals would be issued by the company, although existing policies would remain in force.
In April 2014, the news got worse when the MFSA confirmed that Setanta Insurance was insolvent. A liquidator was appointed to realise the Maltese company’s assets, to discharge its liabilities and to ensure the company’s orderly wind-up.
The most recent update from the Central Bank advises that the liquidator has commenced issuing letters of cancellation to policyholders, and that affected parties should seek cover with an alternative insurer without delay.
Affected parties have at least four possible options following the commencement of the liquidation of Setanta Insurance. However, with the exception of a recovery from the MIBI in respect of third-party claims, there are prescribed limitations on each of these options so a full recovery is by no means certain.
- Motor Insurers’ Bureau of Ireland (“MIBI”)
The MIBI is the entity responsible for making arrangements for the compensation of victims of road accidents involving “uninsured or stolen vehicles and untraced vehicles”.
- Irish Insurance Compensation Fund
In the event of “first party” claims, there is no recourse to the MIBI. Consequently, the Insurance Compensation Fund may become involved in such recovery.
- Setanta Insurance
As part of the Maltese liquidation process, there may be some recourse to Setanta Insurance itself.
- Credit Card / Debit Card Refunds
If policyholders made payment for policies via credit or debit cards, there may be scope to apply to the card provider to seek chargeback.
Setanta Insurance was incorporated in Malta in 2007 and was authorised by the MFSA to carry on non-life insurance business. It carried on business in Ireland on a cross-border basis, and operated through a broker distribution network offering both private motor and commercial motor insurance policies in the Irish market.
To view the Central Bank updates in relation to Setanta Insurance, please click here.