On 4 September 2015 the High Court ruled that the Motor Insurance Bureau of Ireland (MIBI) would be liable for approximately 1,750 outstanding claims stemming from the recent liquidation of Setanta Insurance Company Limited (Setanta).

The liquidation of Setanta in early 2014 resulted in serious ambiguity and uncertainty in the insurance market as to, among many other things, whether the Setanta policies remained valid, whether Setanta claims would be honoured and if so, by whom?

This led to High Court proceedings being taken by representatives of the Law Society of Ireland, the MIBI and the Accountant of the Courts of Justice (who bears responsibility for administering the Insurance Compensation Fund). The Law Society was seeking a declaration from the Court as to whether the outstanding claims should be paid out of the Insurance Compensation Fund, which is primarily designed to facilitate payments where insurers go into liquidation, or by the MIBI, the body responsible for making payments in relation to claims against uninsured drivers.

The MIBI, which draws from a fund contributed to by all motor insurers, argued that the scope of its responsibility did not extend to liquidated insurers but Mr Justice John Hedigan ruled that, given the purpose and nature of the MIBI, it was liable to cover any claim against Setanta policy holders which existed at the date of Setanta’s liquidation.

This judgment brings welcome clarity to the issue of liability in these cases. The Law Society became involved due to the unprecedented number of claims and queries being made to the Law Society and the lack of any definitive answer to those questions. As a result of this decision, many of the 1,750 outstanding claims can now be processed and finalised – at the expense of the MIBI and thus the insurers.