The Department of Finance invites interested parties to make submissions in relation to the exercise of Ministerial powers under section 26 of the Motor Insurance Insolvency Compensation Act (the "Act").

The Motor Insurance Directive

Directive 2009/103/EC, as amended (the “Motor Insurance Directive” or “MID”) ensures that vehicles can freely circulate in the EU while using a minimum harmonised level of insurance cover. It means that when accidents occur, injured parties are protected through effective reciprocal insurance cover arrangements across Member States.

Directive (EU) 2021/2118 (the “Sixth Motor Insurance Directive”) amends the MID by, inter alia, inserting Articles 10a and 25a to the MID. These Articles provide for a pan-EU motor insurance framework and require all Member States to have a compensation regime for motor insurance policyholders of insolvent insurance companies.

Prior to the Sixth Motor Insurance Directive, the Insurance Compensation Fund (“ICF”) framework in Ireland operated under a host-based system, meaning compensation in the context of insolvent insurers is paid from the Member State in which the insured risk is located. However, Articles 10a and 25a of the MID require that the compensation framework for motor insurance must be funded on a home-based system, meaning that the home country of the insurer (where the insolvent insurer is authorised) bears the cost of claims in the event of insolvency.

The Motor Insurance Insolvency Compensation Act 2024

The Act transposes Articles 10a and 25a of the MID and enhances Ireland’s existing domestic legal framework relating to the ICF for motor insurance insolvency so that potential Irish claimants can deal directly and efficiently with the national compensation body appointed pursuant to section 5 of the Act.

Section 26 of the Act amends the Insurance Act 1964, as amended, (the “1964 Act”) by the insertion of section 2A after section 2 of the 1964 Act. Section 2A authorises the Minister for Finance to prescribe, by way of regulations (the “Proposed Regulations”), “requirements for insurers (domestic) which carry on motor third party liability insurance in other Member States as regards contributions to the Fund for the purposes of providing eligible compensation”.

Section 2A of the 1964 Act also sets out, inter alia, that such Proposed Regulations may provide for:

1. the Central Bank of Ireland (the “Central Bank”) to establish a sub-fund of the Insurance Compensation Fund, into which financial contributions collected under the Proposed Regulations (each a “Contribution) shall be paid;
2. the Minister for Finance to prescribe the appropriate Contribution amount, together with the terms of payment of such contribution, after consultation with the Central Bank;
3. operational and governance requirements as regards such Contributions; and
4. such incidental, supplementary and consequential provisions as appear to the Minister to be necessary or expedient for the purposes of the Proposed Regulations.

Purpose of this Consultation Paper

The purpose of this Consultation Paper is to consult with relevant stakeholders and obtain submissions regarding (i) the scope of the Proposed Regulations; (ii) the form of the Contribution; and (iii) the target level of funding, as outlined in further detail below. Feedback to this consultation will assist in the consideration of the way forward. While no decisions have been taken, potential next steps could include, amongst other things, a legislative proposal for the Proposed Regulations.

How to respond to this consultation paper

If you wish to respond to this consultation paper you may do so either electronically (as set out below) or in writing by 24 December 2024, as set out below:

Any submissions received after 24 December 2024 may not be considered.

The Department requests that you provide reasons and explanations for the responses you provide to this consultation paper as this will aid consideration of the issues. Where possible, please also provide material, or references to material, that support or evidence the points you make in your responses.

The information requested in the About You section (Annex) must be completed by all respondents to the public consultation.

Save for these questions in the Annex, you may choose to respond to all or some of the questions in the remaining sections of the consultation paper i.e. you may answer as many or as few questions as you wish.

Notices

Responses to this consultation are subject to the provisions of the Freedom of Information Act 2014 (FOI), Access to Information on the Environment Regulations 2007-2018 (AIE) and the Data Protection Act 2018.

The Department may also invite key stakeholders to meet with it and the Central Bank of Ireland as appropriate, including representative bodies and other interested groups or individuals.

We intend to publish the contents of all submissions received in response to our consultation on the Department’s website. We will redact personal data prior to publication. In responding to this consultation paper, parties should clearly indicate where their responses contain personal information, commercially sensitive information or confidential information which they would not wish to be released under FOI, AIE or otherwise published.

We would like to draw your attention to the Data Privacy Notice on the Department’s website which explains how and when we collect personal data, why we do so and how we treat this information. It also explains your rights in relation to the collection of personal information and how you can exercise those rights.

Nothing in this consultation document constitutes legal advice or any other form of advice, nor should it be construed as such. Please note that neither the Department nor the Minister for Finance assume any liability for the accuracy or completeness of the information contained in this consultation document.

Next Steps

The views expressed in this consultation process will be considered by the Minister and his officials in the context of the Proposed Regulations and, to the extent required, any changes that may be required to other domestic legislation.