Insurance companies have warned that motor premiums will rise further following an appeal court judgement.
The decision could add an extra €50 to each premium, insurance experts said.
The Motor Insurers' Bureau of Ireland (MIBI)
was put in place to compensate victims of road traffic accidents caused
by uninsured and unidentified drivers.
The MIBI had argued that the €90m claims
associated with the collapsed Setanta should be covered by the Insurance
Compensation Fund, which traditionally compensates those impacted by an
insurance company insolvencies.
The Law Society opposed the appeal. It said it
was envisaged, in all the agreements governing the MIBI since it was
set up in the 1950s, that it would have to pay out in the event one of
its members becoming insolvent.
The Court of Appeal has upheld the original High Court decision.
Chief executive of the Motor Insurers' Bureau
Patrick O'Brien expressed disappointment, and called for talks with the
new Government to sort out the issue.
"This disappointing decision has significant implications for the MIBI and the wider motor insurance industry.
"We will be seeking urgent discussions with
the incoming Government to clarify the respective roles of the MIBI and
the Insurance Compensation Fund, in the eventuality of further
insolvencies in the insurance sector."
Mr O'Brien said that if the MIBI is required
to provide for these claims, which amount to an additional 150pc of its
annual claims' budget, "this will have significant implications for
insurers and can only further exacerbate the cost of premiums paid by
insured motorists". Motor premiums have risen by 30pc in the past year.
Kevin Thompson, of Insurance Ireland, said
premiums would rise, and the decision meant liquidation will become a
viable option for imprudent insurers who will "dump" their losses on
surviving insurers.
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