The High Court has ruled that the Motor Insurers Bureau of Ireland (MIBI) must pay out on the outstanding claims following the collapse of Setanta Insurance Company in 2014.

Mr. Justice Hedigan said that following the liquidation of Setanta in April 2014 approximately 1,750 claims by and against Setanta policyholders remained in existence.

He stated that an issue had arisen as to who was liable to meet these claims – the MIBI or the Insurance Compensation Fund. The Law Society asked the Court to decide the issue.

Mr. Justice Hedigan said that Setanta was a Maltese registered company and at an extraordinary general meeting in April last year it decided to surrender its insurance business licence and be immediately dissolved. The Company was a member of the MIBI which was set up by the Minister for Transport to meet the claims against uninsured or untraced motorists and at the time had issued some 75,000 motor policies all of which had been cancelled from the 29th May 2014.

The President of the Law Society had written to the MIBI stating that Solicitors had been inundated with queries from worried Setanta customers as to the consequences of the liquidation. The MIBI claimed that it did not have to satisfy the awards against policy holders where the insurer was unable to pay all or part of the award because of insolvency. The Judge said it was clear that the background to the MIBI agreements was the obligation to protect the innocent victims of uninsured drivers. This obligation had been placed on insurers in return for the introduction of compulsary insurance.

He said that from the evidence and legal argument before the Court it seemed to him that the wording of the 2009 MIBI agreement meant that it did have a liability to pay out in respect of claims against persons who had been insured by an insurer which had beciome insolvent. Mr. Justice Hedigan stated that the MIBI was liable to pay out in respect of claims against persons who were insured with Setanta at the time of the liquidation.