The State must pay almost €21 million to more than 1,200 people who made claims against the now-defunct Setanta Insurance, the High Court ordered on Monday.
Malta-registered Setanta, which sold private, commercial and motor insurance in the Republic, was wound up in 2014, leaving about €90 million in outstanding claims.
High Court president Mr Justice Peter Kelly ordered the State Claims Agency on Monday to pay a total of €20.6 million against 1,286 eligible claims against insurance policies issued by Setanta.
Mr Justice Kelly ordered the money to be paid in three tranches, one of €3.4 million, a second of €4.1 million and a third of €13.1 million.
The agency must pay the money under the terms of the Insurance Act, 1964 as amended in 2011 and 2018.
That law obliges the State to pay part of the money due to people under policies issued by insolvent insurers through the Insurance Compensation Fund.
“I am satisfied that that €20.6 million be paid out as indicated in each of those three tranches,” Justice Kelly said.
He based his ruling on evidence given by State Claims Agency chief executive Ciarán Breen and the Setanta liquidator, Malta-based Paul Mercieca, who used accountancy firm Deloitte to assist him with the process.
Policy categories
According to the judge, the claims against Setanta’s policies fell into different categories.
These included claims caused by an accident, or first-party claims, where people sought payments against their own policies. Another was third-party claims, where people sought payment against Setanta policies taken out by others.
Setanta began selling insurance in 2007. The company was incorporated in Malta and regulated by the country's financial authority. However, it traded solely in the Republic's insurance market, which it was allowed to do under European Union rules.
The company offered some of the cheapest policies here and had recruited about 75,000 customers by the time it was placed in liquidation in April 2014.
The company initially announced that it would not take on new business from early 2014 and would embark on a solvent “run down”, that is where an insurer clears its liabilities to claimants before winding up.
However, Setanta later said that it was insolvent and called a creditors’ meeting.
Setanta Holdings had declared a loss of €1.4 million in 2012 and €4.1 million in 2011. Auditors Grant Thornton had said that it needed further capital to continue trading.
Concluding yesterday’s hearing, Mr Justice Kelly said the State Claims Agency was entitled to its legal costs and expenses.
He said he would leave it up to the agency to decide on the appropriate figure.
However, he stressed that the amount would have to be fair and reasonable and said that he would possibly require the aid of a legal costs accountant to adjudicate on this. He will deal with the costs issue at a later hearing.
