Irish Motor Compensation Body (Comhlacht na hÉireann um Chúiteamh Mótair)
The Motor Insurers’ Bureau of Ireland (MIBI) was appointed as the Irish Motor Compensation Body under the Motor Insurance Insolvency Compensation Act 2024 (“Act”). The new body’s official name is Comhlacht na hÉireann um Chúiteamh Mótair.
The Motor Insurance Insolvency Compensation Act 2024
The Motor Insurance Insolvency Compensation Act 2024 (Act) came into operation on 17 October 2024 and is an important and progressive moment for the protection of motor insurance policyholders and injured parties in road traffic accidents. The primary goal of the Act is to standardise the compensation process for motor insurance by assigning responsibility for compensating injured parties to the EU Member State exercising prudential oversight over the ‘at-fault’ motor insurer that has become insolvent. Whilst the Act maintains the fundamental structure of the existing motor insurance compensation system in Ireland, which relies on the Insurance Compensation Fund and the Motor Insurers Insolvency Compensation Fund, it introduces important changes in how motor insurance claims will be handled in insolvency cases.
The Act implements Articles 10a and 25a of EU Motor Insurance Directive 2009/103/EC as amended by Directive 2021 / 2118 (“2021 Directive”) and introduces amendments to existing Irish law, including the Insurance Act 1964. Aligned to deliver ‘effective and efficient protection’, the 2021 Directive places new obligations on Member States concerning the timely compensation of injured parties from road traffic accidents involving an insolvent ‘at-fault’ motor insurer.
Article 10a applies to accidents occurring within the injured party’s Member State of residence in the case of the insolvency of an insurance undertaking.
Article 25a addresses accidents occurring in a Member State other than where the injured party resides in the case of the insolvency of an insurance undertaking.
Under the 2021 Directive, Member States must designate a national compensation body tasked with compensating residents for personal injuries or damage to property in such scenarios. The MIBI has been appointed as this body under the Act.
Enhanced Victim Protection – Strict Timelines
The Act facilitates a comprehensive streamlining of the existing legal framework relating to the Insurance Compensation Fund for motor insurance insolvency so that claimants will deal efficiently and directly with the Irish MCB rather than different liquidators or motor insurance companies.
In accordance with the 2021 Directive, the Act provides for strict timelines for the review of compensation claims, including that claimants should receive payment of compensation within three months from the date their offer of compensation is accepted. For instance, once the Irish MCB receives a claim, it must be assessed within three months of receiving the claim and provide in writing either:
- a ‘reasoned offer of compensation’; or
- a notice in writing setting out the grounds upon which compensation will not be paid or why it has not yet been determined whether compensation will be paid.
The compensation must be paid no later than three months after the claimant receives an acceptance notice. The Act provides a funding mechanism for the Irish MCB, administered by the Central Bank of Ireland, which ensures that the Irish MCB will be funded expeditiously by the existing insurance compensation vehicles, the Insurance Compensation Fund and the Motor Insurers’ Insolvency Compensation Fund.
Shift from Host-based scheme to Home-based scheme
Ireland’s prior insurance compensation fund framework was primarily designed to facilitate compensation payments to policyholders on a Host State basis, i.e., compensation was paid if the insurance risk was located in the State. Under the Host State principle, all insurers carrying on insurance business in the State, irrespective of where they were authorised (i.e. prudentially supervised), were required to participate (as applicable) in the insurance compensation scheme. Under the new approach, the so-called ‘Home-based’ insurance guarantee scheme, all motor insurance policies issued by an insolvent Irish-authorised insurer are covered by the scheme, including any insurance policies issued by that Irish insurer in other Member States.
The shift from the prior ‘Host-based’ approach to the ‘Home-based’ approach is one of the most significant changes introduced by the Act. Importantly, this change impacts motor insurance only and does not apply to other classes of insurance.
The Act also amends the Insurance Act 1964 by giving the Minister additional powers to introduce regulations for a funding mechanism requiring Irish-authorised insurers writing motor third-party liability business in other Member States to contribute to the Insurance Compensation Fund relating to such cross-border insurance business.
These insurers are now regarded as falling within the scheme’s scope on the ‘Home’ state basis.
The Act also includes various cooperation and engagement provisions between the Irish MCB and other stakeholders to ensure that claim processing proceeds promptly and efficiently and to protect the best interests of policyholders and injured parties.
The 2021 Directive also allows the national insolvency compensation bodies to sign Agreements amongst themselves to facilitate cooperation and information exchange, and establish the funding/reimbursement mechanisms between compensation bodies. These Agreements have now been signed by all EU compensation bodies, including MIBI, via the COB, and the Agreements have been accepted by the European Commission.
Copies of the Agreements can be viewed here:
The COB is an international organisation active in the motor insurance sector and acting for the protection of cross-border road traffic victims.
The COB operates under the United Nations’ aegis and also cooperates with the EU Institutions to improve the free movement of vehicles and the settlement of motor accident claims but it has no political or lobbying purpose. The COB Secretariat is located in Brussels.