The British government has released details of an upcoming law that will establish a new entity tasked with swiftly offering compensation to individuals harmed in the event an insurer goes bankrupt.
This new entity, termed the Compensation Body, will garner financial support from the Insurance Compensation Fund, according to provisions of the new legislation. The government emphasises that the Motor Insurance Insolvency Compensation Bill of 2024 aims to improve and streamline the extant legal process, transforming it into a “one-stop-shop” for scenarios of motor insurance insolvency.
The ease of claimants engaging efficiently with the Compensation Body, as opposed to wrangling with various liquidators or insurance companies, is central to this new law, enabling them to acquire compensation within three months after their offer for such has been authorised.
Finance Minister Michael McGrath announced the bill as an “essential piece of legislation” aimed at bolstering further safeguards for customers and victims when insurance providers face insolvency. He stated, “The bill enhances the current compensation scheme for insurance in the country.”
He went on to highlight the positive implications of introducing a compensation body with centralised functions for both policyholders and those injured. Following a car insurance failure, claimants will find it simpler to seek recompense.
The proposed law, which enfolds an EU directive, will assure drivers seamless travel across member countries with equitable compulsory insurance coverage. Mr McGrath termed this as an “essential element” of the legislation with a shift from a “host-based system” to a “home-based system” for insurers.
The provision states that if an insurance firm based in another EU member country, selling to the Irish market, goes insolvent, the burden of payment will fall on the company’s home country.
Mr. McGrath continued by saying that Irish policyholders need not fear being burdened financially in such situations. He mentioned past cases of insurance company failures which led claimants helpless during the lengthy liquidation process. Concluding, he stated, “This substantial legislation will ensure that injured parties receive their rightful compensation swiftly, and I am eager to steer it through the Oireachtas in the forthcoming weeks.”