Setanta Insurance is mainly an Irish owned and operated company, based primarily in Ireland and selling exclusively, motor and household insurance product to Irish consumers. It went out of business leaving thousands of Irish motor and household policyholders without cover. It now appears that claims in progress may not be met.
It is therefore very important that the Maltese appointed liquidator applies to the Irish High Court to ensure that policyholders can access the Insurance Compensation Fund. The Irish Government needs to play their part by ensuring that compensation is available to those consumers impacted by the sudden liquidation of Setanta Insurance. But Irish taxpayers should not be the fall guys and the Irish Government and the Central Bank of Ireland needs to put urgent pressure on Malta’s Financial Services Authority to ensure that the Irish taxpayer does not have to pick up the bill.
How did this happen? By utilising current freedom of services legislation in the EU, Insurers can pick and choose which country they will be regulated in. Setanta chose to be regulated in Malta where the regulator is the Malta Financial Services Authority. The obvious reason this was done was that oversight in Malta is far less strict than in Ireland where the Central Bank of Ireland operates a well-regarded, robust supervision and monitoring of all regulated entities, especially in the area of solvency.
Regulators have unfettered access to the inner financial workings of the companies they regulate and normally maintain regular close contact with them and with those who audit them. Setanta Insurances’ Directors and the European and Maltese regulatory authorities need to account for their actions which have put innocent Irish policy holders in jeopardy and they need to provide an explanation as to how this occurred.
The Setanta debacle is a clear example that the current EU regulatory structure is not appropriate and is not protecting Irish consumers. The bottom line is, that all Insurance entities operating in Ireland, selling to Irish consumers should be regulated by the Central Bank of Ireland.