Insurance (Amendment) Act 2018

PART 1 Preliminary and General

1. Short title, commencement, collective citation and construction

1. (1) This Act may be cited as the Insurance (Amendment) Act 2018.

(2) Part 4 shall come into operation on such day or days as the Minister for Finance may appoint by order or orders either generally or with reference to any particular purpose or provision, and different days may be so appointed for different purposes or different provisions.

(3) The Insurance Acts 1909 to 2015 and this Act (other than Part 5) may be cited together as the Insurance Acts 1909 to 2018 and shall be construed together as one.

2. Definitions

2. In this Act—

“Accountant” means the Accountant attached to the High Court by virtue of the Courts (Supplemental Provisions) Act 1961;

“Act of 1964” means the Insurance Act 1964;

“Bank” means the Central Bank of Ireland;

“Fund” means the Insurance Compensation Fund established by section 2 of the Act of 1964;

“State Claims Agency” means the National Treasury Management Agency when performing the functions conferred on it by this Act.

3. Expenses

3. The expenses incurred by the Minister for Finance in the administration of this Act shall, to such extent as may be sanctioned by the Minister for Public Expenditure and Reform, be paid out of moneys provided by the Oireachtas.

4. Savings and transitional provisions

4. (1) Anything commenced and not completed before the coming into operation of this section by or under the authority of the Accountant may, in so far as it relates to a function conferred on the Bank by sections 2, 3A, 3B and 3C of the Act of 1964 (as amended by Part 3), be carried on or completed on or after such coming into operation by the Bank.

(2) Anything commenced and not completed before the coming into operation of this section by or under the authority of the Accountant may, in so far as it relates to a function conferred on the State Claims Agency by sections 3A, 3B and 3C of the Act of 1964 (as amended by Part 3), be carried on or completed on or after such coming into operation by the State Claims Agency.

PART 2 The Fund

5. Final accounts of Fund

5. (1) As soon as practicable, but not later than 3 months after the coming into operation of this Part, the Accountant shall cause to be prepared an abstract of the accounts of the Fund, and a report of the administration of the Fund, in respect of the accounting period or part thereof of the Fund ending immediately before the said coming into operation.

(2) The Accountant shall arrange for the abstract and report referred to in subsection (1) to be audited and, as soon as is practicable after the audit, shall submit a copy of the abstract and report as so audited, together with the auditor’s report thereon, to the Minister for Finance who shall cause copies of those documents to be laid before each House of the Oireachtas as soon as practicable.

6. Moneys to be paid to Bank

6. The Accountant shall, not later than 30 days after the preparation of the abstract and report referred to in section 5 (1) pay moneys, if any, standing to the credit of the Fund to the Bank for the purposes of the performance by the Bank of its functions under the Act of 1964.

7. Records of Accountant

7. (1) Each record held, immediately before the coming into operation of this Part, by the Accountant under the Act of 1964 in relation to the accounts of the Fund shall, on such coming into operation, be transferred to the Bank and shall, on and after such coming into operation, be the property of the Bank and be regarded as being held by the Bank.

(2) Each record held, immediately before the coming into operation of this Part, by the Accountant under the Act of 1964 in relation to applications to the High Court for approvals under section 3 of that Act and payments out of the Fund shall, on such coming into operation, be transferred to the State Claims Agency and shall, on and after such coming into operation, be the property of the State Claims Agency and be regarded as being held by the State Claims Agency.

PART 3 Amendment of Act of 1964

8. Amendment of section 1 of Act of 1964 (definitions)

8. Section 1 of the Act of 1964 is amended by inserting the following definitions:

“ ‘financial services legislation’ has the meaning assigned to it by section 3(1) of the Central Bank (Supervision and Enforcement) Act 2013;

‘Member State’ means a Member State of the European Union and, where relevant, includes a contracting party to the Agreement on the European Economic Area signed at Oporto on 2 May 1992 (as adjusted by the Protocol signed at Brussels on 17 March 1993), as amended;

‘MIBI’ means the Motor Insurers’ Bureau of Ireland;

‘MIIC Fund’ has the meaning given to it by section 3D(1);

‘percentage rate’ shall be construed in accordance with section 3F(4);

‘State Claims Agency’ means the National Treasury Management Agency when performing the functions conferred on it by this Act;

‘vehicle insurer’ means an insurer, or an insurer authorised in another Member State, issuing policies covering risk in the State classified under class 10 in Part 1 of Schedule 1 to the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015);”.

9. Amendment of section 2 of Act of 1964 (Insurance Compensation Fund)

9. Section 2 of the Act of 1964 is amended—

(a) by substituting the following for subsection (2):

“(2) The Fund shall, subject to the provisions of this Act, be maintained and administered under the control of the Bank.”,

(b) by substituting the following for subsection (3):

“(3) Subject to subsection (9), the Bank may borrow for the Fund and, for the purpose of giving security with respect to such borrowing, may charge investments of the Fund.”,

(c) in subsection (3A) by substituting “Subject to subsection (9), the Bank” for “The Accountant”,

(d) in subsection (4) by substituting “Subject to subsection (9), the Bank” for “The Accountant”,

(e) by deleting subsection (5),

(f) in subsection (6)—

(i) by substituting the following for paragraph (a):

“(a) any sums paid under section 3E(5), 5 or 6,”,

(ii) by deleting paragraph (e),

(iii) in paragraph (f)—

(I) by substituting “3B(2)(b)” for “3B(2)(c)”, and

(II) by substituting “Bank” for “Accountant”,

and

(iv) in paragraph (g) by substituting “Bank” for “Accountant”,

(g) in subsection (7) by substituting the following for paragraph (a):

“(a) sums to meet the expenses incurred—

(i) by the Bank in performing its functions under this Act in respect of the maintenance and administration of the Fund, and

(ii) by the State Claims Agency in performing its functions under this Act,”,

(h) by substituting the following for subsection (8):

“(8) (a) The Bank shall, in respect of each financial year, cause to be kept proper and usual accounts of moneys paid into or out of the Fund and shall, not later than 6 months after the end of the financial year to which the accounts relate, cause to be furnished to the Minister an abstract of the accounts of the Fund for that year and a report of the administration of the Fund during that year.

(b) Not later than 6 months after the end of the financial year to which the accounts relate, the Bank shall submit the accounts kept under this section to the Comptroller and Auditor General for audit.

(c) As soon as practicable following the audit referred to in paragraph (b), the Bank shall present to the Minister—

(i) copies of the audited accounts, and

(ii) the Comptroller and Auditor General’s report on the audited accounts.

(d) As soon as practicable after receipt of the audited accounts and the Comptroller and Auditor General’s report, the Minister shall cause copies of them to be laid before each House of the Oireachtas.”,

and

(i) by inserting the following subsection after subsection (8):

“(9) The Bank shall not provide any funds to the Fund from its own resources nor shall the Bank have any liability arising from the Fund.”.

10. Amendment of section 3 of Act of 1964 (payments out of Fund)

10. Section 3 of the Act of 1964 is amended—

(a) in subsection (2) by substituting “under subsection (1) or (5A)(d)” for “under subsection (1)”,

(b) by substituting the following for subsection (3):

“(3) The amount that the High Court may order to be paid to a person in respect of a sum due to the person under a policy shall not exceed the amount that remains due after the assets of the insurer in liquidation have been used to satisfy a portion of the sum otherwise due to the person under the policy.”,

(c) by substituting the following for subsection (5):

“(5) Where any sum referred to in subsection (1) relates to the liability of the insured to a third party (other than under a policy issued by an insurer in liquidation that is a vehicle insurer) the limitations prescribed by subsections (3) and (4) on payment out of the Fund apply to the sum required to meet the liability of the insured to that third party.”,

(d) by inserting the following subsection after subsection (5):

“(5A) (a) Where—

(i) any sum referred to in subsection (1) relates to the liability of the insured to a third party under a policy issued by an insurer in liquidation that is a vehicle insurer, and

(ii) the liquidator or, in the case of an insolvent insurer authorised in another Member State, the person who performs the equivalent functions to a liquidator in the Member State concerned, is appointed in respect of the vehicle insurer on or after 30 September 2011,

then, the limitations prescribed by subsections (3) and (4) on payment out of the Fund shall not apply to the sum required to meet the liability of the insured to that third party.

(b) In a case where paragraph (a) applies—

(i) any amount approved under subsection (1) in respect of personal injuries shall be paid in full, and

(ii) any amount approved under subsection (1) in respect of injury to property shall be limited to the sum specified in section 56(2)(a) of the Road Traffic Act 1961, applying at the time the event giving rise to the claim occurred.

(c) Where, on or after the coming into operation of Part 3 of the Insurance (Amendment) Act 2018, a liquidator or, in the case of an insolvent insurer authorised in another Member State, a person who performs the equivalent functions to a liquidator in the Member State concerned, is appointed in respect of a vehicle insurer, any amount payable by virtue of this subsection, in excess of the limitation prescribed by subsection (4) on payment out of the Fund, shall be met by a payment out of the MIIC Fund to the Fund in accordance with section 3E(5).

(d) In a case where paragraph (a) applies, where an amount was approved under subsection (1) and paid to a person out of the Fund before the coming into operation of Part 3 of the Insurance (Amendment) Act 2018, there may, with the approval of the High Court, be paid to the person out of the Fund such amount or amounts as that Court may authorise in respect of any sum that remains due to that person under the policy concerned after such coming into operation, together with the costs and expenses (if any) necessarily and reasonably incurred by the person in endeavouring to secure payment of the sum.”,

(e) in subsection (6) by substituting “under subsection (1) or (5A)(d)” for “under subsection (1)”, and

(f) by deleting subsection (7).

11. Amendment of section 3A of Act of 1964 (application by liquidator of insolvent insurer)

11. Section 3A of the Act of 1964 is amended—

(a) by inserting the following subsection after subsection (1):

“(1A) (a) Before applying to the High Court under subsection (1), the liquidator of an insolvent insurer shall provide the following information to the State Claims Agency for the purposes of that Agency assessing and verifying whether sums payable under section 3 are appropriate to the claim concerned on the basis of the information so provided:

(i) details of the claims concerned, including an assessment and breakdown of the sum payable in respect of each claim;

(ii) all documentary evidence in support of those claims (being documentary evidence in the form that the liquidator required such evidence to be submitted to him or her).

(b) The information specified in paragraph (a) shall be provided in such form and manner as the State Claims Agency may specify, from time to time, for the purposes of that paragraph.

(c) The State Claims Agency shall, in support of any application to the High Court by the liquidator under subsection (1), prepare a written report—

(i) setting out the information provided under paragraph (a) and the process of verification carried out by it in relation to that information, and

(ii) confirming that sums referred to in paragraph (a) have been verified by it as appropriate.”,

(b) in subsection (2)(b) by substituting “the Bank” for “the Accountant”, and

(c) in subsection (3)—

(i) in paragraph (a) by substituting “Fund,” for “Fund, and”,

(ii) by substituting the following for paragraph (b):

“(b) if the Bank recovers an amount in the proceedings for the winding-up of the insurer (other than a vehicle insurer) in respect of that sum, the Bank shall pay the amount to the extent of that excess to the Fund, and”,

and

(iii) by inserting the following paragraph after paragraph (b):

“(c) if the Bank recovers an amount in the proceedings for the winding-up of a vehicle insurer in respect of that sum, the Bank shall pay the amount to the extent of that excess, subject to the limitation prescribed by section 3(4) on payment out of the Fund, to the Fund, and any amount remaining after such payment to the Fund shall be repaid by the Bank to the MIIC Fund.”.

12. Amendment of section 3B of Act of 1964 (application where insurer in liquidation is insurer authorised in another Member State)

12. Section 3B of the Act of 1964 is amended—

(a) by substituting the following for subsection (1):

“(1) In the case of an insolvent insurer authorised in another Member State in respect of which a person has been appointed who performs, in the other Member State concerned, the functions that a liquidator would perform in the State if the insolvent insurer authorised in another Member State were an insurer, where there is an amount payable to one or more persons under section 3, then—

(a) the State Claims Agency may, from time to time but not more frequently than once in every 3 month period, apply to the High Court for approvals under that section in respect of those persons, and

(b) the amount of the reasonable and proper costs and expenses of the application to the High Court under that section shall be paid out of the Fund.”,

(b) by inserting the following subsection after subsection (1):

“(1A) (a) The person referred to in subsection (1) who is appointed in respect of an insolvent insurer authorised in another Member State shall provide the following information to the State Claims Agency for the purposes of that Agency assessing and verifying whether the amount payable under section 3 is appropriate to the claim concerned on the basis of the information so provided:

(i) details of the claims concerned, including an assessment and breakdown of the amount payable in respect of each claim;

(ii) all documentary evidence in support of those claims (being documentary evidence in the form that the person so appointed required such evidence to be submitted to him or her).

(b) The information specified in paragraph (a) shall be provided in such form and manner as the State Claims Agency may specify, from time to time, for the purposes of that paragraph.

(c) The State Claims Agency shall, in support of any application by it to the High Court under subsection (1), prepare a written report—

(i) setting out the information provided under paragraph (a) and the process of verification carried out by it in relation to that information, and

(ii) confirming that the amount referred to in paragraph (a) has been verified by it as appropriate.”,

(c) by substituting the following for subsection (2):

“(2) Where an amount is approved for payment out of the Fund under section 3 in respect of a sum due under a policy issued by the insurer authorised in another Member State—

(a) the Bank shall arrange for payment out of the Fund to the State Claims Agency of the amount ordered by the High Court under section 3 to be so paid and the State Claims Agency shall pay the amount in respect of the sum so due to the person in respect of whom it is due, and

(b) the Bank shall, as respects the amounts paid out of the Fund, be a creditor of the insurer authorised in another Member State.”,

and

(d) in subsection (3)—

(i) in paragraph (a) by substituting “Fund,” for “Fund, and”,

(ii) by substituting the following for paragraph (b):

“(b) if the Bank recovers an amount in the proceedings for the winding-up of the insurer (other than a vehicle insurer) authorised in another Member State in respect of that sum, the Bank shall pay the amount to the extent of that excess to the Fund, and”,

and

(iii) by inserting the following paragraph after paragraph (b):

“(c) if the Bank recovers an amount in the proceedings for the winding-up of a vehicle insurer authorised in another Member State in respect of that sum, the Bank shall pay the amount to the extent of that excess, subject to the limitation prescribed by section 3(4) on payment out of the Fund, to the Fund, and any amount remaining after such payment to the Fund shall be repaid by the Bank to the MIIC Fund.”.

13. Amendment of section 3C of Act of 1964 (payments out of Fund where administrator appointed)

13. Section 3C of the Act of 1964 is amended—

(a) in subsection (1) by inserting “by the Bank” after “paid”,

(b) by inserting the following subsection after subsection (1):

“(1A) (a) An application to the High Court for payment out of the Fund, to the administrator of an insurer pursuant to subsection (1), shall be accompanied by a report prepared by the State Claims Agency.

(b) A report under paragraph (a) shall confirm that the methodology for estimating claims reserves and for assessing liabilities applied by the administrator, in determining the amounts that are required to enable the administrator to carry on the business of the insurer and to perform his or her functions in relation to the insurer, is in accordance with generally accepted accounting principles or practice for insurers.”,

and

(c) in subsection (4)—

(i) in paragraph (c) by deleting “and”,

(ii) in paragraph (d) by substituting “time, and” for “time.”, and

(iii) by inserting the following paragraph after paragraph (d):