Car policies alert as company fails
Tens of thousands of motorists in Ireland have been warned their insurance policies may be useless after the collapse of an insurer.
The Central Bank has urged policy holders with Setanta Insurance to switch their cover after the Malta-based company went into liquidation.
It is believed as many as 75,000 motorists are insured by the firm in Ireland, which is popular among smaller businesses who use vans for their deliveries and trading.
In a statement, the Central Bank said: "Setanta is not in a position to confirm that claims will be met in full since any and all claims will be subject to the relevant liquidation process.
"Policyholders should therefore make arrangements for alternative cover without delay."
The Central Bank - which has no regulatory authority over Setanta - said it was notified by the Maltese Financial Services Authority that the shareholders of Setanta were winding up the company.
"The Central Bank will require Setanta to write to all policyholders to advise them of the situation and its implications for them," it added.
Setanta Insurance said in a statement on its website that policyholders would be covered until they are notified of their policy being cancelled.
But it added: "The company is, however, not in a position to confirm that claims in this interim period will be met in full since any and all claims will be subject to the relevant liquidation process.
"Policyholders may wish to consider their right to cancel their policy and seek alternative coverage."
Rachel Doyle of Piba, which represents financial brokers in Ireland, said policyholders face "a long drawn out affair" in getting claim payouts.
"Even though cover will remain in force for this period, if the insured person has an accident it is questionable whether Setanta will be able to honour the claim due to their financial situation," she said.
"If (motorists) cancel their policy they can request a pro-rata refund.
"However, being realistic, given the circumstances, there is a strong possibility that refunds of premiums will not be given."
Ms Doyle said it was unfortunate that Setanta has suspended all payments that were already in the process of being issued.