Independent TD Mattie McGrath has called on the Minister of State at the Department of Finance, Michael Darcy, to provide urgent clarification around the future implementation of a proposed 2% insurance levy that is to be introduced in order to fund the pay-out of claims in the event of the failure of a motor insurance company. Deputy McGrath was speaking after The Insurance (Amendment) Bill provided for the levy in order to fund the costs that have arisen following the collapse of Setanta Insurance in 2014:
“We all recognise the gross injustice that was perpetrated on Setanta policyholders in 2014. Since then they have endured significant distress in terms of the level of hostility and opposition coming from the insurance sector itself.
This was made worse by a decision of the Supreme Court in 2017 which had the effect that of putting Setanta third-party compensation claimants in a position whereby they were only entitled to 65% of their claim.
That being said, I think many motor insurance policy holders in particular will be absolutely furious at the introduction of an additional levy that will essentially provide cover for the reckless behavior of the insurance providers.
It was made clear to me in the Dáil last week that a 2% levy will be imposed in respect of non-life insurance policies. This in addition to another 2% levy that is already in place and which is paid into the insurance compensation fund and which is passed on directly to policyholders.
It is also on top of the 3% stamp duty paid on non-life insurance policies and which has been paid since 1982. This amounts to 7% increase, only 3% of which is tax with the remaining 4% in the form of a levy.
What is deeply alarming about of all of this is that the Minister has not signalled any definite indication as to when this new levy will end. To my mind this raises the distinct possibility that yet again we are witnessing the introduction of a levy, allegedly for all the right reasons, but that ultimately has the effect of becoming a cash cow for the government and the insurance sector.
The Minister must offer some hope to motorists and policy holders that he is acting on their behalf and not simply bowing down to the corporate pressure of a sector that is already fleecing people left, right and centre,” concluded Deputy McGrath.