Setanta collapse could spark rise in motor insurance

The Government is to pay the shortfall owed to people hit by the collapse of Setanta Insurance

Setanta collapse could spark rise in motor insurance

The Minister for Finance Paschal Donohoe speaks outside government buildings in Dublin. Image: RollingNews

Car insurance premiums could be set to rise after the government agreed to help those hit by the collapse of Setanta.

Roughly 1,600 people were due to lose out on some money as there wasn't enough funding left in the collapsed insurer.

This afternoon however the Minister for Finance Paschal Donohoe said the government will step in to make up the gap.

The payments will be funded by the Insurance Compensation Fund, which the industry will have to make payments into.

That leaves open the possibility the cost of those charges will be passed on to the consumer.

Minister Donohoe has explained how the re-payments will be funded:

“It is not a case of the taxpayer being in any way exposed to this,” he said.

“What this is is the ICF fund – which is paid for by levies – that itself will be the mechanic through which this issue will be dealt with.

“It will not be coming out of general Government revenue or funding that we raise directly from the taxes of normal tax payers.”