Liquidator expects ‘significant shortfall’ in Setanta funds

The liquidator of insolvent Setanta Insurance expects there could be a “significant shortfall” between available funds and the total value of claims.

Paul Mercieca of Deloitte, who was appointed as liquidator to the Dublin-based insurance company in April 2014, said that as a result of the expected shortfall he intends to make advance applications to the Insurance Compensation Fund on behalf of claimants.

The State-backed fund, which was established in 1964, is one into which all Irish insurers pay into to cover claims in the event of a company going bust.

A maximum of 65 per cent of the value of a claim, or €825,000, (whichever is less) can be recovered from the fund.

Setanta, which was licensed by the Maltese Financial Services Authority (MFSA), collapsed early last year leaving up to 75,000 van and car drivers without cover. The firm, which had been in the process of winding down its business since January 2014, collapsed three months later when shareholders were informed that the proposed solvent run-off of the business was no longer possible, and a decision was taken to immediately dissolve the business.

The company had been selling mostly commercial motor insurance through a network of brokers in the Republic. It had been popular with smaller businesses who use vans for their deliveries and trading.

Setanta was founded by Mike Matthews in Ireland in 2007 with the backing of individual investors. Mr Matthews left the company in 2011, claiming that investors had failed to back his vision to grow the business.