Here at the AA we’re alarmed that a large number of van drivers left in the lurch by the collapse of Setanta Insurance will be on the road with no cover at all by the end of this week. This week all remaining Setanta van insurance policies will be cancelled. Of the 75,000 people affected most have found alternative cover but the AA estimates that as many as 20,000 have not yet done so.
“The situation is totally unfair on the van drivers who have been let down.” Says Director of Consumer Affairs Conor Faughnan. “Even so, that won’t be an excuse if a driver is on the road with no insurance. You have to act now. We are calling on all of the affected drivers to find a new insurer immediately. You will not legally be able to drive your van from Monday and you will not have any cover in place if you are unlucky enough to have a claim.”
Since the initial announcement of Setanta’s collapse last month we have and continue to receive high volumes of calls from anxious customers.
“We are still hearing from people who are not clear on the implications.” Says Faughnan. “There are also delays getting essential paper-work, like proof of no-claims-bonus, from the remnants of Setanta. Here at the AA we can put these drivers on cover straight away and allow the paper-work to catch up but not all providers have this flexibility.”
Van drivers without cover will have to bear the cost of any loss themselves, apart from damage done to third parties which will be paid by the Motor Insurance Bureau of Ireland. That in turn increases the financial exposure to the MIBI which could add to everyone’s insurance costs.
“We have huge sympathy for those who have been let down by Setanta and are now out of pocket.” Says Faughnan. “They are in a mess which is not of their making and they have already taken an unfair financial hit. But that won’t excuse them if they drive illegally.”
Since the collapse here at the AA we have heard from many concerned small business owners and other interested parties have been in touch with us fearing a hike in premiums. “This is unlikely to be the case, at least not for now.” Says Faughnan. “It is not the same as the Quinn situation because Setanta was much smaller and regulated in Malta, not Ireland. So we won’t be seeing an extra levy for this one. Mind you, we are already paying a 5% tax on all insurance which people often do not realise.”
The one small positive in this situation is that if you’re a Setanta customer insurance providers are eager to entice your business and this is having a positive effect on premiums in the short term. Here at the AA for example we are offering a €40 discount for online purchases. We’d also encourage you not to look at policies based on price alone. Consideration should also be given to specific benefits such as the driving of other vehicles and how much excess is attached to a policy.
While most Setanta customers can enjoy the courtship of alternative providers those who are classified as high risk for any reason – multiple penalty points or a bad claims history can expect their premiums to rise. “Setanta took on a lot of high risk customers at a price that was too low, one the reasons they went broke.” Says Faughnan. “There is legislation in place which will guarantee that they do get cover but that does not mean that they will like the price. Unfortunately they can expect to pay much higher premiums.”
In summary, this is what happened:
- On 16th April Setanta Insurance announced that it was surrendering its insurance licence and winding up its affairs. Setanta was regulated by the financial authorities in Malta, not Ireland.
- Setanta had provided insurance to 75,000 vans (LCVs in insurance-speak: Light Commercial Vehicles).
- A lot of these were high risk-profile cases who will now struggle to get cover elsewhere, certainly at the price they paid. Setanta’s rates were very cheap (which may be one reason why they went broke).
- On Friday last (9th May), the Central Bank announced that all Setanta Policies would be cancelled in the next ten days. This means that the disk on your windscreen is no longer worth the paper that it is written on – you are now an uninsured driver. http://www.rte.ie/news/business/2014/0509/616285-setanta-insurance/