Up to 75,000 van and car drivers are being advised by the Central Bank to purchase a new motor insurance policy immediately following the collapse of Setanta Insurance.
The insurance firm, which was licenced by the Malta Financial Services Authority and sold car and van insurance in Ireland, had been in the process of winding up its business here since January.
However the company recently decided that a solvent run-off of the business was no longer viable and, at an Extraordinary General Meeting yesterday, decided to immediately dissolve and surrender its business licence.
Setanta Insurance is believed to have in the region of 75,000 customers on its books.
It said that all claims payments have been suspended until further notice as it awaits the official appointment of a Maltese liquidator.
Once that appointment is confirmed, it said, any claims and liabilities would be processed according to the law, which “may result in such claims not being met in full”.
The company said it would notify its remaining customers of the cancellation of policies, and said they “may wish to consider their right to cancel their policy and seek alternative coverage”.
Setanta's policies are still valid for two months but given the company's financial situation the Central Bank is advising its customers to seek alternative cover immediately.
The company's collapse raises the spectre of further claims on the Irish insurance compensation fund if Setanta proves unable to discharge its liabilities.
Non life-insurance policies are already subject to a 2% levy which was imposed to enable the fund to meet the legacy cost of claims from Quinn Insurance.