The Minister for Finance has said the State will ensure that third party claimants affected by the collapse of Setanta Insurance are compensated in full.
Paschal Donohoe and the Minister of State for Financial Services and Insurance, Michael D'Arcy, said the detailed arrangements for such compensation will be elaborated in due course.
It is understood that just fewer than 1,600 claims are outstanding at a cost of around €90 million.
They are still subject to further discussions to ensure no competition or legal issues arise.
Setanta Insurance was placed into liquidation by the Malta Financial Services Authority in 2014 and is being liquidated under Maltese law.
Setanta was the subject of a protracted court case as to whether the Motor Insurers' Bureau of Ireland or the Insurance Compensation Fund was liable in respect of third party motor insurance claims.
The final judgment on this matter was delivered by the Supreme Court last May and it overturned the previous decisions of the High Court and the Court of Appeal that MIBI was liable for such claims.
Ministers Donohoe and D'Arcy also said today's decision will also apply to the similar case of Enterprise Insurance.
That case, while much smaller in scale and impact, has also meant that claimants were left out of pocket by not being compensated fully through the Insurance Compensation Fund mechanism.
The Government decided last July to bring forward legislation to address the uncertainty these cases had highlighted in relation to compensation arrangements for third party motor claimants in any future motor insurer insolvency.
The Bill, which is still being drafted, proposes to increase the level of Insurance Compensation Fund coverage for all future third party motor claims from its current 65% level to 100%.
This will bring it into line with the compensation levels paid out by the MIBI.
This additional coverage will be financed by the motor insurance industry through the establishment of a fund into which industry will make regular contributions.
Fianna Fáil Spokesperson on Finance Michael McGrath has welcomed the announcement.
"The human toll for some of those mired in this mess continues to be enormous and they will want to know when the nightmare will end," Deputy McGrath said. "The announcement that the Government has agreed ‘in principle’ to pay the 35% shortfall in claims is welcome, but no timeline has been given whatsoever for this issue to be fully resolved."
He said the statutory provision that the Insurance Compensation Fund can only issue payments every six months remains in place and is a further barrier to a swift resolution of the Setanta debacle.
