The Central Bank said it will reduce the Insurance Compensation Fund levy from 2% to 1% from January 1, 2026 - marking the first change in the levy in 14 years.
The Central Bank said the change will positively affect a large number of consumers with home and motor insurance policies - if the motor insurance firm is regulated by it.
The regulator said it expects firms to act in the best interest of consumers by ensuring any reductions on eligible policies are passed on without delay.
It also said the ICF remains an important fund, providing protection to certain Irish non-life policyholders in the event of their insurer going into liquidation.
Mary-Elizabeth McMunn, the Central Bank's deputy governor, said the changes announced today reflect the financial position of the fund and the reduction in the levy will positively impact a large cohort of policyholders in Ireland.
"It is the responsibility of insurance firms to pay the correct levy and it is important that they are ready to implement the change from 1st January 2026," she said.
"We expect firms which charge this levy to act in the best interests of consumers by ensuring that any reductions on eligible policies are passed on immediately," she stated.
"We have been engaging with the Department of Finance, Insurance Ireland, the Revenue Commissioners and relevant insurers on this change, and will continue to monitor the fund and carry out another annual review next year," she added.
