Tánaiste and Minister for Finance Simon Harris and Minister of State for Financial Services, Credit Unions and Insurance Robert Troy have confirmed the reduction of the Insurance Compensation Fund (ICF) levy from 2% to 1% from January 1.
The decision was first announced by the Central Bank in October and the cut marks the first change in the levy in 14 years.
The Insurance Compensation Fund ensures that in the event of an insurer going into liquidation, outstanding claims can still be funded.
The Central Bank in October 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.
Tánaiste and Minister for Finance Simon Harris said that since 2011, the Exchequer has advanced about €1 billion to the Insurance Compensation Fund.
"I am pleased that the balance of the advances from the Exchequer has reached a level where the levy can now be reduced from 2% to 1%," he said today.
"This reduction will benefit approximately 2.3 million private motor insurance policies and 1.3 million home insurance policies on renewal in January 2026," Mr Harris stated.
"The reduction in the annual percentage rate will reduce the level of motor insurance contributions by approximately €57m next year. This will have a direct and positive impact on the cost of insurance and the onus is now on insurers to pass on this reduction to consumers," he added.
Minister of State for Financial Services, Credit Unions and Insurance Robert Troy said the reduction will lead to savings of approximately €57m for policy holders on renewal.
"I would like to reiterate the Government's expectation that the insurance industry will offer value for money to consumers and that the reduction should be fully reflected in the cost of insurance policies from 1 January 2026," he added.
