Central Bank to halve insurance-fund levy
The Central Bank has urged insurers to pass on a cut in the Insurance Compensation Fund (ICF) levy to consumers “without delay”.
The regulator today (3 October) announced that the cut in the levy, from 2% to 1%, would come into effect from 1 January 2026 – the first change in 14 years.
The ICF provides protection to certain Irish non-life policyholders in the event of their insurer going into liquidation. It is collected by Revenue and used to pay compensation to consumers for claims on failed insurance firms.
Non-life policies
Its purpose was mainly to repay the State for funding the administration of Quinn Insurance.
The current rate of 2% is the maximum allowed under the Insurance Act 1964, as .
will affect many customers with non-life insurance policies, such as home and motor insurance.
“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,” said deputy governor Mary-Elizabeth McMunn.
“We expect firms that 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.
Review
The regulator said that the average motor premium for the first half of 2024 was €616, meaning that the cut would equate to around €6 for the average customer.
McMunn added that the Central Bank would continue to monitor the fund and carry out another annual review next year.
The Central Bank said that the 1% rate was likely to be enough to repay the outstanding loan balance and cover anticipated calls on the fund in 2026, taking into account companies that are already in administration or liquidation.