Fianna Fáil Finance Spokesperson Michael McGrath has called for the Central Bank to undertake an urgent review of the Irish insurance sector following the collapse of Setanta Insurance leaving 75,000 people without cover.

Deputy McGrath said: “This is an extremely disturbing development coming only a few months after RSA needed a bailout by its UK parent and the decision to put Quinn Insurance into administration in 2010. The basis of the insurance market has to be public trust that the entity to which they are paying their premium will be around to settle a claim if one arises. This is being significantly undermined by the series of crises that have hit the sector. In both instances these firms had overseas parent companies. The Central Bank needs to review whether the model of regulation for the sector is fit for purpose.

“It would appear that customers of Setanta Insurance after the liquidation of the firm may be forced to seek recompense from the Insurance Compensation Fund. This is very concerning as the Compensation Fund is already stretched to its limit by the massive claims being made on it and the fact that we still do not know the full extent of the bill for Quinn Insurance. The Minister should urgently clarify the extent of the potential claim on the Fund and if it is adequately resourced to meets these claims.

“When RSA ran into difficulty before Christmas I queried the Minister for Finance on whether he was satisfied by the regulatory model that applies to the industry. For a second collapse to occur so quickly after RSA highlights the need for an urgent review of the way in which the sector operates.

“While the Central Bank in particular needs to look at the manner in which insurance firms makes provision for future claims, attention is also required to the difficulties many people have in getting adequate insurance cover for flood risk despite remedial work having been carried out in their locality.

“This week the Dáil debated the new Competition Bill which will establish a Competition and Consumer Protection Commission. They also have a potentially significant role to play as it is intended that this will have strong powers to take action in the interests of consumers. The insurance sector should be very high on its list of priorities.

“No action was taken to remedy the problems in the industry following the last two insurance collapses. This cannot be allowed to happen again.”