Insurance levy set to zero from 2027
The Central Bank of Ireland has announced a zero levy on the Insurance Compensation Fund from next January. This decision follows the full repayment of a state loan and will benefit home and motor insurance policyholders nationwide.
Source:
Central Bank of Ireland
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⏱️ 2 min read
The Central Bank of Ireland confirmed today a reduction in the Insurance Compensation Fund Levy to 0%, effective from 1 January 2027. This marks the first time the levy has been set at zero since its introduction in 2012, following a change from 2% to 1% earlier this year.
The adjustment will impact customers holding non-life insurance policies, including home and motor insurance where providers are regulated by the Central Bank. The fund, collected by the Revenue Commissioners, provides compensation to policyholders in the event of an insurer’s failure. Deputy Governor Mary-Elizabeth McMunn highlighted that the move reflects the fund’s strong financial position after the outstanding loan to the Exchequer was fully repaid.
Speaking on the change, Ms McMunn stated: “The Insurance Compensation Fund safeguards eligible policyholders should their insurer enter liquidation. Today’s decision underscores the fund’s stability and will ease costs for a broad range of policyholders across Ireland. Annual reviews will continue, with future levy adjustments possible if circumstances evolve.”
The Central Bank expects regulated firms to prioritise consumer interests and implement the reduction from the new year. Where insurers explicitly itemise the levy as a separate charge in policy documents, the reduction must be reflected in premiums from 1 January 2027. This applies to both new policies and ongoing instalment plans spanning into the new year.
The adjustment will impact customers holding non-life insurance policies, including home and motor insurance where providers are regulated by the Central Bank. The fund, collected by the Revenue Commissioners, provides compensation to policyholders in the event of an insurer’s failure. Deputy Governor Mary-Elizabeth McMunn highlighted that the move reflects the fund’s strong financial position after the outstanding loan to the Exchequer was fully repaid.
Speaking on the change, Ms McMunn stated: “The Insurance Compensation Fund safeguards eligible policyholders should their insurer enter liquidation. Today’s decision underscores the fund’s stability and will ease costs for a broad range of policyholders across Ireland. Annual reviews will continue, with future levy adjustments possible if circumstances evolve.”
The Central Bank expects regulated firms to prioritise consumer interests and implement the reduction from the new year. Where insurers explicitly itemise the levy as a separate charge in policy documents, the reduction must be reflected in premiums from 1 January 2027. This applies to both new policies and ongoing instalment plans spanning into the new year.
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