Central Bank of Ireland announces change to Insurance Compensation Fund Levy

• The Central Bank has reduced the Insurance Compensation Fund levy from 2% to 1% as of the 1^st January 2026, marking the first change in the levy in 14 years.
• The change will positively affect a large cohort of consumers with non-life insurance policies and the Central Bank expects firms to act in the best interest of those consumers by ensuring any reductions on eligible policies are passed on without delay.
• The ICF remains an important fund, providing protection to certain Irish non-life policyholders in the event of their insurer going into liquidation.
  

The Central Bank of Ireland today (3^rd October 2025) announced a reduction in the Insurance Compensation Fund Levy to 1%, which will take effect from 1^st January 2026. This marks the first change in the levy in 14 years since 2012, a reduction of 1% from the maximum allowable 2% under the Insurance Act 1964.

The change will affect many customers with non-life insurance policies such as home and motor insurance (if the motor insurance firm is regulated by the Central Bank of Ireland). The fund is collected by the Revenue Commissioners and used to pay compensation to consumers for claims on failed insurance firms.

Deputy Governor Mary-Elizabeth McMunn said: “The Insurance Compensation Fund is an important fund, the purpose of which is to protect eligible policy holders in the event of their insurer going into liquidation. 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 1^st January 2026. 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. 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.”

The Central Bank of Ireland expects firms to act in the best interests of consumers. Firms must now ensure their systems and processes are up to date to implement the change from 1^st January 2026.

For firms which explicitly pass the levy on to policyholders as separate charge listed within their documentation, the Central Bank’s expectation is that the reduction is reflected in the policy from 1^st January 2026 onwards. This also applies to current policies which are paid in instalments into 2026; where the levy charge is explicitly stated within the policy, the levy should be updated to reflect the reduction from 1^st January 2026.

The Central Bank of Ireland also recommends no further request for credit for the fund from the Minister for Finance is required at this time. The reduction reflects that a rate of 1% is likely to be sufficient to repay the outstanding loan balance and cover anticipated calls on the fund in 2026, taking into account companies which are already in administration or liquidation.

View further information.

ENDS

Further information

• The Central Bank of Ireland is responsible for assessing and administering the Insurance Compensation Fund, and monitors the Fund throughout the year.  The annual review of the Fund involves an assessment of the size of the fund, expected Levy collections, funding requirements and reviews whether the Levy needs to remain in place and at what percentage it should be set.
• In the Bank’s most recent annual assessment of the financial position of the Fund it was determined that a 1% levy applied in 2026 should be sufficient to repay the outstanding loan balance due to the Exchequer and cover expected future compensation to Irish policyholders that have valid claims.
• The reduction from 2% to 1% is estimated to reduce the amount collected by the levy by c. €57m across the whole sector. In terms of the reduction for consumers this will depend on the precise policy and premium paid. By way of example, the average motor premium for H1 2024 was c. €616 (National Claims Information Database private motor report (PDF 522.32KB)) and so a 1% reduction would equate to c. €6 for consumers. Consumers may also have a number of affected policies (e.g. motor insurance and home insurance).

View more information on the levy.

Kelly Horn [email protected] / 086 210 3359

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