Irish motorists' hopes that cheaper premiums offered by foreign insurance companies will soon become a reality have been raised after a court in Enniscorthy, Co Wexford, was told that Romanos Gusakovas, who sourced his insurance in his native Lithuania was legally covered to drive in Ireland, despite the fact that he was living here.
Gusakovas was prosecuted for driving without insurance. However, when he appeared in court, he produced a certificate of insurance from a Lithuanian company. The gardai on the day confirmed that the certificate was valid and that the man was covered to drive in Ireland under the policy. In fact, Gusakovas said that the certificate covered him to drive in all EU countries.
His claim that he was covered throughout the EU would be accurate following the implementation of several community-wide motor insurance directives over the past number of years that have made it compulsory for all vehicles in the EU to be covered by third-party insurance.
But, although these directives require insurance companies to provide cover for their policy-holders driving in other EU countries, this applies only for temporary periods such as holidays. Indeed, Irish motorists cannot source cover from an insurance company trading in another EU country to insure them while they are permanently living here unless that insurance company fulfils certain strict criteria.
But following the Gardai's confirmation that the insurance cover was valid for Ireland, Irish motorists began to hope that increased competition and lower premiums - in this case insurance cover was obtained for three months at a cost of just €50 - were a step closer to becoming a reality.
However, their hopes are to be shortlived. According to Carmel Mulroy of the Irish Insurance Federation, an insurance company in, for example, Lithuania wishing to provide cross-border motor insurance services in another EU country, such as Ireland, must meet several conditions. These stipulate that the insurer must appoint a representative in the country concerned to handle claims there.
In addition, the company must also pay into the country's local guarantee fund. In Ireland, this fund is administered by the Motor Insurance Advisory Board and provides compensation for victims of accidents where the motorists were uninsured.
Foreign insurance companies that fulfil the conditions would also have to register in Ireland with the Irish Financial Services Regulatory Authority (IFSRA) if they wished to offer motor cover here. IFSRA has confirmed that it has not received notification from any Lithuanian insurance company looking to operate in Ireland .
Eventually foreign insurers may enter the Irish market, but, until then, Ireland 's motorists must continue to buy their insurance from the nine insurance companies currently operating in the Republic.