Central Bank of Ireland sets Insurance Compensation Fund Levy to 0%

29 September 2026 Press Release

Central Bank of Ireland

Central Bank of Ireland has today (29 September 2026) announced a reduction (PDF 55.79KB) in the Insurance Compensation Fund Levy to 0%, which will take effect from 1 January 2027. It is the first time the levy has been set at 0% since it came into effect in 2012. This marks the second change in the levy in two years, following the reduction from 2% to 1% in January 2026.

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 protects eligible policy holders in the event of their insurer going into liquidation. The changes announced today reflect the financial position of the fund and follows the full repayment of the outstanding loan balance to the Exchequer. The reduction of the levy will positively impact a large cohort of policyholders in Ireland. The Central Bank will continue to conduct annual reviews of the fund and, should circumstances change, the levy may change in the future.”

The Central Bank expects firms to act in the best interests of consumers and must be ready to implement the changes from 1January 2027. For firms which explicitly pass the levy on to policyholders as a separate charge listed within their documentation, the Central Bank's expectation is that the reduction is reflected in the policy from 1 January 2027 onwards. This also applies to current policies which are paid in instalments into 2027 - where the levy charge is explicitly stated within the policy, the levy should be updated to reflect the removal from 1 January 2027.

View further information.

ENDS

Further information

The Central Bank 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.
The reduction from 1% to 0% is estimated to reduce the amount collected by the levy by c. €60m 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 2025 was c. €655 (National Claims Information Database private motor report (PDF 525.45KB)) and so a 1% reduction would equate to c. €6.50 for consumers. Consumers may also have a number of affected policies (e.g. motor insurance and home insurance).