Reduction of the Insurance Compensation Fund Levy
Tánaiste and Minister for Finance Simon Harris TD, together with Minister of State for Financial Services, Credit Unions and Insurance Robert Troy TD, have confirmed a reduction in the Insurance Compensation Fund (ICF) levy from 2% to 1%.
The reduction, announced by the Central Bank of Ireland (CBI) on 3 October 2025, will take effect from 1 January 2026.
The ICF is a key protection for Irish policyholders, ensuring that valid claims can continue to be paid if an insurer goes into liquidation. Since 2011, the Exchequer has advanced approximately €1 billion to the Fund to ensure it could meet its obligations.
Following sustained repayments over recent years, the balance of these advances has now reached a level that allows for a reduction in the levy charged on insurance policies.
Confirming the measure, the Tánaiste said the decision represents a positive development for consumers. He noted that the reduction will benefit an estimated 2.3 million private motor insurance policies and 1.3 million home insurance policies renewing from January 2026. The lower levy is expected to reduce motor insurance contributions by approximately €57 million in 2026, easing costs for households and motorists. The Tánaiste emphasised that it is now incumbent on insurers to ensure this saving is fully passed on to consumers.
Minister of State Robert Troy welcomed the reduction, describing it as a tangible benefit for policyholders. He reiterated the Government’s expectation that the insurance industry will provide value for money and reflect the reduced levy in the price of policies from the start of 2026. He stated that transparency and affordability in insurance pricing remain central priorities for Government.
The ICF was established under the Insurance Act 1964 and strengthened by subsequent amendments in 2011 and 2018. It is financed through contributions from non-life insurance companies, calculated as a percentage of gross premiums written in respect of risks in the State, up to a statutory maximum of 2%. Contributions are collected by the Revenue Commissioners and administered by the Central Bank of Ireland.
Under the legislation, the Central Bank carries out an annual assessment of the Fund’s financial position and determines the appropriate levy rate. Where necessary, the Minister for Finance may advance funds to the ICF on a repayable basis to ensure timely payment of claims. Over the past 14 years, the levy has been used to repay these Exchequer advances. The reduction announced today reflects the improved financial position of the Fund and marks an important step in lowering insurance-related costs for consumers.