Central Bank of Ireland reduces Insurance Compensation Fund levy to 1% from 1 January 2026

The Central Bank of Ireland has announced that the Insurance Compensation Fund (ICF) levy on eligible non-life insurance policies will be reduced to 1% from 2% with effect from 1 January 2026, marking the first change in the levy since 2012. Insurers are expected to ensure any reduction on eligible policies is passed on to consumers without delay. The ICF levy is collected by the Revenue Commissioners and used to pay compensation to consumers with valid claims where an insurer fails. The change will affect a large cohort of policyholders with non-life policies such as home insurance and motor insurance where the motor insurer is regulated by the Central Bank; firms must update systems and processes to implement the new rate. Where the levy is explicitly listed as a separate charge in policy documentation, the expectation is that the reduced rate is reflected from 1 January 2026, including for policies paid by instalments that run into 2026. The Central Bank estimates the reduction will lower levy collections by around EUR 57m across the sector, and gives an illustrative impact of around EUR 6 on an average private motor premium of around EUR 616. The Bank also indicated that no further request for credit for the fund from the Minister for Finance is required at this time, and that a 1% rate in 2026 is likely to be sufficient to repay the outstanding loan balance due to the Exchequer and cover anticipated calls on the fund, taking into account insurers already in administration or liquidation. It will continue to monitor the fund and carry out another annual review in 2026.