A reduction of the Insurance Compensation Fund (ICF) levy from 2 per cent to 1 percent came into effect on January 1st.
While the decision was originally announced by the Central Bank of Ireland, Monaghan Senator Robbie Gallagher says the onus will now be on insurers to pass on the savings to consumers.
Senator Gallagher says the Insurance Compensation Fund is an important protection mechanism for policyholders.
He told Northern Sound: "It ensures that in the event of an insurer going into liquidation, outstanding claims can still be paid.
"Approximately €1 billion has been advanced to the Insurance Compensation Fund by the Exchequer since 2011 and the balance of these advances has reached a level where the levy can now be reduced from 2% to 1%.
"This reduction will benefit approximately 2.3 million private motor insurance policies and 1.3 million home insurance policies on renewal in January 2026.
"This will reduce the level of motor insurance contributions by approximately €57 million next year."
Speaking to Northern Sound, Senator Gallagher says the onus is now on insurers to pass on this reduction to consumers.
The Fund is primarily designed to facilitate payments to policyholders and third-party claimants in relation to risks in the State where an Irish authorised non-life insurer or a non-life insurer authorised in another Member State goes into liquidation.
