My 10 cents.
The owner of a car is vicariously liable for the negligence of the driver only if the car was being driven with
consent of the owner.
In this case there should be no vicarious liability as there was no authority given expressly.
The owner also needs to exclude the possibility of
implied consent to drive.
Implied consent could arise where, on the facts, there is evidence of previous instances of unaccompanied driving being permitted by the owner.
In Ireland taking a vehicle without consent is known as taking a vehicle with authority. See RTA 1961 S.112.
LINK
http://www.irishstatutebook.ie/eli/1961/act/24/section/112/enacted/en/html#sec112.
Insurers would probably have refused indemnity anyhow if the driver had consent but was driving unaccompanied. Many insurers seem to exclude policy liability for this event. However, any third parties injured by the negligence of the driver - in a public place - will have to be paid by the insurance company that had a certificate of insurance issued on the car at the relevant time. This then leads to the issue of recovery.
The owner will be open to action for recovery of the insurer's outlay only if the owner gave consent.
The driver is certainly open to action for recovery but that will probably be of no practical value if she has no assets.
Hopefully, the owner did not sign any form of indemnity for the insurer authorising them to settle on her behalf. If she did that she has a problem.
The normal drill would be for such an indemnity to be obtained first but it is not necessarily fatal to the insurers efforts to recover outlay.
My overall suspicion is that the insurers may be misreading or misconstruing their contractual rights to seek recovery. I think that the fatal flaw for the insurer is the consent issue. If there had been consent I would take a different view.