The majority of the spend was attributed to employers’ liability policies
The Financial Services Compensation Scheme (FSCS) paid out £85m in compensation to policyholders of failed insurers.
The majority of the spend was attributed to employers’ liability policies issued by three firms; Builders’ Accident Insurance (BAI), Chester Street Insurance and Independent Insurance.
The FSCS compensates customers on behalf of failed financial service firms using money it collects from an industry-wide levy.
Milburn, European Risk Insurance company (ERIC) and Balva are among the more recent insurer failures. The scheme paid out £8.95m to customers of all three insurers in 2014/15.
Compensation for indemnity claims for Milburn policyholders in 2014/15 was £1.92m,
In addition to providing protection for indemnity claims, FSCS also protects eligible policyholders for any loss of premium sustained where the joint administrators cancel the firm’s live insurance policies.
The FSCS paid out £650,000 in total to 7,139 customers of Milburn for these return premium claims.
The FSCS says it expects to continue paying indemnity claims for Milburn over the next 12 to 18 months but not over the long term.
Passported insurer ERIC wrote property and liability insurance. It was declared in default in April 2014.
In 2014/15 the FSCS paid out £4.3m to its policyholders for indemnity claims – the majority of which came from solicitors’ professional indemnity insurance.
The FSCS shelled out £2.73m to policyholders of Latvian insurer Balva.
The majority of the spend also came from solicitors’ professional indemnity policies.
Both ERIC and Balva wrote liability insurance. The FSCS says it expects to receive further claims from policyholders of both insurers over the next few years.