FSCS steps in to help policyholders of failed insurer Lemma

Up to 7,000 UK policyholders in failed Gibraltar-based insurer Lemma Europe Insurance Company are in line for compensation after the Financial Services Compensation Scheme (FSCS) stepped in to help.

A report by the FT Adviser said the FSCS, which is working with Lemma’s provisional liquidator Grant Thornton, will protect claims against the failed insurer as it was authorised by the EEA.

The FSCS will compensate a maximum of 90% of a claim, with no limitations on the size of the claim.

Lemma froze claims payments to policyholders and went into liquidation last month after it ran into financial difficulty when its sister company, the Ukrainian firm Joint Stock Insurance Company Lemma failed to honour its reinsurance agreements and stopped all company reinsurance claims payments.

According to the FSCS, up to 7,000 UK policyholders could be affected by the firm’s collapse.

FSCS chief executive Mark Neale said: “FSCS is here to protect consumers when authorised financial services firms go bust, and we are stepping in to help UK customers of the firm.

“We are prioritising people who may have urgent claims and will be working with the provisional liquidator to ensure that emergencies can be dealt with. People facing potential hardship will be our top priority.

“As well as various general insurance products, Lemma also sold UK solicitors’ professional indemnity insurance.”