Compensation scheme on the hook for 800 claims
The failure of Gibraltar-based insurer Lemma Europe could cost the UK Financial Services Compensation Scheme (FSCS) about £25m in claims payouts, the body announced in its annual report.
The FSCS said it had identified 800 Lemma Europe-related claims that fell within the scope of its protection. The majority are for solicitors’ professional indemnity insurance.
Lemma Europe was a subsidiary of Ukrainian insurer Lemma.
The Gibraltar-registered insurer had traded in the UK since 2008 until the Gibraltar regulator, the Financial Services Commission, removed its permissions in August 2012.
Partners at Grant Thornton were appointed as Lemma Europe’s liquidators in September, and the FSCS declared the firm in default in October 2012.
The FSCS fully covers compulsory insurance policies such as employers’ liability, and up to 90% of all other claims of firms declared in default.
In a letter to policyholders, Grant Thornton partner Frederick White said: “I am currently exploring all options in respect of the future of the company, but I must advise that there is a real possibility that there will be insufficient funds to meet the company’s insurance liabilities in full. No claims will be paid by the company in the immediate future.”
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