Buildings guarantee insurer has been struggling with the volume of high-value claims in recent months
Administrators have been appointed to protect creditors and policyholders of struggling structural defects insurer East West Insurance (EWIC).
The business was put into administration on 12 October after struggling to meet the demands of an unexpectedly high number of large value claims in recent months, administrator EY said in a statement.
EWIC stopped writing new business in 1997, but bought a book of buildings guarantee policies from Zurich in 2018.
”In recent months, EWIC has received a number of unexpected high value new claims as well as material increases in the value of existing claims,” the administrator said.
”Acting in the best interests of policyholders and creditors, the board of directors of EWIC, alongside financial and legal advisors, assessed the company’s financial position and applied to the High Court to place EWIC into administration.
”This will provide EWIC with the protection of a statutory moratorium and the time necessary to allow the administrators to develop an option or options most likely to result in a better outcome for policyholders and creditors than a liquidation.”
Eligible buildings guarantee policyholders will be entitled to claim 100% compensation under the Financial Services Compensation Scheme, EY added.
Existing claims will be handled by Armour Group.
Joint administrator and EY partner Simon Edel said EWIC ”had been adversely affected by an unprecedented set of claims that ultimately proved to be too extensive to remain solvent”.
Set up in 1964, EWIC’s primary business consisted of 10 to 15 year structural defect policies, which covered risks such as defective cladding. A rule change by the PRA on 8 October now means that structural defect policyholders will have 100% of their claim value covered.