FSCS chief operating officer says the industry needs to improve how customer data is provided
The Financial Services Compensation Scheme (FSCS) is still working to provide premium refunds for thousands of Enterprise customers.
FSCS chief operating officer Jimmy Barber told Insurance Times in the wake of the latest unrated insurer, Qudos, going into liquidation, that most often it was a lack of customer data that was delaying these refunds.
He said while the majority of brokers and premium finance providers have been able to collaborate with the insurer and the FSCS to provide that data, the process needs to improve to ensure all policyholders receive their refund in an appropriate timeframe.
He said there were improvements that the insurance industry had to make to catch up with other sectors.
“If you compare the speed at which we are able to operate at with insurers, compared to the speed at which we are able to operate with depositors, it’s very different,” Barber said.
“We have worked with that industry and the regulators to ensure that we have good quality data in single customer view files, which means that when a deposit taker fails, customers don’t have to make any application to us, and they get their money back within seven days.
“From an insurance perspective though there are still some Enterprise policyholders who we’re unable to provide protection for simply because we can’t get the data to tell us who they are. This is over two years later.”
The FSCS has helped out 1.5 million policyholders in the last three years and paid out over £400m.
In relation to the collapse of Alpha this year, it has to date paid out over £16m in premium refunds to 185,000 Alpha policyholders. On top of this, it has also paid out £3.1m on Alpha indemnity claims so far.
Barber said the job of paying premium refunds was made more difficult due to poor record keeping on behalf of the insurer. And this adds to the workload of the broker, in providing the FSCS with accurate customer data.
The FSCS has been working hard with latent defects broker CRL to provide refunds for 22,000 Alpha policyholders. So far the FSCS only has accurate data for 6,500 of these customers. The aftermath in handling the collapse of Alpha is said to have cost CRL millions of pounds.
Barber said: “The important point is does the insurer have good records? What we have found with most of the firms that have failed is the answer is no.
“That means we have to look to the broker and ask if they can they help us piece together the jigsaw. A lot of them have done a great job, but at times we struggle.
“The vast majority of customers have now been protected, but there are still a small number who it’s either taken too long, or we still haven’t been able to return their premium.”
On Gable, Barber said the FSCS worked well with brokers, and there are believed to be no outstanding policies.
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