A19 Insurance have today been informed by the FSCS (Financial Services Compensation Scheme) that Enterprise Insurance clients will forfeit the right to FSCS protection, unless the situation is forced on to them with the subsequent cancellation by the liquidator.
So we understand this to mean that, if an Enterprise Insurance policyholder cancels their policy at the moment, they will not be entitled to compensation from the FSCS. If Mr Frederick White (the Provisional Liquidator appointed by Gibraltar Financial Services Commission) subsequently decides to cancel the Enterprise Insurance policy, then clients will be entitled to compensation from the FSCS.
Enterprise Insurance “in default” – what does this mean?
The “jargon Buster” on FSCS website explains “in default” as : A firm unable, or likely to be unable to pay claims against it. This will generally be because it has stopped trading and has insufficient assets to meet claims, or is in insolvency.
A statement on the FSCS website on 28 July 2016 headed Enterprise Insurance Company PLC now in default states : If FSCS establishes Enterprise cannot meet the cost of claims made against it, we will protect UK policyholders.
We can only assume that the above will happen when the liquidator make his final decision and reports back to the Gibraltar Financial Services Commission and the the Supreme Court of Gibraltar.
Please be careful if you are advised to cancel your Enterprise Insurance policy.
In light of the above, it is not surprising that brokers are unsure on what advice to give their clients regarding the best course of action.
Whereas the present situation is far satisfactory, in that Enterprise on the instructions of the liquidator are unable to currently pay any claims arising under such policies, please be careful if you are advised to cancel your Enterprise Insurance policy. It is clear from the above that if you do so, then you will not be entitled to compensation from the FSCS.
We will endeavour to keep our customers updated of any developments to the Enterprise Insurance situation.