The Financial Services Commission in Gibraltar has said that insurance policies issued by the troubled Enterprise Insurance will remain valid regardless of the company’s financial situation.
The Gibraltar-based insurance company, which has around 14,000 customers in Ireland, has ceased trading after being declared insolvent on Friday. However, although the company is insolvent, the Gibraltar FSC, which is the regulator for all financial services companies based in the territory, has stated that “the current position does not terminate or cancel the contracts of insurance” on its website.
However, for those that wish to receive an immediate return on premiums the Irish insurance underwriting agency that wrote business on behalf Gibraltar-based insurer Enterprise, has, according to the Irish Times, said it would refund outstanding premiums to up to 14,000 Irish motorists that may have been affected by Friday’s collapse.
Wrightway Underwriting, based in Wexford in Ireland, but ultimately owned by Zurich Insurance, entered into an agreement with Enterprise Insurance in 2014, to offer motor insurance in Ireland through the Irish company’s broker network.
“Wrightway has committed to helping its broker clients deal with affected policy-holders and, with this in mind, Wrightway has decided to make an ex gracia payment to its brokers to pass onto their policy holders which is equal to the value of the premiums from now until the end of their current policy contracts,” the company said in a statement on Sunday.
A spokesman for Wrightway declined to say how much money was involved, other than it was a “significant” amount which would be funded by the company’s own resources.
In a questions and answers section on the Financial Services Commission of Gibraltar’s website, relating to Enterprise Insurance policy holders, the commission advises customers that they do not have to take any action at this stage “as existing policies remain in force”.
For policy holders who have an existing claim, it says that claims will be considered by the provisional liquidator of Enterprise.
No new policies
It has also issued an order which means the Enterprise is not authorised to issue any new policies.
The FSC added that it has notified the European Insurance and Occupational Pensions Authority (EIOPA), and the relevant financial services regulators and compensation schemes in France, Greece, Italy, Norway and the UK, where Enterprise has also written business. It is not known how many policyholders in these countries have been affected, but it is understood to be lower than those affected in Ireland.
It is expected that responsibility for any customers that do not receive compensation from either the Gibraltar FSC or Wrightway could be passed onto Ireland’s own Insurance Compensation Fund (ICF.)
The Department of Finance’s Review of the Framework for Motor Insurance Compensation in Ireland recommends that the liabilities of any future insurance failure be assumed by the ICF, with no upper limit on the exposure of insurance companies.