Gibraltar-based insurer files for liquidation

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Gibraltar-based insurer files for liquidation

The Gibraltar-based LAMP Insurance Company has submitted an application to the Supreme Court of Gibraltar to appoint the Official Receiver and place the company into liquidation.The Gibraltar Financial Services Commission (GFSC) said in a statement on its website that the directors have taken this action as LAMP is insolvent and has been unable to secure additional financing. The hearing date is set for 31 May 2019. 

The Gibraltar incorporated company which is authorised and regulated by the GFSC provided general insurance products including legal expenses, healthcare, general and warranty insurance to policyholders in the UK, Europe and Asia. 

The GFSC said that policyholders should be aware that whilst their policies are still valid, the firm is "not in a position to pay claims". Policyholders should contact their broker, solicitor or other intermediary in the first instance as it "may be considered prudent" to replace the cover. 

The Official Receiver will work to collect the assets of LAMP with the objective of making distributions to insurance creditors, including policyholders. It is likely that the amount recovered will not be sufficient to meet the amount due to policyholders in outstanding claims and unearned premiums.

The GFSC will work closely with the Official Receiver and/or the designated Insolvency Practitioner, when appointed, to ensure that all policyholders are identified and communicated with directly and fairly.

'Potential sale'
The GFSC statement read: "In the interest of policyholders, LAMP is still actively considering all options, including a potential sale of the business. Any such solution would, however, be subject to the acquirer completing its due diligence, regulatory approval, and making an unconditional financial commitment prior to the 31 May 2019 hearing date. In the event that such a solution is forthcoming, an update will be provided on our website." 

The possibility that a sale may arise should not be relied upon by policyholders when considering acquiring alternative insurance products.

FSCS protection
With regard to UK policy holders only: If eligible under the rules of the scheme, the UK's Financial Compensation Scheme (FSCS) may protect UK policyholders in respect of claims made under policies written by LAMP but unpaid along with claims for return of premium. The liquidator, when appointed, will be cooperating with the FSCS to facilitate the processing of claims for affected UK policyholders. 

For non-UK policy holders: The liquidator, when appointed, will contact regulators and compensation schemes of the other countries in which LAMP policies were written. It may well be that schemes for the compensation of policyholders are not available in all jurisdictions. Policyholders should seek advice from their broker.

 

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Gary Robinson

Commercial Director, Head of Video at International Investment.