UK individuals and small business customers affected by the collapse of after-the-event insurance LAMP will be protected, the Financial Services Compensation Scheme (FSCS) has confirmed.
LAMP Insurance Company was formally put into liquidation last week by the Supreme Court of Gibraltar, after the company revealed that it did not have the money to meet its current obligations and insure new risks.
The liquidator, Grant Thornton, is considering which policies should be terminated. LAMP also provided home, GAP and health insurance.
The FSCS said eligible policyholders would be protected for 90% of the unexpired value of their premium. Small businesses for these purposes have an annual turnover of less than £1m.
“If you’d like to cancel your policy, you should contact your broker who’ll advise you on how this might affect the value of return of premium on your policy,” it said.
“If your broker or the liquidator can replace your policy with a new insurance provider, FSCS will pay the broker the return of premium compensation where we have reached an agreement with them.
“Your broker will then pass this return of premium on to your new insurance provider. Your broker/new insurer will tell you if they’ve replaced your policy and you will be able to cancel any replacement cover during the ‘cooling off period’.
“FSCS may not be able to pay compensation if a broker funds replacement cover or pays return of premium on its own without securing an undertaking from you that you are required to repay them.”
The FSCS said it aimed also to pay finance companies where customers have bought the cover using a loan that required them to assign their rights to the finance company.
Where insurance was bought using a credit card, “in certain circumstances the credit card company will reimburse you for the product you have bought”.