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Home > Prudential Regulation Authority > Insurance information
 

Insurance information

FSCS  |  Updates  |  Banking  |  Insurance
 
This page includes information on:

FSCS coverage of insurance contracts 

To be protected by the FSCS, policyholders must: (1) have a protected insurance contract; and (2) be eligible to receive compensation.
 
1. To be protected, an insurance policy, generally, must:
 
A. Be a ‘relevant’ general insurance contract or a long term insurance contract
 
Further details on the types of general insurance contracts and long term insurance contracts protected by FSCS can be found within the Policyholder Protection Part of the PRA Rulebook.
 
B. Not be a reinsurance contract
 
C. Be issued by a relevant firm through an establishment in the UK, another EEA state, the Channel Islands or the Isle of Man
 
Generally the policy will be protected by the FSCS if the policy is issued by:
  • A UK based insurer with a UK establishment (e.g. a UK firm, a UK branch of an EEA or non-EEA firm, a UK insurer providing cross border services in another EEA state).
  • An EEA insurer providing cross-border business into the UK (e.g. via a website).
  • A UK branch in another EEA state.
  • An insurer with an establishment in the Channel Islands or Isle of Man
FSCS cover is not available to policyholders with claims against firms that do not have the relevant UK or EEA passport authorisation to bring them within the scope of FSCS cover. This includes any policyholder of a subsidiary of a UK group based in any non-EEA state.

D. Relate to a protected risk or commitment
 
  • For policies issued by a UK based insurer, the risk or commitment must be located in the UK, another EEA state, the Channel Islands or Isle of Man.
  • For policies issued through an EEA insurer with an EEA establishment providing cross border services into the UK (e.g. via a website), FSCS protection covers UK risks or commitments only.
  • For policies issued by a UK branch in another EEA state, the risk or commitment must be situated in the UK or another EEA state.
  • For policies issued through an establishment in the Channel Islands or Isle of Man, the risk or commitment must be situated in the UK, Channel Islands or Isle of Man.

For more information on how ’risk or commitment’ is determined please refer to section 9.5 of the Policyholder Protection Part of the PRA Rulebook.

2. Eligible Claimants

Not all policyholders are eligible to claim compensation from the FSCS. For claims relating to general insurance, most private individuals and small businesses are eligible for protection. For long term insurance most claimants, including large businesses, are eligible for protection.

Provided that the claim is a protected contract of insurance, there are no exclusions from eligibility for claims under insurance contracts which cover compulsory insurance, e.g. third party motor or employers’ liability.

Amount of compensation

If, on and from 3 July 2015, an insurance firm has been declared in default and the FSCS is satisfied that a claim is protected and the claimant is eligible (in accordance with Policyholder Protection rules), the following compensation from the FSCS is available:

  • General insurance contracts: 
    • where the claim is in respect of a liability subject to compulsory insurance, a liability subject to professional indemnity insurance, or death or incapacity of the policyholder due to injury, sickness or infirmity: 100% of the claim;
    • all other cases, 90% of the claim.
  • Long term insurance contracts:
    • 100% for all long term insurance claims.

If the insurance firm was declared in default between 1 January 2010 and 2 July 2015, and the FSCS is satisfied that a claim is protected and the claimant is eligible (in accordance with COMP), the following compensation from the FSCS is available:

  • General insurance contracts:
    • where the claim is in respect of a liability subject to compulsory insurance: 100% of the claim;
    • all other cases, 90% of the claim.
  • Long term insurance contracts:
    • 90% for all long term insurance claims.

If the firm was declared in default before 1 Jan 2010, the level of FSCS protection covers 100% of the first £2000 and 90% of the remainder.

In relation to any of the above:

  • for general insurance, the FSCS must calculate the value of the firm’s liability to the claimant in accordance with the contract terms, and pay that amount, subject to any limits, to the claimant.
  • for long term insurance, unless the FSCS is trying to secure continuity of cover, it must calculate the value of the firm’s liability to the claimant in accordance with the contract terms as valued in a liquidation of the insurer, or in the absence of this, in accordance with valuation techniques that the FSCS considers appropriate.

This may mean that policyholders will lose some of the value. Further details are provided in COMP 12 and the Policyholder Protection Part of the PRA Rulebook, as applicable.

For further information about the policy changes and implementation, please see the 2015 updates page.

Lists of insurers

The lists of UK authorised insurers and EEA authorised insurers operating in the UK as a branch and/or on a freedom of services basis, published by the Bank of England and/or the Prudential Regulation Authority (PRA), are intended to be used solely as a guide. These lists will be published biannually. The list of active Lloyd's of London syndicates will be updated annually.
 
 
 
 

Historical versions of these documents are also available on our Insurance information - historical lists page. 

Please note that the information noted above relates to the authorised institutions in the relevant sector as at the date noted and is not updated on a continuous basis. For an up to date list please refer to the Financial Services Register. 
 
More information regarding FSCS coverage
  • Protection for ‘defined benefit occupational pension schemes’ is provided by the Pension Protection Fund rather than the FSCS.
  • For motor claims, the Motor Insurance Bureau may be the relevant scheme.

For further information or any questions on the FSCS, please see the FSCS website.

 

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