Following the demise of Enterprise Insurance plc in October 2016, we find ourselves in a similar position.
On the 8th May 2018 it was announced that Alpha Insurance A/S has been declared insolvent. Whilst Alpha Insurance was a Danish Insurance Company they provided a range of insurance services to the UK, such as gap insurance, professional indemnity and motor insurance.
The Financial Services Compensation Scheme (“FSCS) are working closely with the Danish Insurance Guarantee Fund, to agree how claims can be processed quickly and to what extent their UK policyholders are protected by the Danish Fund. We are closely monitoring the situation and waiting for further updates from the FSCS.
For those of our clients who have outstanding claims against Alpha Insurance, we would suggest that they notify the Danish Guarantee Fund (for claims covered by the fund) or alternatively the insolvency administrator.
The Danish Guarantee Fund covers claims incurred prior to the 8th May 2018, up to four weeks after the liquidators have notified policyholders of the bankruptcy. The Fund will appoint another insurance company to handle claims on their behalf and once appointed, they must be notified of any claims to be covered no later than six months after the issuing of the bankruptcy order.
The Fund will cover claims reported by:
- Policyholders with private insurance policies
- Third-parties protected from personal injuries or property damage according to motor vehicle liability insurance
- Third-parties protected from personal injuries according to other liability insurance
- Collective insurance to the extent that an insurance policy of its kind corresponds to the covered individual insurance policies
- Claims regarding a building fire on all types of real estate
If the claim does not fall into these categories, the claim must be proved in the liquidation and will be compensated in the form of dividends from the estate.
Brokers who have placed business with Alpha will urgently need to seek alternative insurance cover for affected clients. It should be noted that the collapse of Alpha has particularly hit hard cab drivers and motor fleets who operate within compulsory classes of business, who require motor insurance to function day-to-day. The collapse, however, provides an opportunity for insurance providers who can act swiftly and provide policyholders alternative cover in a highly competitive market.
Whilst it is a worrying sign that two insurers have become insolvent in a relatively short space of time, it does seem to be just a co-incidence. Enterprise Insurance struggled to adapt to the new requirements under Solvency II which was implemented in January 2016. It failed to meet its capital requirement by that deadline.
Alpha Insurance however, was doomed after their re-insurer and financial backer, CBL Insurance became insolvent following the downgrade of their credit rating.
However, over the past 9 years of working within this industry it is interesting to see how many more insurers from EU countries are offering motor insurance products within the UK and what affect that increase is having on other UK based insurers.
Thomas, Outram-Haskins, Insurance Manager in the Credit Solutions team at Judge & Priestley LLP
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