The Gibraltar Financial Services Commission (GFSC) has recently ordered Enterprise Insurance to discontinue writing new insurance contracts after the insurer declared its insolvency.
GFSC also barred the Gibraltar-based insurer from making any payments unless previously authorised by the commission.
On July 22nd, Enterprise Insurance, which sells motor insurance in several countries including France, Greece, Ireland, Italy, Norway and the UK, notified the financial services industry regulator that it went broke and failed to secure additional funding.
Enterprise Insurance has advised existing policyholders that their cover remains in effect.
“The current position does not terminate or cancel the contracts of insurance,” it said on its website.
The terms and conditions of individual customers’ policies will determine if they can get a refund, it added.
The Central Bank has advised policyholders to have alternative motor insurance cover as claims may not be fully covered.
A provisional liquidator has already been appointed to manage Enterprise Insurance.
Mr Frederick David John White will work under GFSC’s supervision and explore options for policies transfer and protection of assets and position of policyholders.
In an August 8 communication, Mr White said that the company will not be able to pay any claims arising under existing policies at this stage.
It also remains uncertain whether the company’s assets will be enough to meet insurance claims in full, he added, advising policyholders to contact their brokers.
Mr White is working with compensation schemes to coordinate with them the processes by which eligible claims may be paid.
He is also making arrangements for claims managers to continue to administer process and agree claims for admission as insurance claims and for submission to compensation schemes as applicable, he said.
In Ireland, where Enterprise Insurance has about 14,000 motor customers, Wexford-based insurance underwriting agency Wrightway Underwriting pledged to give refund of outstanding premiums to affected Enterprise Insurance policyholders.
Wrightway would make ex gratia payments to brokers to pass onto affected policyholders, an amount that is equal to the value of the premiums from now until the end of existing policy contracts.
Meanwhile, the GFSC has warned the public about the website enterpriseinsuranceclaim.com, which alleges to offer claims assistance against the insolvent insurer.
According to the commission, the website contains false and misleading information about the validity of Enterprise Insurance policies and the position of customers while the insurer is in provisional liquidation.
The website, owned by Gibraltar-registered company DFM Services Limited, is not regulated, registered or authorised by the GFSC, it said.
Enterprise Insurance seems to share the same fate with Malta-regulated Setanta Insurance, which collapsed two years ago and left €90 million of outstanding claims. To date, it remains uncertain whether the Motor Insurers Bureau of Ireland, an industry-funded organisation that manages claims against uninsured motorists, will foot this amount.
Members of the bureau believe that the state-run Insurance Compensation Fund, formed to meet claims costs in the event of an insurer’s insolvency, should pick up the tab.