Insurance companies going bump

[pinkbabytots]

What protection do you have if you have a pending claim with an insurance company and they go into administraion or liquidation?

Thanks in advance

[Jimbo137]

It's a complex subject - but in general, insurers are regulated by the FSA and it would be worth you checking specifically with them, and making sure your insurer is appropriately registered.

[beso]

You may find that you would be in the same boat as other unsecured creditors. This is what happened a few years ago when an insurance company in Australia went bust.

In this case you get a percentage of the company's assets in proportion with the value of your claim.

Unfortunately the liquidators (who get paid a fortune) and any secured creditors get paid first and this often means there is a pitance left for other claimants.

Any buildings they own would be mortgaged so the banks would get them. Given the worldwide downturn commercial real estate is likely to be worth less than they owe on them so there won't be anything coming from their sale.

The only other significant assets will be investments and their collapse is probably what brought on the liquidation.

However in the Australian case the some Directors did jail time because the fraudulently misrepresented the state of the company. However it was little consloation to those who lost their homes especially when one of them was relaease from jail and returned to his wife's multi-million dollar mansion.