FSCS Guarantees Protection of LAMP Policy Holders

We confirmed, in the preceding edition of BC Disease News (here), that Gibraltar-based after the event insurer, LAMP, had entered into liquidation.

We also reported that the Financial Services Compensation Scheme (FSCS) were ‘aware of the situation’ and were ‘working with the appointed Liquidator to protect eligible UK policyholders’.

This week, FSCS confirmed that individual and small business (turnover of less than £1 million) policy holders will be protected for 90% of the unexpired value of their premiums, initially paid to LAMP.[i]

FSCS has pledged to pay brokers the return of premium compensation, which can then be passed on to new insurance providers, assuming that policies have been cancelled. In addition, it has pledged to pay assignee finance companies who have loaned insurance cover.

However, FSCS has warned that it ‘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 [the policy holder] that you are required to repay them’.

If FSCS are able to assist former LAMP policy holders, as claimed, defendant parties may still have decent prospects of recovering their costs. Defendants may also have success where insurance was bought using a credit card, as credit card companies may agree to pay out for the ‘product’.

Of course, this predominantly affects parties to personal injury proceedings commenced pre-April 2013, as the introduction of qualified one-way costs shifting (QOCS) removed the need for claimants to take out ATE insurance.


[i] Neil Rose, ‘FSCS to protect LAMP policyholders after liquidation is confirmed’ (6 June 2019 Litigation Futures) <https://www.litigationfutures.com/news/fscs-to-protect-lamp-policyholders-after-liquidation-is-confirmed> accessed 10 June 2019.