The collapses of Gable and Enterprise Insurance are set to have a widespread impact on the insurance industry with general insurers asked to pay more into the Financial Services Compensation Scheme (FSCS) pot.
General insurance providers will have to shoulder a £63 million levy to compensate the policyholders of collapsed companies such as Gable and Enterprise; while there are further levies of £36 million for life and pensions intermediation, and £15 million for home finance intermediation.
A mismatch in the sales of annuities in previous years has resulted in “unforeseen” self-invested personal pension (SIPP) claims costs, which is compelling the FSCS to impose supplementary levies on finance firms.
FSCS chief Mark Neale further said in a
New Model Adviser report that the deficit will “trigger a cross subsidy for the first time.”
“These claims relate to advice to switch pension funds into high risk investments. We previously flagged the potential for high costs here,” he also noted.
In addition, the agency said in the
Adviser report that it expects a sustained spike in the trend of ‘complex claims in the life and pension intermediation sector,’ and will levy £171 million in that specific class.
However, the total £378 million supplementary levy expected to be imposed in the coming year is still lower than the £401 million levied against the industry in the 2016-2017 period, the FSCS pointed out in the report.
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