Policyholders with Latvian insurer Balva have been given fresh hope of making a successful claim for compensation.
The Financial Services Compensation Scheme (FSCS) declared Balva to be ‘in default’ earlier this week – effectively saying the company is unable to pay claims against it.
The declaration of default means the FSCS is able to accept eligible claims against Balva.
Hundreds of law firms are believed to have signed up to policies for indemnity cover with the unrated insurer, which was operating in the UK under European directive ‘passporting’ arrangements.
In June last year, Latvia’s Financial and Capital Market Commission withdrew all operating licences issued to Balva and a liquidator was appointed. Balva customers were supposed to transfer to Berliner, only for that firm to withdraw from the market.
The FSCS said it will protect most of the policies Balva sold in the UK to individuals, small businesses and any UK policyholder who purchased compulsory employer liability cover.
Balva sold a variety of policies which may qualify for FSCS protection including general liability insurance and professional indemnity insurance. FSCS protects general insurance policies for 90% of the value of the claim, with no upper limit.
FSCS chief executive Mark Neale (pictured), said: ‘[The scheme] is here to protect consumers when authorised financial services firms go bust and we are stepping in to help policyholders of Balva as a priority.’
Anyone with indemnity claims should go through City firm Caytons Law, which is authorised to handle claims, with contact details provided here .
The Solicitors Regulation Authority has said it understands the liquidator appointed to wind up Balva is still in the process of gathering all the claims by creditors.
A report will then be made then to the Latvia commission and decisions will be taken regarding the solvency or otherwise of the company.