News release

Overseas insurers, further clarification

The SRA has been updated on the situation involving overseas insurer ERIC.

The Financial Services Compensation Scheme (FSCS) declared ERIC to be in default on Monday (28 April). This means that the FSCS is able to accept eligible claims against ERIC.

Go to the FSCS website

The FSCS has confirmed that claims may be made by both firms and clients within the FSCS eligibility rules – View an outline of these rules for European Economic Area (EEA) Qualifying Insurers (PDF 2 pages, 41KB).

The Authority had already been made aware of new problems involving two companies, European Risk Insurance Company hf ("ERIC") and Balva Insurance Company AAS ("Balva"). The SRA has been keeping in contact with ERIC and Balva, as well as the Financial Conduct Authority (FCA), and understands that the solvency positions of these insurers should be further clarified in the coming weeks.

The SRA understands the current position to be:

ERIC

ERIC was a qualifying insurer in the 2011/12 indemnity period and wrote solicitors professional indemnity business under a fronting arrangement with Balva. The difficulties experienced by Balva have had a knock on effect on ERIC.

The Icelandic Financial Supervisory Authority gave notice that it had withdrawn ERIC's operating licence with effect from 12 February 2014 and it had appointed a three person Resolution Board to review the business with a view to managing the portfolio towards a sale (http://en.fme.is/published-material/news--announcements/news/nr/2021).

It the absence of a sale the company is likely to be put into liquidation. Indications are that this is likely to be a relatively short process. At this point in time ERIC is still accepting claim notifications but is not in a position to pay defence costs or settle claims. The new claim contact details are as follows:

Ms Emma Grimsdottir/Ms Kristin Helgadottir
European Risk Insurance Company
hf Síðumúli 28
108 Reykjavík
Iceland

Phone number: 00354 518 5300
Email: claims@erichf.com

Balva

The liquidator appointed to wind up Balva is in the process of gathering all the claims by creditors after which a report will be made to the Latvian Financial and Capital Market Commission and decisions will be taken as to the solvency or otherwise of the company. (http://www.fktk.lv/en/publications/press_releases/4026-2013-08-12-ijsc-balva-liquidator-registered.html)

 
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