Credit crunch - what if my insurer goes bankrupt?

Many people may have been concerned about the news last month of the difficulties suffered by AIG and the bail out by the US Government. It should be emphasised that the insurance arm of AIG was never in trouble, unlike others within the group. Ironically now, as with Northern Rock, AIG is one of the safest places to be. At Centor, we have never placed any insurance with an insurance undertaking in which we did not have the utmost confidence in their financial stability. We regularly check the security of all our insurers with the market leaders in financial ratings. In other words, we only place our clients with blue chip companies. Their premiums, whilst always competitive, may not be the very cheapest available in the market but as John Ruskin, the social critic of the 19th century, said;  "It is unwise to pay too much but it is worse to pay too little. When you pay too much, you lose a little money - that is all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing it was bought to do." The “what if” scenario? For those of our private clients or small businesses (turnover of less than £1m) who may have bought insurance products through another intermediary or direct from an insurer and that insurer is proved later to be insolvent during the insurance year, then they would be able to claim money from the Financial Services Compensation Scheme (FSCS), as long as the insurer is authorised in the UK.  For unsettled claims in compulsory classes (i.e. employers or motor liability), the claim will be paid in full. For other unsettled claims, as well as the unexpired period in the insurance year, the compensation would be 100% for the first £2,000 and 90% of the remainder.   For further reading we attach the page link to the FAQ section of the FSCS website: http://www.fscs.org.uk/consumer/FAQs/