FSCS protecting Municipal Mutual Insurance customers

4th December 2012

Claims will be paid says FSCS

The Financial Services Compensation Scheme (FSCS) is protecting eligible customers of Municipal Mutual Insurance Ltd (MMI) which is insolvent.

The news comes after MMI directors triggered a so called scheme of arrangement originally approved in the early 1990s. This means the business is now under the oversight of Gareth Hughes of Ernst & Young LLP as the scheme administrator.

The FSCS is working closely with Mr Hughes on protecting policyholders under the scheme of arrangement.

MMI stopped writing new insurance policies in 1992.

MMI sold a variety of types of policies which could qualify for FSCS protection. However many of those policies have long since lapsed, and it is unlikely that policyholders will ever need make a claim against them.

MMI did write substantial volumes of employer’s liability business. Policies covering employer’s liability can lead to claims many years after the policy has lapsed. Claims often relate to asbestos-related illnesses such as mesothelioma which is always fatal. It can take many years for someone exposed to asbestos to develop symptoms of these diseases.

FSCS provides 100% protection for qualifying compulsory insurance claims. In this case, it is stepping in to protect policyholders who were required by law1to have employer’s liability insurance. For claims protected by FSCS MMI is continuing to handle and pay claims in the usual way and FSCS will be reimbursing the company.

FSCS Chief Executive, Mark Neale, says: “FSCS protects consumers when authorised financial services firms go bust. Our coverage includes insurance policyholders.  We’ll do everything we can to protect eligible MMI policyholders and will work with the scheme administrator to make sure claims are paid promptly.”

FSCS protection is wide-ranging. It covers the full range of financial services, including insurance.  And FSCS pays out hundreds of millions of pounds of compensation a year.


Since 2001, FSCS has come to the aid of more than 4.5m people, protecting them and paying out £26bn in compensation when firms went bust.  Set up by government, FSCS is independent and does not charge consumers to use its services.

1 Under the Employers Liability (Compulsory Insurance) Act 1969.