The Financial Services Authority (FSA) is to go ahead with proposed changes to the compensation limits for insurance business in the event of a firm failing, designed to achieve greater simplicity and consistency in the Financial Services Compensation Scheme (FSCS).
The changes from 1 January 2010 mean the compensation limit for all claims for non-compulsory insurance will be paid at 90%, with no upper limit.
Non-compulsory insurance provision (general and health and life insurance): protection for 90% of the claim, with no upper limit (currently 100% of the first £2,000 and 90% of the remainder, with no upper limit).
Mediation of non-compulsory general insurance and pure protection contracts (term, critical illness and income protection insurance): protection for 90% of the claim, with no upper limit (currently 100% of the first £2,000 and 90% of the remainder, with no upper limit).
