FSCS CUTS INSURANCE LEVY BUT EXPECTS AN UPTICK IN CLAIMS

The Financial Services Compensation Scheme (FSCS) is to cut the levy on UK insurers and brokers, although it expects an uptick in compensation claims for general insurance. The final FSCS 2021 levy on financial services has been cut from the previously forecast £1bn to £833m, reflecting lower than expected claims volumes from recent insurance failures. However, the 2021 levy is still an increase of £133m on the 2020 levy of £700m, in part due to larger payouts for general insurance. According to FSCS, compensation costs for general insurance are expected to increase to £206m in 2021/22 from £121m in 2020/21. The increase is due to pay-outs relating to insurer failures, including East West Insurance and Prometheus Insurance. The levy on general insurers for 2021 is forecast at £190m, £88.3m lower than previously forecast, and £74m for brokers, which is £73m lower.