The Sorry Tale of Tribune Insurance

Tribune Risk and Insurance Services Ltd. was established in 1998 to fill a certain niche in the insurance market. At the time, big British insurance companies were starting to focus more on selling directly to the public, and were gradually cutting back on the services they provided to mortgage brokers, independent financial advisers, and other insurance agents and brokers.

Tribune saw an opportunity to act as an intermediary between these agents and insurance underwriters. They created Tribune-branded insurance packages (primarily home insurance) that were actually backed by third-party underwriters. Tribune built up a network of agents who would re-sell the insurance packaged to their clients (homeowners).

The homeowner would only see “Tribune” on their insurance policies. They would pay their annual or monthly premiums directly to Tribune. Tribune paid a commission to the agent, and then took a cut of the premiums before passing the rest back up to the underwriters. If the homeowner made a claim, they would deal with Tribune in the first instance. Tribune had delegated authority from the underwriters to deal with claims up to a certain amount, above which the underwriters would send in their own loss adjusters to review the claim.

Tribune was most definitely not an “insurance company”. They were a “provider of insurance-related services”. By not providing insurance themselves, they avoided all of the messy costs and overheads that come from being governed by regulatory bodies.

It all came to an end today. The Financial Services Authority didn’t like the way that Tribune was semantically sidestepping general insurance regulations. They also found out that Tribune had been avoiding the bit where they actually got a third party to underwrite their policies. Policyholders were thus unprotected by any kind of guarantee beyond Tribune’s own solvency, which turned out to be minimal. The FSA petitioned the Scottish Court of Session to have Tribune shut down. Yesterday afternoon PriceWaterHouseCoopers were assigned as liquidators by the court. This afternoon about 100 staff were informed that Tribune had been declared insolvent, and that they were all redundant, effective immediately. Tribune is not expected to pay any outstanding wages. About 40,000 homeowners with Tribune insurance policies are going to have to find new cover, and the unlucky few (hundreds?) with outstanding claims are, well, screwed.

Remember the New Job? Well, it was nice cycling to work for the five weeks that it lasted….

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