Letter to David Vick 02/03/2009

Letter to David Vick 02/03/2009

Dear Mr Vick

Chairman of the IPA

We write for clarification of your position regarding the Life Assurance (Compensation of Policyholders) Regulations 1991 with regard to the current predicament of bondholders with deposits resting with Kaupthing Singer & Friedlander (Isle of Man). We note the following from published questions and answers regarding this legislation:

FINANCIAL SUPERVISION ACT 1988

LIFE ASSURANCE (COMPENSATION OF POLICYHOLDERS) REGULATIONS 1991

Q: My policy links to individual assets, what happens if the institution writing / backing those assets fails?

A: You should refer to the terms and conditions of your individual contract to determine who bears the risk of asset failure or contact your insurance provider or independent financial advisor to help you determine this. The policyholder compensation scheme would not ordinarily cover investment losses within a contract.

Since this is not an 'ordinary' situation, we suggest that it falls upon the IPA and your fellow insurance company members to initiate these regulations and the rights within which have been used in marketing literature to promote deposits in the Isle of Man to bond depositors and use the compensation fund that exists to reimburse bondholders caught up in this banking crisis. In turn this will secure the reputation of the life insurance industry on the Isle of Man.

Please advise your considered legal opinion on this important issue as a matter of urgency.

KSFIOM DAG

IMPORTANT

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