Investor Compensation Scheme

The Investor Compensation Company Limited is a company which was established under the Investor Compensation Act, 1998.

The main purpose of the Investor Compensation scheme is to provide adequate funds out of which eligible investors of failed investment firms are compensated. The funds are generated solely from contributions from investment firms.

The reason the Investor Compensation Scheme does not apply to life assurance companies is because unlike certain other financial institutions life assurance companies are asset-backed. This means that should any or all investors require the value of their investment in cash, a life company can sell the assets within which they are invested to meet these requirements. In addition, all life assurance companies are required by the Financial Regulator to hold assets separate to their clients' investments, known as their solvency margin.

It is important to know that the Investor Compensation Act protects customers during the period that a customer gives their funds to an insurance intermediary (in the case of Bank of Ireland Life this is an Insurance & Investments Manager) and before those funds are received by the life assurance company .

Investors with Bank of Ireland Life are asset-backed and as such should they require to encash their investment in accordance with the provisions of their policy conditions the life assurance company can sell the assets held in their policy to provide the necessary funds.

As mentioned previously, the Financial Regulator requires each life assurance company to maintain a certain solvency margin to further protect their customers. (A solvency margin is the amount by which an insurance company's capital exceeds its projected liabilities - it's effectively a measure of its financial health.) Bank of Ireland Life has consistently maintained very strong solvency margins, which are double the minimum requirement as set out by the Financial Regulator.

For more information on this scheme please click here to visit the Investor Compensation scheme website.