UNLICENSED International Alliance Insurance Ltd has been shut down. The Guernsey Financial Services Commission became aware of its activities less than a month after the company was formed.

The commission posted warnings on its website and alerted brokers that an unlicensed company was in operation.

IAIL was closed down immediately the commission had sufficient evidence to apply for a compulsory liquidation.

‘At the company-formation stage it was recognised that prior to it underwriting any insurance business, a licence would be required,’ said GFSC director-general Peter Neville.

He added that such a situation was a risk faced by every jurisdiction but said it was a credit to the sector that the company, which had been incorporated on 20 December, was swiftly uncovered.

‘The prompt identification of such companies is essential and Guernsey is fortunate that it has a vigilant insurance industry which can assist in bringing such operations to the commission’s attention,’ he said.

‘Additionally, our new insurance laws allow the commission to take action and use its powers to promptly close such operations, as we demonstrated in the case of IAIL.’

Jamie Toynton – appointed as liquidator on 4 April – said agents in the UK had issued policies under the name Blue Swan Insurance, which was purporting to act on behalf of IAIL. He confirmed that the company had been unable to honour these policies.

‘One agent, trading through a network of sub-agents, issued the majority of the policies and has provided alternative cover through policy endorsements,’ he said.

‘The second agent has advised all its customers that their policies are invalid and is refunding all premiums received.’

Mr Toynton said that, to the best of his knowledge, all policy claims were being dealt with under these alternative arrangements.