The Autorité des marchés financiers, the financial services regulator in Quebec, says that it will compensate consumer with claims concerning certain Lloyd’s insurance policies. A move that may cost up to to $6 million.

The policies in question were purchased through three damage insurance firms: Loyalist Insurance Brokers Inc., Loyalist Insurance Managers Inc. and CUAI Gestionnaires d’assurances inc. The AMF says that Lloyd’s does not intend to recognize the validity of the policies, and the insurer claims that it was not remitted the related premiums.

However, the AMF has decided that claimants who suffered damage from Loyalist’s fraudulent acts should be compensated. “After reviewing the specific facts of this case, the AMF’s compensation branch will compensate claimants holding policies not recognized by Lloyd’s who have suffered damage and who have filed a claim supported by the relevant documentation,” it says.

The AMF says that unearned insurance premiums, and losses which occurred before the fraudulent acts were discovered may be compensated. “Before paying compensation — which could surpass $ 6 million — a specific analysis of each of the 161 claims filed will be necessary. Compensation will be paid over the next few months and claimants will receive a decision giving reasons,” it says.

The regulator also says that an analysis of the eligibility of claims filed by automobile dealers is continuing. The AMF will announce its decision on this issue once as it has been reached.

The AMF administers the FISF, which is responsible for compensating people who were the victim of fraud, fraudulent tactics or embezzlement for which a firm, an independent representative or an independent partnership can be held liable in connection with his or its activities governed by the Act respecting the distribution of financial products and services. Compensation is limited to $200,000 per claimant.