Customers of AA Warranties have received reassurance that their policies still hold water after the schemes’ Gilbraltar-based underwriters fell into liquidation.

But AM understands that around 250,000 policy holders could face uncertainty in the event of making warranty and motor insurance claims underwritten by Enterprise Insurance Company PLC, with the issue of policy transfer unlikely to be completed within three months.

The Gibraltar Financial Services Commission directed Enterprise Insurance Company to cease writing new business a week ago after the company admitted to being insolvent and Mr Frederick White was subsequently appointed as Provisional Liquidator at the Supreme Court.

A source within the insurance industry told AM: “I have no doubt that these warranties and motor insurance policies will be honoured, but customers are unlikely to see a quick resolution to any claims.”

A spokesman for AA Warranties said: “Enterprise failure Motorway Direct, which provides AA-branded warranties, is in contact with customers to reassure them that valid claims will be met.

“All new warranty business is now underwritten by Amtrust International.  We cannot offer any further detail at this stage except to say that we continue to have the best interests of customers at heart.”

Sheffield-based Motorway Direct, whose warranties were also underwritten by Enterprise, refused to comment on the situation but were keeping customers updated on their company website.

A statement published online said: “The Provisional Liquidator will explore options for transfer of policies, protection of assets and any other steps that can best protect the position of policyholders, including the continued processing of claims and continued validity of policies. The Provisional Liquidator is required to report back to the court within three months.

“Mr White will now be managing the Company’s affairs under the supervision of the GFSC. He will be working with the Enterprise staff and claims operations to ensure that the insurance business continues to operate. This includes managing and processing all claims; this applies to claims arising in each of the countries that Enterprise operates in.

“Mr White will be contacting all policyholders to notify them of his appointment and what happens now. He will be talking directly to each of Enterprise’s brokers over the course of this week.

“Whilst claims will be processed, Enterprise is not able to pay any claims at this stage. In those countries where compensation schemes operate, claims will be considered by those schemes.”