CIPF Coverage > What Happens If My CIPF Member Is Insolvent? > What if my account has assets exceeding $1 million? >

Allocation of Losses to Customers

1. At the date of insolvency, CIPF or the trustee/receiver will determine the TOTAL CLIENT NET EQUITY, and the size of the CUSTOMER POOL.
   

        and    

2. CIPF/trustee will then determine EITHER:
   

   

                                                                    OR

   

3. CIPF/trustee will calculate the SHORTFALL, if there is one, as:
   SHORTFALL = TOTAL CLIENT EQUITY less CUSTOMER POOL

4. CIPF/trustee will allocate the SHORTFALL to each customer in proportion to their claim for net equity.

   HERE IS AN EXAMPLE:
   CIPF/trustee determines the following:
   TOTAL CLIENT NET EQUITY $2.0 BILLION
   CUSTOMER POOL $1.9 BILLION
   SHORTFALL $100 MILLION or 5% (100 million / $2 billion)
   
   CLIENT 1 HAS CLIENT NET EQUITY OF $2 MILLION:
   LOSS ALLOCATED = $100,000 (5% OF $2 MILLION)
   CIPF COVERAGE = $1 MILLION
   LOSS TO CUSTOMER = NIL
   
   CLIENT 2 HAS CLIENT NET EQUITY OF $20 MILLION:
   LOSS ALLOCATED = $1,000,000 (5% OF $20 MILLION)
   CIPF COVERAGE = $1 MILLION
   LOSS TO CUSTOMER = NIL
   

   As you can see in this example, unless a customer's client net equity exceeds $20 million, there will likely be no loss.

   This example is for illustrative purposes and each insolvency can produce different results. In most insolvencies, clients who are eligible for CIPF coverage will find that the $1 million limit of coverage is sufficient to protect their assets, as of the date of insolvency.

For more information please refer to the CIPF Coverage Policy.