PricewaterhouseCoopers, the provisional liquidators appointed last Monday to sort out the financial mess at the U.K.’s Independent Insurance, have so far uncovered £62 million ($87.8 million) worth of insurance claims that were never entered into the company’s accounting systems.
The total is expected to rise significantly, and has already triggered the opening of a formal investigation by the serious fraud office. One London paper quoted the liquidators as saying it was Britain’s “worst corporate disaster since Maxwell,” (referring to the media tycoon, whose empire collapsed 15 years ago in a welter of debt).
PwC has already indicated that it’s looking for buyers for Independent’s remaining assets, including its European subsidiaries. French officials announced that they were freezing its assets, and had appointed a provisional receiver to oversee the business.
While investors may have suffered a total loss, individual claimants and policyholders are protected by the U.K.’s Policyholders Protection Act, run by a board of advisors, who are empowered to pay 100 percent of third party claims, and up to 90 percent on policyholders claims. The board has asked PwC to refer all claims it uncovers to it for disposition.
Commercial policyholders, however, who account for around 60 percent of Independent’s total coverage, aren’t included in the scope of the act, and must join the increasingly long line of creditors.
Further revelations show that Independent was in fact insolvent, and would have completely exhausted its remaining reserves within the next few months. One expert claimed that he warned investors as long ago as 1993 that they were too low.
Other insurers stand to benefit from Independent’s demise. Royal & Sun Alliance may gain the most. It has already begun accepting policies from brokers, that were formerly placed with Independent, and is negotiating with the liquidators to take over some 450,000 of Independent’s commercial customers. AXA is also believed to be interested, and may acquire the French subsidiary.
Was this article valuable?
Here are more articles you may enjoy.
Manufacturers Hit by Soaring Property Insurance Costs 
Consumers’ Refusal to Keep Paying Higher Prices May Halt Inflation Spike 
California Commissioner Moves to Implement Insurance Rate Review Reforms 
Hard Reinsurance Prices Likely to Last Longer Than in Previous Market Cycles: Report 
