Dave T-S

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:<HR>Originally posted by Huge:
<B>Dave,

With the amount of time you spend on here it's a good thing that insurance company liquidations take so long

Or is it a case of cause & effect

Hugh[/quote]


Good point mate....

PS - your commercial policy - there is still plenty of capacity in the market and it can stand the loss of Independent in that respect. Inevitably however the price will go up, that is however solely due to the fact that Independent were undercutting everybody else, got their pricing totally wrong, and now they and we are suffering the consequences. Any insurer that takes on Independent's business is not likely to make the same mistake.

We all want the cheapest insurance, me included, but not if this is the end result....

LanCat

Simon

No problem. Sorry for any "problem".

The content came via email from a source at Independant and was circulated to many who do/did business with them. If I have any more information I'll paraphrase it better

Dave is right you will see higher costs on policies, not only because Independant were undercutting but also everyone else can now be less aggressive in their pricing.

I assume brokers may also feel it as they were offering some very attractive commission rates to those who sold the policies (60% ???).

Rum*

60% commission....bloody hell.....I wish!!!

We have/had only ever had 15% from Independent for Motor and 22.5% for Household...Commercial is slightly different - commission varies bewteen 7.5% and 20%...

Speak later

Tom

LanCat

Not on car business for sure, but 60% year one to loan companies for 1st/2nd mortgage business (buildings insurance).

Or so I heard...

p1 media

Hi

Just thought that i would say thanks to Rum for keeping us informed on the situation and for taking the time to call today personally to explain what is going re my premium and cover, Thanks Tom, hope all goes well, i'm sure you have a great many supporters out here.

Greg

Rum*

Thank you to Greg and everyone who has passed on their comments (so far all positive as far as our service is concerned!!).

We are endeavourng to speak to all our clients as soon as we can.

For all Independent policyholders;

I CONFIRM THAT AT PRESENT (& UNTIL FURTHER NOTICE) COVER REMAINS IN FORCE WITH INDEPENDENT INSURANCE. IN THE EVENT OF A CLAIM THIRD PARTY CLAIMS WILL BE PAID IN FULL (100%) & OWN DAMAGE CLAIMS (I.E. FIRE, THEFT, ACCIDENTAL DAMAGE) WILL BE PAID A MINIMUM OF 90% OF THE CLAIM UNDER THE TERMS OF THE POLICYHOLDERS PROTECTION ACT.

We are obviously working towards obtaining comparable rates with another carrier - the latest and most likely insurer will be Groupama...in this regard I have a meeting with them ast 09.30 on Friday at their office in Manchester...as soon as I know whats happening I report to our policyholders first by either phone or email.

Once all policyholders have been advised of the situation I will post a further response on Scoobynet.

I would like to take this opportunity in apologising to all those people who have either phoned, faxed or emailed us for motor (or other) insurance quotations - unfortunately for the time being and due to the above "problem" we have put a halt on all new business quotations.

As previously advised should anyone wish to discuss the above further...please do not hesitate to contact me either on my work number (0113 250 0377) or my mobile (07798 762285).

Please note that this does not just apply to motor...we have alternative markets already available for ex-Independent Household and Commercial policies.

As ever wishing you all the best

Tom

P.S. If anyone is passing the office at anytime today...and happens to have a few tinnies in the boot...we'll be herre till circa 23.00!!!!

MattOz

Tom,

I'm not insured via yourselves, but just read the post. It's encouraging to see that you and Dave have tried to make sense of the current situation to the Scooby owners on here. Keep up the good work, and good luck!

Matt

Neil Smalley

I'll second that Matt. I just hope everyone get's a good deal out of it.

Gastro

Tom,

Thanks for all the information - I'm confident (as I'm sure everyone else is!)- that you will sort things out ......

Cheers

Gastro

chiark

...and he was still in the office at 21:30 when I drove past yesterday. Someone really should drop those tinnies in. He's dropped enough hints

Cheers Tom, keep up the good work but do take a break!!!

Rum*

Just a quick up date and to show the extent of the problem...

Quote from the Insurance Times online...

[start quote] "Independent: at least £62m unreported (21/6/01)

The first signs of the black hole in Independent's accounts emerged yesterday when reports stated that £62m of claims had not been recorded.

Sources say that Independent staff were underpricing new business, unaware of the scale of large pipeline claims that had not been entered into the books.

The provisional liquidator, Pricewaterhousecoopers, is believed to be involved in talks with several insurers, including AXA, about the break-up of remaining assets. Assets include the loss adjusting business Property and Casualty Services.

It is also rumoured that a group of Independent managers is seeking funding for a start-up operation, potentially employing up to 50 Independent staff." [end quote]

Quote from todays ft.com...

[start quote]"But the total figure for unrecorded claims is expected to be significantly higher.

It is understood that Independent failed to enter many of its biggest insurance claims - known as "whiteboard" cases in the industry.

Whiteboard cases arise from big claims that need to be monitored before being finalised. During the monitoring process, the claims are displayed on a whiteboard in the claims department.

Because Independent staff responsible for new business were unaware of the true level of claims, they were consistently underpricing new policies, according to company executives.

Last month Watson Wyatt, the company's external actuaries, discovered Independent faced unquantifiable losses stemming from the claims not entered into its accounting systems. The total scale of its liabilities are still not known.

The last set of audited accounts showed the group had gross liabilities of £1.4bn against assets of £1.7bn.

Meanwhile, PwC, the provisional liquidators, on Wednesday started talks with insurers, including Axa, about disposing of what remains of Independent's assets."[end quote]

Not a pretty picture alas...

As always I will try and keep everyone informed of changes as soon as is physically possible....

Tom

(still in the office and wishing he was tucked up with the other half...or better still screaming across the Yorkshire Dales in the P1)

[This message has been edited by Rum* (edited 21 June 2001).]

Dave T-S

...this is only scratching the surface so far.....I stick by my guess of II ultimately being insolvent by at least a billion

BTW Tom - you can't afford to go screaming across the Yorkshire dales in the P1 - £3k loss to you if you total it (90% payout).....or if it's nicked - thank God for trackers...

I am seriously conscious about keeping ours in one piece/our possession at present...

Dave T-S

For those interested, below is the provisional liquidators' latest report, dated 05 July 2001:


THIS LETTER NOW INCORPORATES THE COMMENTS OF THE POLICYHOLDERS PROTECTION BOARD IN RESPECT OF CANCELLATION OF CURRENT POLICIES AND CLAIMS PAYMENTS. THIS VERSION OF THIS LETTER SUPERCEDES AND REPLACES ALL PREVIOUS VERSIONS, WHICH HAVE APPEARED ON THE COMPANY'S WEBSITE OR BEEN CIRCULATED IN DRAFT. ACCORDINGLY ALL PREVIOUS VERSIONS OF THIS LETTER SHOULD BE IGNORED.

TO ALL KNOWN POLICYHOLDERS, BROKERS, INTERMEDIARIES AND AGENTS WHO HAVE PLACED BUSINESS WITH INDEPENDENT INSURANCE COMPANY LIMITED (IN PROVISIONAL LIQUIDATION)

5 July 2001

Subject: INDEPENDENT INSURANCE COMPANY LIMITED (IN PROVISIONAL LIQUIDATION) ("INDEPENDENT")

Dear Sirs

On the 17 June 2001, the Directors of Independent presented a petition to the High Court for the winding-up of the company on the basis that Independent was insolvent and could not pay its liabilities in full. I was appointed Joint Provisional Liquidator of Independent together with my partner, Mark Batten.

This letter is being sent to all known policyholders, brokers, intermediaries and agents who have placed business with Independent. Brokers, intermediaries and agents are requested to send copies of this letter to all their clients who have or may have claims against Independent.

Independent wrote general insurance and reinsurance business, mainly covering liability, property, motor and other insurance for the commercial and personal lines sectors.

Provisional Liquidators

In the majority of cases where Provisional Liquidators are appointed to a company, the company is ordinarily placed into liquidation after approximately four weeks. Provisional Liquidators are appointed where the Court is persuaded that there are specific tasks to be done urgently, for example collecting in and safeguarding assets which may be at risk.

The procedure normally adopted for an insurance company is, however, to present a winding-up petition, obtain the appointment of Provisional Liquidators and, at a later date, obtain an adjournment of the winding-up petition in order to avoid liquidation. The reason for this procedure is that the run-off of an insolvent insurance company's business can normally be achieved in a manner more beneficial to policyholders than would be possible in a liquidation. A winding-up petition is needed in order to stay all proceedings, so that no single creditor can gain an advantage over the general body of creditors through judgment and execution against the company's assets.

The powers and duties of the Provisional Liquidators are set out in the Court Order appointing us and include the power to realise assets, investigate transactions and, if appropriate, develop a Scheme of Arrangement under Section 425 of the Companies Act 1985 (a "Scheme"). The appointment of Provisional Liquidators has the effect, inter alia, of passing management and control of the company to independent insolvency practitioners.

The Advantages of a Scheme

A Scheme is a compromise or arrangement under English law between the company and its creditors, which becomes legally binding on all creditors if the necessary majority of them vote in favour of the Scheme and the Court approves it. The necessary majority is more than 50% in number representing 75% in value of those creditors who vote.

Both the Directors and the Provisional Liquidators of Independent believe that a Scheme is likely to be better for the general body of creditors than a liquidation. I believe that there are two major advantages to a Scheme and these are:

It should provide an opportunity for creditors to be paid a proportion of their agreed claims earlier than would be likely in a liquidation.
It should avoid some of the substantial costs which would be incurred in a liquidation.
The Scheme document will, in due course, explain fully the background to the company and the effect of the Scheme. It will be circulated to all known policyholders and creditors.

Early Steps

Following our appointment we have:

Secured cash assets and investments of Independent and brought them under our control.
Identified, secured and, where appropriate, begun to obtain valuations of other assets of Independent.
Commenced to put in place arrangements to ensure that, as far as reasonably possible, those people working on Independent's business whose skills and expertise are necessary for the conduct of an orderly run-off are retained.
Begun an examination of the current financial position of Independent.
Commenced discussions with the Policyholders Protection Board (the "PPB").
Informal Creditors' Committee

The Provisional Liquidators will shortly be forming an informal Creditors' Committee to assist us with the preparation of the Scheme and provide us with views on important issues.

Current Policies

The appointment of Provisional Liquidators does not automatically terminate live policies (unless the terms of the policy provides for this, which is unusual) and I am advised that this will enable policyholders to continue to comply with the compulsory insurance requirements of the Road Traffic Act 1998 and Employers' Liability (Compulsory Insurance) Act 1969 and equivalent legislation in Northern Ireland for as long as the policy remains in force. Although we are hoping that a significant number of current policies will be taken over by other insurers, policyholders should be aware that in any event they may not receive full payment in respect of a claim against Independent whether occurring before or after the date of our appointment (see Claims' Payments section and references to the PPB below). Accordingly, policyholders are strongly advised to contact their broker, intermediary or agent in order to consider whether to seek alternative cover immediately.

Cancellation of Current Policies

Our present intention is to cancel policies where the policy terms permit and where policies have not been taken over by other insurers. Where the policy terms do not provide for cancellation we would be prepared to agree cancellation with the policyholder on mutually agreeable terms. In any event, policyholders are encouraged to consider cancelling their Independent policies and obtaining replacement cover.

Any claim arising in respect of return of premium following cancellation will not be paid in full by Independent but will be treated as an unsecured claim against the company. In certain circumstances, claims for return of premium arising in accordance with the terms of cancelled policies, which provide for such a return on cancellation and which are protected by the Policyholders Protection Act 1975, (the "1975 Act") may, during the period of provisional liquidation, be paid to private policyholders at the rate of 90% by the PPB (see references to the PPB below).

We have been asked by Premium Credit Limited who have provided premium finance to certain Independent policyholders, to remind those policyholders that they remain liable to continue to make payments to Premium Credit Limited under the terms of their relevant premium finance agreement.

If you are in any doubt as to the action you should take, please consult your broker, intermediary, agent or premium finance company.

Claims' Payments

Policyholders' agreed claims against Independent will fall to be paid through the Scheme, if implemented, and may qualify for assistance by the PPB.

The PPB, a statutory body, has agreed in principle to exercise its discretion under the 1975 Act to assist with the payment of eligible indemnity claims from individual policyholders who would be eligible for protection under the 1975 Act if Independent were in liquidation. Under the 1975 Act, such protection is in general limited to 90% of the liabilities to policyholders who are private individuals (including partnerships of private individuals) with United Kingdom policies. An exception to this arises in relation to certain liabilities that are subject to compulsory insurance in Great Britain and Northern Ireland. These include liabilities that are required to be insured under the Employers' Liability (Compulsory Insurance) Act 1969 (effective from 1 January 1972) and the equivalent legislation in Northern Ireland (effective from 1 January 1975). In these cases, protection is provided in full and the private policyholder restriction does not apply.

If a policyholder has a claim, he must ensure that Independent are notified in the normal way. Independent's claims department will notify claims which may qualify for protection to the PPB for its consideration. A valid claim will only be paid by the PPB if and to the extent that it would be eligible for protection under the 1975 Act if Independent were in liquidation and the policyholder assigns his rights in respect of his claim to the PPB. The policyholder would be required to bear 10% of any eligible claim in respect of risks protected as to 90%, and will not be able to recover that amount from Independent or the PPB. Please note that policyholders will be liable for the excess as normal. Neither policyholders nor their brokers, intermediaries or agents should contact the PPB with any queries.

It will be for the PPB to determine whether or not an agreed claim is eligible for protection. Payments by the PPB to or on behalf of protected policyholders will be subject to the prior receipt by the PPB of a total assignment to it of the policyholders' rights, inter alia, under or in respect of the policy. Where payment is made to a third party, an assignment of that party's rights may also be required.

Policyholders with agreed claims which are not eligible for protection under the 1975 Act will have to wait until payments are made under the Scheme. At this time it is not possible to predict the proportion of each policyholder's agreed claims that will ultimately be paid by Independent.

Agreement of Claims

The Provisional Liquidators propose that the process of agreeing claims will in general continue in the same manner as prior to our appointment. As such, where appropriate, Independent will continue to deal directly with the party who is claiming against a policyholder. However, as Independent is unable to pay claims as and when they are agreed, Independent will make contact with the policyholder in order that once a claim is agreed it will then be settled. The policyholder will then have a claim against Independent.

I believe that this method of handling claims is in the best interests of Independent's creditors as a whole. This is because Independent has the services of specialised claims handling experts. If the policyholder were to deal with the claimant in agreeing a claim, it is likely that the final value of the claim would be higher than it would have been had Independent agreed it. Accordingly, policyholders should be aware that if a policyholder does not allow Independent to deal directly with a claimant, Independent may not admit the full or any amount of the claim agreed between the policyholder and the claimant, as a claim against Independent.

Broker Accounts

From the date of our appointment on Sunday 17 June 2001 all authority for brokers to account on a net basis with Independent is withdrawn. All accounting involving Independent should now be on a principal to principal basis. There should be no netting off of premiums or any other sums of any nature collected by brokers on behalf of Independent against payments due from Independent to any other policyholders or any other creditors of any nature with whom brokers do business, whether in respect of premiums, claims, expenses or otherwise. Accordingly, brokers who have collected reinsurance or other amounts on behalf of Independent should remit such amounts to us as soon as possible.

Identification of Policyholders

We will be compiling a detailed breakdown of all the names and addresses of policyholders in due course. Much of this information is maintained, as is usual, by brokers, intermediaries and agents on behalf of Independent and I should be grateful for their assistance in this regard. I will shortly be contacting brokers, intermediaries and agents to detail the exact nature of the information required.

Until the Court can be satisfied that all reasonable steps have been taken to identify creditors we will not be position to ask the Court to convene meetings of creditors to approve the proposed Scheme. The timing of the creditors' meetings and hence the date when the Scheme becomes effective may well depend upon the co-operation of brokers, intermediaries and agents in assisting us with this exercise.

Further Queries

I should be grateful if policyholders, brokers, intermediaries and agents would continue to send correspondence on individual claims, or other policy matters, to Independent's address. Telephone enquiries on these matters should be made to Independent on 0161 741 1010. Correspondence for the Provisional Liquidators should be sent to the address at the head of this letter.

Yours faithfully
For and on behalf of
Independent Insurance Company Limited

DY Schwarzmann
Joint Provisional Liquidator

Mr Schwarzmann and Mr Batten are licensed to act as Insolvency Practitioners by the Institute of Chartered Accountants of England and Wales.

Rum*

A quick update and in response to Gordos thread in the Insurance Section (

gaz1048

Guys

If it makes those on the BBS feel any better about being stung by this, I had lunch with a Director of a large broker firm last week. We discussed the Independent situation. He is convinced things are going to result in some of the directors being pulled up in court and sent to prison. The expected level of wrong doing is comparable to Maxwell re pensions and Saunders over the Guiness scam in the 80's.

One in particular seems to be getting a lot of press at the moment which seems to tell me enough. I hope they don't have to many communial showers in his block coz he will come out a different man!

Gaz