Independent faces fraud probe

The UK city watchdog has called in the Serious Fraud Office (SFO) to investigate the collapse of the insurer, Independent Insurance.

The company, which has been hit by soaring claims for personal injury claims, went into voluntary liquidation on Monday after closing to new business last week.

PricewaterhouseCoopers has been appointed provisional liquidator to sell the assets and use what remains to pay creditors.

The SFO confirmed that it is studying documentation on Independent Insurance to see if there is sufficient evidence to launch an investigation.

It is expected to announce a decision in the next few days. The SFO will also try to establish whether there is a case against the company's directors.

The decision to call in the SFO followed an emergency meeting between the watchdog, the Financial Services Authority, and the Department of Trade and Industry.

'Too early to apportion blame'

Dan Schwarzmann of PwC told BBC Radio 4's Today Programme that it was too early to apportion blame for the collapse of the insurer.

He added that the accountancy firm was conducting a "forensic investigation" into Independent.

"Our focus at the moment is to secure the assets and we've been trying to sell the books of business to other underwriters."

Observers have speculated that any SFO investigation would centre on Michael Bright, who founded the company in 1986 and left last week without a pay-off.

Close to zero

Worth £1bn last year, but now worth close to zero, Independent's demise is the biggest collapse among general insurers - as opposed to life insurers - for many years.

A spokesman for the liquidator said job losses were "inevitable" but it was too early to say how many would go. The company employs 2,000 people at offices in Greater Manchester, Kent and London.

The liquidator has set up a hotline on 0161 741 1010 for concerned policyholders.

Fresh cash

Independent's collapse comes after an attempt to raise £180m in fresh cash by issuing new shares failed because of revelations that the company faces unquantifiable losses.

The insurer has received claims from its customers that have not been entered into its accounting system.

Consequently nobody, not even the company's own directors, knows how large its liabilities are.

Last Monday the company's shares were suspended at 81.5p.