Dave T-S

If you are insured with Independent - they stopped accepting new business this morning as they cannot raise a £200 million rescue package.

What will this mean?

If you have a policy with them you are still covered.

They have shareholders funds of £328 million (free assets). There are some extremely complicated and questionable reinsurance arrangements in place which makes their ultimate liabilities very difficult to define at present.

Assuming nobody wants to buy the company (and it is doubtful given the question mark over their liabilities) they will go into run-off i.e. they do not accept any new business but continue to pay claims as normal (you WILL have to pay your premiums.....).

Ultimately, they will have negative cash flow and if liabilities exceed assets they will be insolvent. That will not necessarily happen - if they are adequately reserved they should have enough assets to pay all claims in full.

This is my specialist area of business so if anybody has any concerns please post them and I will try to answer.

If you are insured with them via Rum he is more than aware of this - we spoke this morning.

Blow Dog

Oooh I say, I knew that bumper claim would put them out!



Rum,

What happens to any new claims I put through? Will it take 4 years to get it?

Also, will you have new underwriters by next month? My premium is due, as you know.

Cem

Rum*

Evening All,

With immediate effect we have put a temporary halt on issuing any New Business quotations for "High Risk Motor"...i.e Subarus, Mitsubishis, Porsche etc. This is purely to enable us to concentrate on our existing clients who are presently insured with Independent Insurance.

As you may be aware from recent press comment Independent Insurance Company have formally stated they will not be writing any new business or transacting future renewals, effective immediately they will be in orderly "run off".

For those of our clients who are currently insured with Independent their policies will continue through to renewal date.

Prior to your renewal we shall of course be arranging quotations with alternative markets.

From a claims perspective all claims will continue to be dealt with per the normal policy terms and conditions.

We are of course aleady discussing the High Risk Motor scheme with other major composite insurers and Lloyds Underwriters. These meeting started this morning at 10.00am...and will no doubt continue for the next week or 2.

Please feel free to contact myself or one of my colleagues should you have any further concerns.

Tom (aka Rum*)
Partner
Schofield Insurance Brokers
Tel: 0113 250 0377
Mobile: 07798 762285

EvilBevel

(this user just felt a shiver down the spine)

Best of luck Tom, hope you can sort things out.

Dave, instead of being a master muppet , it would be great if you could give the Scoobynet community some more background on just how insurance works, what the risk factor of each car is (why is a Mondeo repmobile less costly to insurance than a loved & cared Impreza), etc...

We all heard the "insurance companies are just there to rip you off" mantra, but I personally feel a bit strange about being paid out for something that happened on the Ring... someone else will pay for that I'm sure.

I realize we can't just "expect" you to educate us, but a bit of info on how it all works might be great. We can then of course continue to "hate" those insurance companies, but at least we would have some insight on how things fit together.

Sorry if I'm out of line with this question.

Again Tom, as you are obviously a car enthousiast, and are not afraid to continue your communication here: best of luck !

Theo

Dave T-S

EB
Good idea. Not out of line at all. I'll try and put something together......

EvilBevel

Dave, great. Looking forward to it.

TIA (have in the mean time thought about the difference between "warranty" and "insurance" issues though...)

Theo

robski

Dave,

drop me a line if you want a little help

I would suggest you(we maybe) expand to include why costs are soaring....

robski

Dave T-S

Robski
I'll mail you a draft - will take a while - bit busy at the mo! - don't hold your breath for a few days. Will certainly take the opportunity to explain soaring costs......!!

Chris.Palmer

I was in insured with Drake 01 May 2000, two weeks later they went bust!

Spent a month or so waiting to see whether they would be bought out eveventually the result - No cover - Lost Years Premium - Had to get re-insured again , filled out forms from insurance ombudsman and am still waiting and still p155ed off.

Trout...

Tom,

it was good to speak to you the other day - thanks again for your time. Sorry that it didn't work out with Michael and Independent - good luck finding a new underwriter.

Still hope to get you to Bristol/Bath as promised.

Dave T-S/Robski,

as you know, in my former incarnation (Rannoch) I posted a lot on here trying to explain how insurance works, not to defend insurers of course, just to stave off the 'insurance is a rip-off' rubbish .

Will gladly help if you want it.

Cheers,

Trout

JohnH#2

From BBC Website:

Independent Insurance, the insurer hit by soaring claims for personal injury compensation, has gone into liquidation.
PriceWaterhouseCoopers has been appointed provisional liquidator to sell the assets and use what remains to pay creditors.

Independent's 500,000 private customers will be covered by the Policyholders' Protection Act 1975, which will keep any financial losses to a minimum.

Compulsory claims such as third party motor insurance will be met in full.

Claims made by private individuals under non-compulsory insurance, such as claims for own damage under comprehensive motor policies, buildings and home contents, will be paid to 90% of their value.

However, The Assocation of British Insurers is advising Independent policyholders - and in particular those not covered by the Act - to take out new policies with other insurers.


HELP!

Does this mean I have lost this year's premium?

Rum, I know you must be busy but any info?

ChrisB

Just been reading an article on the BBC Business news site :

Dave T-S

I (or Rum) will put something up on this later; I need to talk to him first.

Rum*

Sorry if I appear not not be keeping people upto date on this one...but as Dave has said, we could do with speaking before posting a fully detailed response...

...for information our office has been fully manned from Saturday 07.30 - 17.30 and Sunday 07.30 - 19.45 trying to reslove our existing clients potential problems.

As soon as I am in a position to advise further I will contact all our clients individually to discuss options and alternatives...

Once again...apologies for the vagueness..

Rum

Markus

Tom,
Thanks for the post here letting us know what's going on.

I'm not too worried as my renewal is not until dec 01/jan 02, so a long time yet to sort out stuff, and I'm confident you'll do a blinding job for all of us who were with independant.

JohnH#2

I don't think any of us doubt Tom's ability to find a new scheme - the service is top class

The issue is am I still covered for 100% of the value of any claim or do I need to take out (and pay for) another policy now they are in liquidation?

John

chiark

If I read that right, it appears that third parties will be paid out, and that the policyholder will be paid out 90% of the claim.

Or is that oversimplification?

GEJL

My question, which I think is the same as JohnH#2 is whether my existing policy is legal and valid until its expiry date? This is a different question to whether current claims will be paid.

Anyway, I expect Tom will answer this one when he posts the details...

Rum*

JohnH#2, GEJL and all...

As I am sure you can imagine we are having what can only be described as an interesting day!!!

As far as Private Motor policies are concerned...I confirm that they remain legal at present.

PLEASE NOTE THAT UNLESS "TRACK COVER" WAS ARRANGED PRIOR TO 14TH JUNE 2001 VIA OUR OFFICE (AND AGREED) THIS COVER WILL NO LONGER BE AVAILABLE (in fact this applies to any amendments!!).

Third Party claims WILL be paid in FULL...own damage claims will receive settlement of 90%.

We have been advised that there will be no refunds of premium and that any amendment to the existing policies will result in cancellation of cover.

We are obviously working all hours in an attempt to resolve this situation and as soon as I am made aware of any further info I will post details on here.

As I have previously mentioned our priority is to assist our existing clients as soon as possible (as such all other new business quotes are on temporary halt)...and as such, we will be speaking to you all (on an individual basis) as quickly and as efficiently as we can.

Please bare with us...we are doing the VERY best we can given the present situation.

Wishing I was at home in bed with the other half or even better in the pub

Rum*



[This message has been edited by Rum* (edited 18 June 2001).]

chiark

Tom, let me know when (if) you leave before closing time and I'll meet you in the local. I guess you'll need a beer!!!

Dave T-S

With regard to the liquidation aspects of Independent, a large chunk of my job is dealing with liquidated insurance and reinsurance companies worldwide. I currently have around 200 of these on the books, and in 26 years of working in the City I have never seen an active insurance company go into liquidation so rapidly. They normally cease writing new business, go into run-off, and finally run out of money or liabilities exceed assets and they go into liquidation anything from 1 to 10 years or more after.

I think there are a number of factors leading to the rapid demise of Independent. Net cash flow was £160 million negative for 1999/2000 – they have basically run out of cash. They sold liquid assets last year to try and bolster this – liquid assets went down by £65 million in 2000.

Shareholders funds (free assets) were £328 million at the end of 2000 (and now of course these figures are long out of date – there will have been further deterioration).

The reinsurance protections they had in place were questionable – they allegedly had a net value of around £170 million but speculation says they were negated by other previously undiscovered reinsurance policies and were worthless – and will thus come off the bottom line of the balance sheet.

There is talk that claims reserves were either not entered in the books at all or were undervalued.

PricewaterhouseCoopers were in over the weekend and my belief is that they very soon discovered Independent is technically insolvent (thus breaching the Companies Acts and DTI regulations) and they had no choice but to close it down.

The SFO have also been called in.

My gut feeling is that the whole thing is smoke and mirrors and before long they will be found insolvent in excess of at least £1 billion.

The court order for Independent actually puts them in provisional liquidation pending a proposed scheme of arrangement rather than full liquidation. Without going in to the legalities there is one important distinction – in a full liquidation, claims made AFTER the liquidation date would normally be excluded. In provisional liquidation (and I have not seen the court order yet so this is surmision, but every insurance company insolvency I have seen in the last 10 years has followed the same pattern) leading to a scheme, it means claims continue to be admitted, and will be paid, but at so many pence in the pound.

Timescales are related to the complexity of the company and its business – one notable example I am dealing with is Municipal General, who went into provisional liquidation in March 1994, and has not even put a scheme of arrangement into place yet never mind paid a single penny in dividends!

Independent wrote a lot of multi - (three and up to five) year commercial policies and a scheme of arrangement favours long term policyholders where claims may not materialise for a number of years – particularly on liability business. This is a more equitable way of dealing with creditors but does mean there are less assets in the pot ultimately to pay short tail creditors.

For compulsory classes of insurance, for individual as opposed to corporate policyholders, (for people on this board, primarily motor) then the Policyholders Protection Board should compensate claimants up to 100% for third party claims and 90% for AD (own damage).

Bottom line is that based on the information available to date there appears to be no immediate cause for concern if you have a motor policy with Independent.

You WILL have to pay your premium – if it is on an instalment plan then your contract to pay will probably be with the finance company (such as Premium Credit) rather than Independent. If you stop paying the premiums on an instalment plan without giving notice of cancellation on the policy to Independent there will be no return of premium given by Independent and you will still be liable to pay the full premium to the finance company. If you do give notice to cancel your policy it is unlikely that any return of premium will be given anyway. The finance company pays the insurer in full then recovers from you the policyholder and will pursue any shortfall against the premium they have paid out and what they have collected from the policyholder.

If you paid your premium in full and cancel the policy then, again, it is unlikely that any return of premium will be granted.

I will post any material developments from time to time as they become known.

There is a helpline available – 0161 741 1010.

PLEASE NOTE THE INFORMATION ABOVE IS GIVEN AS A GUIDE ONLY, SHOULD NOT BE ACTED UPON, AND IF YOU HAVE A POLICY WITH INDEPENDENT AND NEED GUIDANCE ON IT OR HAVE TO MAKE A CLAIM YOU SHOULD CONTACT EITHER YOUR BROKER OR INDEPENDENT THEMSELVES AS INDICATED IN YOUR POLICY DOCUMENTATION.


[This message has been edited by Dave T-S (edited 19 June 2001).]

Rum*

Chiark...

Cheers M8...left after closing unfortunately!!!...and was back in well before opening time this morning ...

Speak later

Tom

chiark

Off licence? Syphon petrol out of the P1? Stand on the garage forecourt and sniff the fumes?

GEJL

Thanks for the update, Tom... Not particularly great news, but at least existing policies remain in force (for the time being...)

LanCat

Edited by webmaster for legal reasons

[This message has been edited by webmaster (edited 19 June 2001).]

chiark

Where on earth did you get that? And moreover, could scoobynet be in any form of trouble for "publishing" it?

ex-webby

LanCat

Apologies for editing your post.

It would be best if you could re-phrase any important information you can get from it and post it in your own words.

This way the important information would stil be of benefit to everyone, but nobody will get in trouble for posting a confidential document.

Best regards

Simon

Dave T-S

I will shortly be on the circulation list from the provisional liquidators and will post anything of interest.

Huge

Fortunately our policy with Independent, though due to run for three years from 1.7.00, is on an annual premium basis so we've got no liability to pay 2001/2 premiums (c£130k pa & due to have been paid in 2 weeks!!).

Our broker tells us that they've businesses who've just paid an annual premium and will therefore not only have no cover but will not receive a premium refund.

We've already placed our cover elsewhere, but the demise of Independent is bad news - a further reduction in the number of insurers will mean less choice & a greater ability for the remaining players to jack rates.

Fortunately it would appear that protection does, in part, exist for private policy holders. Not such good news for us. Could be a hit of £30k+.

Hugh

Huge

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