Until June 2001 Independent Insurance was the third largest P/C insurer in the U.K. Then it all fell apart. Shady loans to founder and former chief executive Michael Bright, cover-ups in accounting and failures to pay claims culminated in the U.K.’s Financial Services Authority requesting the country’s serious fraud office to investigate the company’s operations (See IJ web site June 19, 2001).
Six years later Bright, finance director Dennis Lomas and deputy manager Philip Condon faced their day in court. A jury found the three men guilty of consciously misrepresenting Independent’s financial condition. Among other cover-ups the serious fraud office found that the insurer’s financial results for 2000, which reported a £22 million (around $35 million at the time) was in fact a loss of at least £180 million (around $130 million at the time).
Bright received a seven year prison term; Lomas four years and Condon three.
An audit by PriceWaterhouseCoopers, the liquidators appointed to straighten out the accounts, initially uncovered £62 million ($87.8 million at the time) worth of insurance claims that were never entered into the company’s accounting systems. Around 1000 employees lost their jobs.
Other British insurers (notably Royal & SunAlliance) took over most of the policies issued by independent in a move to protect policyholders.
Source: IJ archives and news reports
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