Irish commercial clients of troubled Independent Insurance were scrambling to organise cover yesterday after a provisional liquidator was appointed to the British company.
Commercial customers, who make up the bulk of the insurer's Irish business, are not covered by the UK Policyholders Protection Board if the insurer is liquidated or where claims cannot be met. This is because employers' liability insurance is not compulsory here, unlike in Britain where business clients will be protected.
The board will cover up to 90 per cent of any claims in these circumstances once policyholders are deemed eligible. Irish customers holding household or personal protection policies are covered by the board.
The Insurance Brokers' Association has been advising clients affected to seek to reinsure their business immediately with another firm. IBA chief executive, Mr Paul Carty, said it was too early to know what the outcome would be for Independent's customers, but to guard against any future claims new insurance cover was being advised.
Independent Insurance has been operating in the Republic for the past couple of years, initially directly from Britain, and since February last year through an Irish branch. It offered much cheaper insurance rates than other insurers in the Republic, mainly to commercial clients and some high net worth individuals. Its main business is understood to be employers' liability insurance, insuring what is believed to be a number of large companies, including some in the construction sector.
The company has reported premium income of £30 million (€38 million), with some industry sources suggesting the amount of business it has written in the Republic could be as high as £50 million.
PricewaterhouseCoopers was appointed as provisional liquidators of Independent Insurance yesterday. The financial position is unlikely to be determined fully for some days yet.
Job losses are expected. Independent employs around 30 people in Dublin and also has a small reinsurance operation, Novi Re, which operates from the International Financial Services Centre.
Mr Mark Batten, partner at PricewaterhouseCoopers, said it would be conducting a forensic investigation into the financial position of the company as a matter of urgency, including the reasons for the company's failure. "Over the next few months we will also be seeking to develop a scheme of arrangement to enable claims to be agreed and payments to commence for settling those claims."
Policyholders are being advised to continue to submit claims information in the normal manner. Outside of Britain, the firm has operations in Ireland, France, Spain and Australia. At the end of December 2000 it showed gross assets of £1.7 billion sterling and gross liabilities of £1.4 billion.
