PracticeConsultingIndependent collapse hits indemnity cover

Independent collapse hits indemnity cover

Fears are mounting that thousands of accountants may unwittingly be practising without professional indemnity cover following the collapse of Independent Insurance.

The insurer collapsed suddenly and went into voluntary liquidation last week following the discovery of a huge hole in the company’s accounts.

Practising without indemnity cover could leave accountants open to massive negligence payouts if they are sued.

Michael Rendell, of professional indemnity insurance brokers PYV, said: ‘There will be plenty of professionals practising without professional indemnity cover following Independent’s collapse without realising it – potentially leaving themselves open to ruin if they are sued.’

Initial concerns over the state of the insurer arose in May when actuaries from Watson Wyatt found large claims had not been entered into the insurer’s accounting system. Watson Wyatt had previously provided Independent’s actuarial certificate and KPMG had signed off its 2000 accounts.

In December last year Independent was valued at nearly £1bn.

‘I have had to deal with a few cases where Independent’s collapse left professional firms without adequate professional negligence cover. However, I am sure there are thousands of such firms out there, particularly as Independent had £30m of professional indemnity premiums,’ said PYV’s Rendell.

‘Independent particularly targeted many professions, such as engineers, accountants, architects and actuaries,’ he added.

Matthew Ives, director of professional stadnards at the ICAEW, said the institute had received a large number of calls from members worried about their PI policies. Ives said the institute was advising members to get in touch with their brokers immediately.

The High Court last week approved Mark Batten and Dan Schwarzmann, partners at PricewaterhouseCoopers, as official liquidators to the collapsed insurance company.

Links

ICAEW to investigate insurer’s collapse

Independent FD unaware of contracts

Liquidators appointed at Independent

SFO called to probe ndependent

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