PracticeConsultingICAEW to investigate insurer’s collapse

ICAEW to investigate insurer's collapse

The ICAEW is to conduct its own investigation into the collapse of Independent Insurance, the insurer ruined by a reported £700m black hole in its accounts.

An investigation committee is deciding what form the probe will take but it is likely to include the work of auditors KPMG and finance director and ICAEW member Dennis Lomas.

‘The institute is currently considering the most appropriate means for an investigation,’ a spokesperson said. ‘Members of the investigation committee are currently deciding whether it would be better to conduct an internal investigation or ask the JDS [accountants Joint Disciplinary Scheme] to do so.’

Independent entered voluntary liquidation after external actuaries from Watson Wyatt found large claims had not been entered into the insurer’s accounting system. Confusion over reinsurance contracts – used to lay off Independent’s risk to other insurers – has also been blamed for the mess.

KPMG said this week it had ‘performed extensive procedures’ on Independent’s reinsurance arrangements and ‘received specific reassurances from management’ of their validity. But some board members, including FD Lomas, claim they had no knowledge of the controversial cover.

A group of Independent’s creditors, brokers and institutional shareholders have approached City legal firm Class Law to look at the possibility of taking action against KPMG and Independent directors. This could offer a short cut for creditors not prepared to wait for legal proceedings to be brought by Independent liquidators PricewaterhouseCoopers.

Stephen Alexander, partner at Class Law, told AccountancyAge.com he would be considering whether KPMG’s work met the standards expected by the accounting profession. KPMG said it had yet to receive any communication regarding legal action.

Links

Liquidators after Independent’s assets

Independent FD unaware of contracts

SFO called to probe Independent

Liquidators appointed at Independent

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