Following meetings with the broking community, Dan Schwarzmann, joint administrator with Mark Batten at PwC, set out the broad terms of the deal.
Under the proposal, brokers will ensure time-on-risk premiums are collected and paid to Independent, while the insurance company, in return, will forgo any right to time-off-risk premiums due for post-cancellation periods. In addition, brokers will settle commissions due on return premiums to Independent.
According to PwC, the success of the deal depends on a ‘very high proportion of brokers agreeing to, and contracts, which each broker will need to accept, should be confirmed and available by the end of May 2002’.
Schwarzmann, who along with Batten, were appointed joint provisional liquidators in June 2001, said it had always been keen to resolve the matter without the need for litigation.
‘From my discussions with representatives of the broking community I am confident that this is a fair deal all round,’ he said.
Independent Insurance collapsed in early 2001 after external actuaries Watson Wyatt discovered huge losses arising from claims that had not been entered into the company’s accounting system.
At the end of 2000, Independent Insurance had a market capitalisation of £1bn and was considered the darling of the insurance industry headed by the flamboyant figure of Michael Bright.
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