Final reckoning for Independent fraudsters

by Gill Montia

Story link: Final reckoning for Independent fraudsters

Three former employees of Independent Insurance are now in custody awaiting sentence, having been found guilty of fraud, in what has been described as one of the UK’s “worst commercial disasters” of recent times.

Michael Bright, former chief executive, chairman and managing director at Independent Insurance has been detained with colleagues Philip Condon, the firm’s deputy managing director, and finance director Dennis Lomas.

The company collapsed in 2001 after an investigation by the Serious Fraud Office accused the three of deceiving fellow “directors, employees, actuaries, auditors, re-insurers, shareholders, policyholders and others … by dishonestly withholding claims data”.

Mr Bright and Mr Lomas have also been found guilty of “making incomplete disclosure” of its re-insurance agreements between 1998 and 2001.

The fraud took the form of holding back information from accountants about outstanding “claims reserves”, which are amounts allowed for claims that have yet to be settled.

At its height Independent was hailed as an industry leader and by 2000 the market value of the company had increased to around £1 billion.

At the time of its collapse the business employed 1,000 workers, some of whom not only lost their jobs but also savings that had been invested in the company’s “share and incentive” scheme.

In addition, large numbers of customers were left without cover. Around 500,000 private and 40,000 commercial policyholders have since received a total of £357 million from the Financial Services Authority’s compensation scheme.

The trial lasted four months and has been described as one of the Serious Fraud Office’s most complex and expensive investigations.