Insurers lodge ING complaint 36 ING heady
Shortly after the ABI made the complaint, ING found £660m to buy up Barings. Tony Baker, deputy director-general of the ABI, said that the bank's behaviour "seems to us not entirely compatible with group supervision of the company and looking after the interests of prospective policyholders".
In April 1993, Orion was "deconsolidated" from the accounts of ING and later placed in provisional liquidation. Because of the deconsolidation, the Dutch group was not legally required to support its former subsidiary.
The Policyholders Protection Board (PPB) in the UK said that it had started paying household insurance claims on the defunct insurer's behalf. Mr Baker said this indicated that ING had not made adequate provisions for its former subsidiary.
However, ING insists that it did make adequate provisions. It referred further enquiries to Orion's provisional liquidators, Price Waterhouse in London.
In its complaint to the DTI, the ABI suggested that insurance supervisors around the world should be informed how ING had treated Orion.
"There are principles involved which may deserve a wider debate," Mr Baker said. He maintained that the reputation of ING in the insurance industry was not high, and said it was "ironic" that the bank was now apparently looking to enhance its reputation by rescuing Barings. He added that ING's behaviour was unprecedented and would "cloud" the view some insurers took of the bank in future. "Whether they would wish to do business with ING is up to them."
Deryck Wright, secretary of the PPB, said the board hoped that ING might still honour its "moral" obligations. But he added that it had given no indication that it would do so.
The ING treatment of Orion set a bad example for other insurers, according to Ian Dean, chief executive of the London market insurer Sphere Drake. But whether his company would do the same would depend on the circumstances. "If a subsidiary is deficient by £5, the parent is going to put the £5 in. If it's £500m, it may not."
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