More than 1,000 employees of Independent Insurance have been made redundant after the failed company went into provisional liquidation last week.
Independent Insurance's liquidators, PricewaterhouseCoopers, told half of the commercial insurance specialist's staff yesterday morning that they had lost their jobs with immediate effect.
Employees being forced to leave the once-lauded company will receive statutory redundancy payments, which will be partly funded by public money from the Government Redundancy Fund. This fund is only used when companies go into full liquidation, so that workers receive their legally entitled payouts even if their company loses all of its cash.
The fund is rarely used in cases of provisional liquidation. PricewaterhouseCoopers had to launch a legal appeal to gain access to the funds. Independent Insurance, whose debts have turned out to be much greater than previously thought, may not have had enough money to pay the redundancy costs.
The largest number of redundancies will be from the company's Cheadle operation in Cheshire, with substantial losses from its centres in London and Edenbridge in Kent. The divisions to be slashed most heavily are sales, marketing and underwriting new business. The companyhas ceased taking on new customers yet still requires staff to manage its existing business, which in many cases are mainly policies that extend over decades.
The Serious Fraud Office and the regulator the Financial Services Authority have mounted an investigation into the causes of the demise of Independent Insurance. Earlier this month the company encountered problems relating to insurance claims that were not logged on its computer system. The company allegedly took out insurance cover for itself, called reinsurance, unbeknown to some of its directors.