The profits warning and share price collapse of Capita has raised fears that a Carillion-style crash could impact the insurance industry

Concerns are growing about the potential impact on the insurance sector of a collapse of outsourcing company Capita.

More than £1bn was wiped off Capita’s share price on Wednesday after it issued a profits warning, announced a rights issue, and said it will sell off non-core parts of the business, sparking fears that the contractor would go the way of Carillion.

The shares have fallen further since then and now stand at less than half their value of a few days ago.

Capita’s contracts range from collecting the BBC licence fee to electronic tagging of prisoners, but it also has a number of insurance companies and insurance industry bodies among its clients.

Its clients include Flood Re. It was awarded the contract in 2015 to design, build and operate the reinsurance business.

The group provides policy administration, broker services, risk management, claims management and underwriting services. It supplies businesses with end-to-end administration, digital support and business support services.

Among the services it offers are helping businesses migrate off legacy systems onto new platforms, creating customer-centric digital services, managing change and managing regulatory changes.

Shadow minister John Trickett said the government needs to take “serious steps to oversee the activities of Capita”.

He said: “We cannot afford another Carillion.”