Liquidator will not compromise on controversial offer
Brokers could be financially destroyed by the Independent Insurance compromise deal on the return of premium and commission, brokers have warned.
The Creditors of Independent Insurance Group (CIIG) broker sub-group has fired a legal letter off to liquidator PricewaterhouseCoopers (PWC), saying it could not accept the deal without several issues being addressed.
Other brokers said the deal meant that PWC had effectively suggested that some brokers were already trading insolvently.
However, PWC liquidator Dan Schwarzmann, who released the deal for Independent's 800 agency brokers last week, was adamant that the vast majority of brokers must agree to the deal for it to go ahead.
He made it clear that PWC would not make any further compromises.
CIIG chairman and Argyll Insurance Holdings chief executive Kevin Young said the commissions PWC wanted back had already been absorbed in meeting the extra cost of replacing the Independent policies.
"The PWC compromise, which is effectively an ultimatum demanding the return of such commissions, would therefore prejudice the financial stability of many of the brokers involved," he said.
"Brokers are very concerned that the suggested actions would actually cause the collapse of their own businesses."
Other brokers said the legal understanding behind the PWC deal had "enormous implications" for brokers.
"If the liquidator is legally correct, it doesn't matter whether the policyholder creditors of Independent get any premium refund out of the liquidation for the broker to refund commission following policy cancellation," one broker said.
"Following this logic, should brokers not reserve in their accounts commission at risk until the premium of insurance has expired?
"If so, would we not be classified as insolvent?"
The British Insurance Brokers' Association (Biba) has taken a neutral stance on the deal, refusing to advise brokers to accept or reject the offer.