The lawyer leading the Independent Insurance class action has said the company's 2000 accounts were “fraudulent”.
Class Law partner Stephen Alexander told the Insurance Times' broker briefing last week that the word “fraud” had been previously missing during discussions on Independent's collapse.
“People have been reluctant to use it but, frankly, we are not, based on the evidence we have now achieved,” he said.
Alexander warned that fraud affected all legal advice policyholders may have received.
“Anybody giving advice to anybody in relation to this matter must bear this in mind because, without it, the advice you're getting from your lawyers is wrong, the advice you are giving is wrong, because you cannot know the true facts, and, with respect to the liquidator, some of the advice he's been given is predicated that this is a normal liquidation,” he said.
“In this country, fraud basically cancels many contracts and therefore it's extremely important for people to understand what their true legal position is.”
Alexander said former Independent employees were inundating the class action with evidence. “We've been advised by employees that, to give you one example, they were all given figures which they could use in their departments for reserves for each month and, once those reserves had been exceeded, the claims were written down to £1 or not put on the system,” he said.
Alexander said his firm was continuing to “delve” into the matter as fast as it could and was considering how far back it could go in terms of examining the account.
Insurance Times managing director Jonathan Shephard, who chaired the briefing, said it was important to differentiate between optimism and fraud.
“If you carry out a review of your policies for reserving or whatever and you take a somewhat optimistic view of where the reserves might need to be, that, in my view, is not fraud,” he said.
“If you know that the reserving policy that you've acquired is beyond any reasonable range and is going to be inadequate and you don't tell people, then that is fraud.”
Former Independent chief executive Michael Bright would not comment.
