One of the biggest commercial lines stories this year was the collapse of Independent Insurance.

The Serious Fraud Office (SFO) is now investigating the company amid allegations that its liability business was vastly under-reserved, claims were incorrectly recorded and that business was dramatically under-priced.

There has also been controversy over the company's reinsurance contracts, three of which some directors have claimed were placed by chief executive Michael Bright without their knowledge.

The Policyholders' Protection Board is facing compensation claims from about 200,000 of Independent's personal lines policyholders and firms are struggling as their commercial claims go unpaid.

Independent's liquidators Pricewaterhousecoopers (PWC) have warned that it may take up to a year to produce a scheme of arrangement for the payment of creditors.

PWC hopes to have cancelled all Independent policies by July 31, following a meeting with the British Insurance Brokers' Association (Biba) and leading brokers.

Policyholders were sent a letter on July 10, asking them to invoke the cancellation clauses, if possible, in their policies. If the policy had no cancellation clause, the policyholder was invited to cancel.

Meanwhile, other insurers have picked over the bones of the business, most notably Royal & Sunalliance, which bought Independent's loss adjusting company Property & Casualty Services (PCS) for £3m.

More than 2,000 creditors are expected to take part in a class action against the groups involved in the insurer's failure.

The first target of the action, which will cost creditors 2% of the value of their losses, will be Independent's auditors KPMG.

Brent North Labour MP Barry Gardiner also questioned the FSA on its role in the collapse during a debate in the House of Commons on July 4.

Independent was forced to make 1,044 staff members redundant on June 29.