Independent Insurance was “systematically underpricing” its commercial lines business by between 20% and 50%, Royal & Sunalliance (R&SA) has alleged.
The insurer said it had uncovered extensive evidence of underpricing after examining former Independent business it had been offered by brokers.
R&SA said it had netted more than £100m of business since Independent collapsed into voluntary liquidation on June 17. This breaks down to a gross written premium of £60m for commercial business and £40m for personal lines, priced on Independent terms.
But R&SA said it had to reprice most of the risks it had accepted because the Independent had discounted its premiums so heavily. It cited one example of a £2m risk that Independent had allegedly quoted for £300,000.
Former Independent staff interviewed for jobs by R&SA have said Independent set its staff “aggressive” growth targets.
R&SA UK commercial underwriting manager Colin Short said: “Commercial insurance is a complex business and you cannot run a commercial insurance company by piling it high and selling it cheap like a cut-price supermarket.”