Independent Insurance was “systematically underpricing” its commercial lines business by between 20 and 50%, Royal & Sunalliance has alleged.
The insurer said it had uncovered extensive evidence of underpricing after examining former Independent business it had been offered by brokers.
RSA said it has 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 RSA said it had had to reprice most of the risks it had accepted because the Independent had discounted its premiums so heavily.
RSA cited one example of a £2m risk that Independent had allegedly quoted for £300,000.
Former Independent staff interviewed for jobs by RSA have told it Independent set its staff “aggressive” growth targets.
RSA 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.”
His colleague, UK commercial liability insurance manager Phil Bell, added: “If we could not get an acceptable minimum premium for commercial business we were prepared to lose it to Independent.
“We estimate that Independent was systematically underpricing its commercial business by between 20 and 50%.”
Bell predicted the colla
