Fraud Office set to investigate collapsed insurance company

The Serious Fraud Office is poised to launch an investigation into Independent Insurance, a stock market favourite for the past five years that announced yesterday it had gone into provisional liquidation.

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Clients face losses as liquidators are called in at Independent Insurance

The Serious Fraud Office is poised to launch an investigation into Independent Insurance, a stock market favourite for the past five years that announced yesterday it had gone into provisional liquidation.

The decision to involve the SFO is unusual, and is a mark of the gravity with which allegations of impropriety surrounding the collapse are being taken. Anyone found to have committed a fraud at the company could face jail.

Inquiries into Independent, which specialised in commercial insurance, will also involve the Financial Services Authority and the company's liquidators, PricewaterhouseCoopers. An SFO spokeswoman said: "We have been passed information from the Financial Services Authority today. We are still examining whether it would be appropriate to launch an investigation."

Independent's difficulties could leave many of its clients out of pocket. Companies that have taken out more cover than is legally required will not receive compensation for any new claims.

The collapse may add to the suffering of those bereaved and injured by the Hatfield rail crash, because Great North Eastern Railways, the company involved in the crash, was insured with Independent.

The failure could herald a rise in premiums on a variety of policies, including those for cars and homes, as claims from the 400,000 individuals insured with Independent will be covered by the industry-funded policyholder protection board. This will impose a heavy cost on other insurers, which they may recoup through premiums.

Independent's chief executive, Michael Bright, has fallen on his sword, resigning last week. Whether his actions would be the focus for the SFO inquiry was not clear.