16 years to sort out the Independent Insurance mess - Really?

Independent-Insurance

It has taken 16 years to sort out the mess left behind by the failed insurance company Independent.

Here former employee Paul Handleigh and youTalk-insurance founder looks back over the demise of the company that started with such grand plans, and its unbelievably long liquidation process

I received an unexpected letter from PwC the other day. They are Independent Insurance Company liquidators and the letter was advising me a ‘cheque was in the post'.

Holy Mother of God. Who would have thunk it? Sixteen years on and I was finally going to get some cash back from those crooks who left so many hundreds of us high and dry back then.

The background

For those of you too young (or too old, I know how those grey cells die and make you forgetful) the demise of Independent in 2001 was one of the biggest scandals to ever happen in the insurance market. It is so long ago that Googling it may not even do that much good.

To put it into context, the Guardian described the events of the time as a scandal that ranked with the Maxwell affair and the collapse of the Barings Bank. It was dubbed one of “Britain’s worst commercial disasters”.

Our CEO and the founder of the company Michael Bright went to prison. The jury found he was a liar who for years, along with two other senior directors, pulled the wool over the eyes of fellow directors, the company's professional advisers and investors in one of the most comprehensive boardroom cover-ups of recent times.

It left a huge swathe of employees, 1000 in total, including myself, not only without a job, but out of pocket too. Many of us had invested our savings into the company and believed in Bright, who set up the company in 1986 and was the darling of the City. He seemed to have built a hugely profitable firm which in the late 90s was valued at almost £1 billion. Others lost out too – policyholders with outstanding claims and shareholders.

During Bright’s trail, the court heard that figures were manipulated, massive undisclosed liabilities "buried", and loss-making contracts that offloaded risks to other insurers were "concealed". Bright was found guilty of two counts of conspiracy to defraud.  

As a scandal, you couldn’t make it up.

So, like many others, I found another job and wrote off for me what were not inconsiderable shares in the company, thinking myself lucky not to have been burnt more by the situation.  I moved on.

The letter

To say I was incredulous to get the letter from PwC would be a gross understatement. After sixteen long years, I read the letter with great interest…

Dear Mr Handleigh…. waffle, blah, process, lawyer-speak, bluster, BS, blah and waffle - you're going to get some money blah blah etc... Like most people I suspect, my eyes were just trying to make a Usain Bolt like dash to the 'how much bit’ - Show me the money!

The upshot was that after sixteen years, me along with the many other ex-employee creditors were finally going to get about fifteen pence in the pound from monies owing following the collapse.

Yes, I repeat sixteen years later. Yes, that's One Six.  Sixteen whole Gregorian calendar years later. So, why so long?

Now if I were to ask an affluent liquidationist (I’m sure that’s what Jeremy Clarkson would refer to them as) type expert, they'd no doubt rattle off a whole lot of legal and process newspeak which would bore the bejesus out of anyone who could be bothered to listen, but I fear I would still not get a plausible and moreover believable answer to the fundamental question: “Why sixteen years?”

Get it in perspective

This is what I keep thinking:

  • The plans to build an atomic bomb 'The Manhattan Project' which involved developing a whole new area of science took less time from conception to the fateful detonations at Hiroshima and Nagasaki.
  • Emperor Hadrian's wall is 125 kilometres long (largest single construction in Roman history) and archaeologists believe that it took 14 years to construct
  • President Kennedy's famous speech that committed the U.S.A to landing a man on the surface of the moon by the end of the 1960's was made on the 12th September 1962.  Neil Armstrong took his ‘One small step’ on the 20th July 1969.

I could go on, but I think you get my drift. It's simply “crazy-mental-bonkers” (to quote Al Murray), that a task far more-simple than any of the examples mentioned should’ve taken 16 long interminable years.

My gripe here isn't about the money.  It is what it is. Nor is it about the technical machinations of insurance company liquidations, I know it’s a complicated business.  It is just around time. I simply fail to believe that in any universe that 16 years could be considered reasonable and acceptable.

Whilst it's nice to get an unexpected boost to the Handleigh coffers (I think Mrs H may have designs on some of the loot), I have been minded to spare a thought to some of my former less fortunate colleagues.

The fall-out

Whereas young things like me (at the time of The Independent's demise) were able to bounce back, we had time and energy on our side to recover, build and go again, others were less fortunate.

At the time of the collapse some older highly talented colleagues who did their jobs diligently (unlike our crooked CEO) were nearing retirement. This community of people were completely financially broadsided by the events that unfolded.  In some instances, some of my former colleagues were forced to work on for many years past their planned retirement dates with a fraction of the nest eggs they were hoping for.

I’m sure that this took a toll in on their wellbeing and as if this wasn't bad enough, I'm sure that a few may have even not survived to get their 'cheques in the post letter'.

So to bookend this mild rant, Teresa, Jeremy or the other bloke, who's name I can't quite remember, if you are taking some downtime during election campaign and find yourself reading this blog: Sort it out (I know it'll be low down on your to do lists), here’s my tuppence worth - review and reengineer the liquidation process. It's become and industry in itself and can’t be good for individuals or business.

 

Comments

Paul, completely agree with you. It's an industry that requires a serious overhaul in standards and rates chargeable.

Company name: 
LFP
Email address: 
paulhiggins5@sky.com
Telephone number: 
07812 520675
Blog Disclaimer: 

THERE MUST BE A BETTER WAY. Surely this was not the most complex of projects. I remember that Monday morning in June whilst we all thought there was problem we never envisaged collapse.

Company name: 
Thomas McGrath Professional Associates Ltd
Email address: 
tommcgrath1815@gmail.com
Telephone number: 
07770273857
Blog Disclaimer: 

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