Staff of fallen Independent Insurance could have to wait up to 18 months to receive only 10-16% of their severance packages, it has emerged.

Administrators PWC have told former staff the final sum will depend on how much is left over after long-tail claims, especially employers’ liability, are paid off out of the pot of money put together from Independent’s remaining assets.

The length of time staff will have to wait for their payments is unknown, but sources believe the wait could be as long as 18 months. Details of the potential final dividend are contained in an update from PWC.

One former staff member, who did not want to be named, said: “Independent Insurance was quite well reserved, so this will come as a real kick in the teeth that there’s so little left for staff.”

Independent Insurance collapsed 10 years ago after directors were found to have withheld claims data from its actuaries, and its eventual collapse cost financial authorities at least £357m in compensation and 1,000 jobs were lost.

Michael Bright, the founder and former chief executive, was sentenced to seven years in jail for committing fraud that helped to cause the company’s demise.

Two of his deputies - Philip Condon, the company’s former deputy managing director, and Dennis Lomas, the former finance director - were also jailed for their parts in the conspiracy.

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