Jersey Mutual Insurance Society (JMIS) is being investigated by the police following months of "potential fraudulent activity," according to local press reports.
On Thursday JMIS informed members informing them of the situation and confirmed that none of its clients' policies had been affected, according to the Jersey Evening Post.
The company explained in its financial report last week: "While the full impact of such activity has yet to be determined, it appears that some amounts to reinsurers [insurers of insurance companies] over a number of years may have been inappropriately withheld.
"As a result, a provision has been included in these financial statements for the year ended 30 September 2018 amounting to £343,645 as due to reinsurers in this respect," the company's report said.
Sam le Breton, Jersey Mutual's president, said in his letter to clients: "We regret to advise you that we have recently become aware of potential fraudulent activity involving our finances that has occurred over a number of years. As a consequence we are currently undertaking detailed investigations as to the significance and impact of this activity."
Le Breton explained: "We have informed our regulator, the Jersey Financial Services Commission, along with the States of Jersey Police - Joint Financial Crimes Unit and the matter is subject to their investigation. We continue to assist them fully."