Towergate under pressure

RSA’s decision to withdraw from Fusion is an embarrassing blow to Towergate.

The company was the lead insurer on Fusion’s special risks panel and is understood to have made the decision because of the poor returns generated by Fusion.

It is not the first time that Towergate has lost the support of an insurer on a scheme.

But Fusion is one of the consolidator’s flagship businesses, so the departure of such a key insurer is bad news indeed.

The question is whether Fusion’s other three key underwriting partners – AXA, Norwich Union (NU) and Allianz – will follow RSA’s lead and withdraw their capacity.

“The withdrawal of another major insurer from the Fusion panel would be immense blow.

Towergate had high hopes for Fusion when the business acquired it in November 2005, looking to double its £100m size within 18 months of the purchase. But well placed sources suggest that the Fusion business has actually declined in size.

NU and Allianz are both understood to be reviewing their position on the Fusion panel. Allianz Commercial general manager Chris Hanks admits that the Fusion business has not performed as well as Allianz had hoped.

And NU is getting tougher in assessing the profitability of its business deals. Sales and marketing director John Kitson said earlier this year: “We have gone up a gear in respect of [assessing the profitability of] commissions and profit shares. It has to add up.”

Towergate will now be under pressure to address any profitability issues that the other panel members may have. The withdrawal of another major insurer from the Fusion panel would be immense blow.