Battle-lines were drawn this week as underwriting agents prepared to slash the rates they offer to non-Towergate brokers in response to Towergate's decision to 'favour' its own underwriting agency, Fusion.

It is understood that Fusion will automatically be favoured on any new business from Towergate's 100-plus brokers, unless the client requests the business be put to market.

A number of underwriting agents have also told Insurance Times they will be aggressively targeting non-Towergate brokers in a bid to mitigate the potentially disastrous effects of Towergate's decision.

One Yorkshire-based underwriter said: "Towergate has made it clear to us it will favour Fusion, and this will include moving our renewals across to them.

"Our position with Towergate is now clear. Where we have the opportunity to compete for Towergate business we should pull out all the stops to secure it - we need to at least replace the business that will be lost."

The decision to place Towergate's business through Fusion has also led to speculation over the future of the panel insurers' underwriting teams, who may become surplus to requirements .

Chris Hanks, general manager of Allianz Cornhill Commercial, claimed its decision to reduce the number of teams in Leeds from four to three was "entirely unrelated" to the Fusion deal.

Norwich Union meanwhile said it would not be laying off some its NU Bonus staff based in the North. A spokesman said it intended to increase the number of on-site underwriters as previously announced.