Cgu has dealt a blow to hundreds of brokers and intermediaries by announcing its intention to withdraw almost completely as a Key Choice panel insurer, writes Alaric Nightingale.
Key Choice is the marketing arm of one of the UK's largest broker software houses, Computer Sciences Corporation (CSC).
Until now, 700 Key Choice brokers had agencies with CGU, but following the withdrawal, there will be just ten.
The insurer said that it is also reviewing its entire motor business for profitability. CGU receives around £2 million a year from Key Choice brokers for motor business, but poor loss ratios have prompted the withdrawal. However industry sources suggest that CGU's estimate is conservative and the figure could be as high as £10m.
"CGU has not entirely withdrawn from Key Choice. They are applying a set of criteria based upon premium income and loss ratios," said CSC marketing director Tony Barker.
He also hit out at insurers who he believes are unfairly blaming brokers for bad business.
"Brokers don't fix the rates, underwriters do. If the answer comes back from an underwriter that the broker can write such and such a risk at such and such a premium, then of course the broker will do that,"he said.
"If that then turns out to be bad business, it is not really fair to blame the broker."
A spokesman for CGU said: "We are reviewing every area of business, but particularly in the motor market where results have not been good." As reported last month, CSC is also carrying out a strategic review of its Key Choice broker base and this could mean many broker members being axed.
Barker said CSC had decided to close Key Sure, one of the groups within the Key Choice marketing group. Other software houses said they did not anticipate a CGU withdrawal.
Policy Master's Jonathan Davey said: "I can confirm it doesn't apply to us. We have a strong relationship with CGU with an expanding book of business that's currently running profitably."
