Business as usual says Towergate chairman.
Towergate chairman Peter Cullum (pictured) has hit back at claims that Fusion, the broker’s underwriting arm, has suffered from dwindling capacity.
Cullum’s comments followed the news, reported in Insurance Times last week, that RSA had cancelled its binding agreement with Fusion because of poor returns, and that other insurers were set to follow suit. It is understood that Norwich Union and AXA are also in the process of cancelling their agreements with the underwriting agency.
But Cullum said: “It is simply wrong to take an inference that capacity has been withdrawn. It is business as usual for 2008 arrangements and, in line with our normal process, we are in negotiation with all our insurer partners regarding 2009, although many of our arrangements are already in place through to 2010 and beyond.”
The row comes as relations between the large consolidating brokers and major insurers grow increasingly strained, with a number of insurers stating that they would rather lose business than pay sky high commissions.
“The returns on a few of our accounts were not as we or the insurers really wanted.
Cullum admitted that Towergate’s 2007 results had been poorer than expected, but blamed last summer’s floods and insisted Fusion had outperformed the market.
He said: “The returns on a few of our accounts were not as we or the insurers really wanted. However, insurance is not a fast buck industry, it is judged over a five-year cycle and we can put our figures up against anyone’s.”
He insisted that Fusion’s underwriting capacity for 2009 was “in great shape” and suggested that if anything, it was likely to be oversubscribed.
Cullum concluded: “Of course everyone would like to earn more or pay less – who wouldn’t? Remuneration, whether paid to us or to third party brokers, is always negotiable and there are always many variables involved when renewing a facility, and different ways you can structure deals.”