Fresh talks have begun between Folgate and NIG about the insurer providing above market rate commission for Folgate's brokers.

When Folgate set up in March 2002, it intended to secure deals with the top insurers that rewarded large volumes of income with above market rate commissions.

Folgate set up special deals with Norwich Union and AXA, but failed to sign up R&SA, Zurich and NIG for the large volume deals.

Market sources speculated that Folgate chairman Peter Cullum used the start-up's close relationship with its main investor, Royal Bank of Scotland (RBS), to open doors at NIG, which has just been acquired by RBS through Direct Line's takeover of Churchill.

A source close to the talks said that the decision to go ahead with the fresh negotiations was taken last week, but denied that NIG was acting under pressure from RBS.

"The talks are back on because Folgate has a much stronger market position than it did when it started," the source said.

Folgate chief executive Andy Homer said that dialogue between Folgate and NIG had been ongoing, and that through its acquisitions, Folgate had built up a large account with NIG. "It is too early to say how it will go, we want to see what NIG's strategy is in light of the Direct Line deal," said Homer.