... but overflow panel not ruled out

Norwich Union (NU) is to ditch the RAC insurer panels and underwrite the broker's 275,000 policies in house, if its £1.1bn bid for the motor breakdown business is accepted.

A spokesman for NU confirmed the insurer would migrate as much business as it could to the Norwich Union (NU) book, but did not rule out retaining RAC's current panel, run by BDML, for overflow business.

The spokesman said: "Our intention is to take the RAC book in-house. The business will effectively be underwritten by Norwich Union."

RAC currently operates a panel of 22 insurers, including the main composites, through BDML for its motor business.

The book runs to 245,000 policies including the AXA Direct business it bought at the end of last year.

The 30,000-strong home insurance book, which is understood to run through a much smaller panel, will also be migrated across to NU.

Questions have also been raised about the future direction of RAC Insurance's 2.2 million policy legal expenses business. Although NU has traditionally shied away from this area it now looks likely to migrate all of its personal lines legal expenses business into RAC Legal Services, effectively taking the business in-house.

NU legal expenses are currently written by RAC with Capita running the home book. NU was due to review its entire legal expenses portfolio this year.

NU's £1.1 bn offer for RAC looks likely to be rubber stamped by shareholders.

' See news analysis page 10 for more