When it opened for business in 2001, Wilmington, Del.-based Fusura was heralded by its founding company partners as a new Web-based insurance agency that eventually would allow customers to obtain a vast array of coverages and financial services. Its not going to happen.
The online independent agency is closing shop in late October and is no longer writing policies with its three carrier partners–American International Group Inc., Kemper Insurance Companies and Prudential Insurance Company of America.
The reason is simple, explains Fusuras President, Chairman and CEO Mark A. Parsells in a telephone interview. Kemper and Prudential changed their business strategy, selling off their personal lines property-casualty businesses and pulling their financial support of the agency.
That left AIG as the only company partner, which Parsells explains, could not fund the agency on its own because it would have gone against the “fundamentals of an independent agency, to be impartial.” He adds that AIG “did all it could to find a way for us to remain as an independent agency.”
Attempts were made to find new funding, but they failed. There was “strong interest” among outside investors, he says, but “given the tight financial market out there, we could not find an investment on mutually acceptable terms.” The only recourse was to close shop, meaning that 98 people will lose their jobs by Oct. 31 when the agency closes its doors.
“This is unfortunate,” observes Parsells. “It is one of those situations where we had a very good business being built; we were ahead of our projections. But we had a fairly straightforward situation that was difficult to overcome.
“The circumstances were not in our favor and were out of our control,” he says.
The technology developed by Fusura will be turned over to its investors, he explains.
“We have a state of the art rating engine, a very strong, quality book of business,” he says. “Everything was on track, but we were building the business with a certain amount of funding that we were counting on [from the investors]. But it was being tranched in over a three-year period, and a significant amount of that money they were not able to put in.”
The technology is a “terrific direct selling platform,” he says, noting that a large diverse company could use it “as a front end to sell multiple products.” The investors, he says, currently are looking at how they can apply that technology.
As for the policyholders, discussions are still ongoing about where those customers will end up. Parsells says he could not disclose the size of the agencys book of business.
An AIG spokesperson says the company would honor all policies written with the carrier.
A Prudential spokesperson says the company is no longer in the p-c business and could not comment on the status of the policies. The company sold the bulk of its homeowners and automobile book to Liberty Mutual.
Kemper did not return a request for comment.
Fusura was writing only automobile but had contemplated moving into other lines. At the time of its opening, AIGs Chairman and CEO Maurice Greenberg said the agency would eventually offer life insurance in addition to other lines of p-c business.
For now, says Parsells, Fusura is looking at making an orderly transfer of the business to the investors. It recently returned grant money (with interest) that it received to train new employees from both the state of Delaware and the city of Wilmington.
“While we did not have an obligation to return the money, I thought it was the right thing to do,” says Parsells. He declines to say how much money was returned, but one press report said the city of Wilmington received more than $30,000.
As for his future, Parsells says that after the agency closes he would look for another opportunity. “Im a start-up and turnaround guy,” the former president and chief operating officer of CitiBank Online observes.
Mark Ruquet is an assistant editor of NUs Property & Casualty edition.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 18, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.