Fusura Online Agency: Losing Partners Sank Us

By Mark E. Ruquet

NU Online News Service, Aug. 1, 1:53 p.m.EDT?When it opened for business in 2001, Wilmington,Del.-based Fusura was heralded by its founding company partners asa new Web-based insurance agency that would eventually allowcustomers to obtain a vast array of coverage and financialservices. It's not going to happen.

The online independent agency is closing shop in late Octoberand is no longer writing policies with it's three carrier partners:American International Group Inc.; Kemper Insurance Companies; andPrudential Insurance Company of America.

The reason, explained Fusura's President, Chairman and ChiefExecutive Officer Mark A. Parsells in a telephone interview, issimple. Kemper and Prudential changed business strategy, sellingoff their personal lines property-casualty businesses and pullingits financial support of the agency.

That left AIG as the only company partner, which Mr. Parsellsexplained could not fund the agency on its own because it wouldhave gone against the "fundamentals of an independent agency, to beimpartial." He added that AIG, "did all it could to find a way forus to remain as an independent agency."

Attempts were made to find new money, but that failed. The onlyrecourse was to close shop, meaning 98 people will eventually losetheir jobs by Oct. 31, when the agency closes its doors.

"This is unfortunate," observed Mr. Parsells. "It is one ofthose situations where we had a very good business being built, wewere ahead of our projections, but we had a fairly straightforwardsituation that was difficult to overcome. The circumstances werenot in our favor and out of our control."

The technology developed by Fusura will be turned over to itsinvestors, he explained.

"We have a state of the art rating engine, a very strong,quality book of business," he went on. "Everything was on track,but we were building the business with a certain amount of fundingthat we were counting on [from the investors]. But it was beingtranched in over a three-year period, and a significant amount ofthat money they were not able to put in."

The technology, he pointed out, is a "terrific direct sellingplatform, and for a large diverse company, they can use it as afront end to sell multiple product." The investors, he said, arecurrently looking at how they can apply that technology.

As for the policyholders, discussions are still ongoing wherethose customers will end up. Mr. Parsells said he could notdisclose the size of the agency's book of business.

An AIG spokesman said the company would honor all policieswritten with the carrier.

A Prudential spokeswoman said the company is no longer in thep-c business and could not comment on the status of the policies.The company sold its homeowners and automobile book to LibertyMutual.

Kemper did not immediately return a request for comment.

Fusura was writing only automobile, but had contemplated movinginto other lines. At the time of its opening, AIG CEO Maurice"Hank" Greenberg said the agency would eventually offer lifeinsurance in addition to other lines of p-c business.

For now, Mr. Parsells said, Fusura is looking at making anorderly transfer of the business to the investors. It recentlyreturned to both the state of Delaware and the city of Wilmingtongrant money it received to train new employees, with interest.

"While we did not have an obligation to return the money, Ithought it was the right thing to do," said Mr. Parsells. Hedeclined to say how much money was returned, but one press reportsaid the city of Wilmington received more than $30,000.

As for his future, Mr. Parsells said after the agency closes hewould look for another opportunity.

"I'm a start-up and turnaround guy," the former president andchief operating officer of CitiBank Online observed. "And I'llprobably look for another start-up or turnaround."

When asked if it would be in the insurance industry again, hesaid, "I really enjoyed the insurance industry and I'm certainlyopen to it, but I'm going to keep my options open."