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 as a new Web-based insurance agency that would eventually allow customers to obtain a vast array of coverage and financial services. It's not going to happen.

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

The reason, explained Fusura's President, Chairman and Chief Executive Officer Mark A. Parsells in a telephone interview, is simple. Kemper and Prudential changed business strategy, selling off their personal lines property-casualty businesses and pulling its financial support of the agency.

That left AIG as the only company partner, which Mr. Parsells explained could not fund the agency on its own because it would have gone against the "fundamentals of an independent agency, to be impartial." He added that AIG, "did all it could to find a way for us to remain as an independent agency."

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

"This is unfortunate," observed Mr. 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 out of our control."

The technology developed by Fusura will be turned over to its investors, 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 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, he pointed out, is a "terrific direct selling platform, and for a large diverse company, they can use it as a front end to sell multiple product." The investors, he said, are currently looking at how they can apply that technology.

As for the policyholders, discussions are still ongoing where those customers will end up. Mr. Parsells said he could not disclose the size of the agency's book of business.

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

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

Kemper did not immediately return a request for comment.

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

For now, Mr. Parsells said, Fusura is looking at making an orderly transfer of the business to the investors. It recently returned to both the state of Delaware and the city of Wilmington grant money it received to train new employees, with interest.

"While we did not have an obligation to return the money, I thought it was the right thing to do," said Mr. Parsells. He declined 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, Mr. Parsells said after the agency closes he would look for another opportunity.

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

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

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Fusura Online Agency: Losing Partners Sank Us

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