Brokers to draw clients' attention to Towergate's financial troubles

Brokers will draw their clients’ attention to Towergate’s financial troubles and offer alternatives before any business is placed with its managing general agent, Insurance Times has learned.

Brokerbility, a network of independent commercial brokers which has a multimillion pound relationship with Towergate Underwriting, wrote to its members yesterday to advise them to look for alternative quotes as a matter of precaution.

Chairman Ashwin Mistry said: “We’ve sent out a note to our brokers to say they should be advising their clients on what information is available in the public domain and be aware we will be taking action over the next couple of weeks. We’re looking to offer alternative quotes to existing renewal terms as a matter of precaution in light of the information that’s currently available and will be taking clients’ instructions.

“We have to take a cautionary view for our clients. We have no concern about the insurers who are supporting Towergate at this time. We’re possibly concerned about the staff and their attention to the day job.”

“We’re not looking to do any harm to Towergate,” Mistry said. He added that he would circulate correspondence with Towergate Underwriting chief executive Clive Nathan to the group and let directors evaluate the situation.

Insurance Brokers’ Standards Council chairman Paul Anscombe said brokers needed to evaluate their position in terms of the business they had with Towergate and the capacity provided.

“It is not something that any broker can ignore. To protect your client you have to consider the implications for your clients. Brokers would not be acting diligently if they did not consider the implication to their clients,” he said.

Anscombe said each broker would need to consider their specific relationships.

“I don’t think there’s a right or wrong here,” he said. “It’s not unreasonable for brokers, given the circumstances, to be discussing that internally and considering their way forward.”

Biba said it had no position on the matter.

Supportive insurers

Nathan said he had spoken to every one of the MGA’s major insurers and had “nothing but wholehearted support from each of them” since last Wednesday, when Towergate reported that it would need to sell off non-core parts of the business and renegotiate with its banks to avoid running out of cash in the first quarter of next year.

“There’s no suggestion at all that there’s any issue around capacity,” he said.

Nathan stressed that as an MGA, claims would be paid by insurers which have passed Towergate Underwriting’s security committee, and are covered from the moment Towergate Underwriting signs to accept the risk.

“MGAs are successful because they either provide distribution to a carrier which the carrier doesn’t have, or they’ve got a skill in underwriting in a particular niche which the carrier wants to access.

“As long as I continue to provide those two things as well as I possibly can, I get support from brokers. And we’ve got fantastic support from third party brokers as well as our own internal brokers.”

He added that his team was focused on the day job, rather than speculation about who might buy the company, and that Towergate Underwriting had grown in October and was on track to grow in November too.

Ageas, one of Towergate Underwriting’s capacity providers, said Towergate remained an “extremely valued and important partner.”

Broker distribution and development director Chris Dobson said: “The relationship is long standing and has led to successful growth.  We remain committed to them and this shared goal.”

Ageas has not changed its payment terms with Towergate, he added.