At its launch in 2001, Fusura was heralded as a new breed of P&C insurance agency--an online joint venture of AIG, Prudential Financial and Kemper Insurance Companies--designed to sell personal auto insurance from multiple carriers.
But after Kemper and Prudential changed business strategies and sold off their respective personal property-and-casualty businesses, Wilmington, Del.-based Fusura was left with only one financial supporter (AIG)--a situation that did little to support Fusura's business model of being an impartial agency that sold products from multiple carriers, according to Mark Parsells, Fusura's chairman, president and chief executive officer. As a result, Parsells has decided to wind down the agency's operations. Before the decision was made, Fusura was doing business in 32 states with eight carriers.
"We were founded as an independent, impartial agency and we were started by AIG, along with Prudential and Kemper," Parsells says. "The only way to maintain the integrity of the model was to retain a diversified investor base with multiple investors," so Fusura would not be an agency that sold products from multiple insurance companies but was owned completely by a single carrier. "We could not operate as a division of any single company. It looked like we were going to get funding, but we could not get terms that were agreeable in the timeframe we had established for ourselves," Parsells continues. "Once Prudential and Kemper sold their auto insurance businesses, it was our strong belief that we needed to find other investors to continue to operate."
Because of the funding limitations, Parsells decided that the best decision was to transfer the technology to the investors so that they could leverage the investment internally. However, at press time, AIG was not able to comment on how, or if, the technology would be incorporated into AIG's technology infrastructure. An AIG spokesperson did say that AIG will continue to honor all polices written by the carrier.
As a result, 98 Fusura employees will lose their jobs between now and late October. Although Parsells says Fusura has the funding to continue to operate through the end of the year, he made the decision on July 31 to wind down the operation, in order to be able to provide employees "good severance packages," refund excess capital to the investors, and return job grants and economic development incentives given to Fusura by the city of Wilmington, estimated to be approximately $33,000, according to local press reports.
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio