...as it prepares for law firm cull

A leading insurer is demanding to know the financial details of nearly 100 firms, sparking fears that its overgrown panel is about to be slashed.

A letter, in the form of a pro forma spreadsheet, issued by recently merged insurer CGU, requires firms to provide financial and operational data for 1998.

Alistaire Layland, project leader for legal services at CGU, says a decision on which firms will be retained is not far away.

But he refuses to say if the information would itself be used to pare down CGU's panel, or if firms would be invited to tender for a place.

Firms, however, are fearful of the outcome, as one source says: "CGU is doing what Marks & Spencer did when it slashed its suppliers, by finding out how tightly we run ourselves."

He says: "It would be a great shock if we were not kept on the panel."

A source says a place on the panel means a major source of fees.

He says: "But I don't know if CGU is going to be looking for a discount in return for bulk, which for smaller firms is not wildly attractive."

Layland says: "We have been validating the amount of money we have been spending on solicitors and how we operate the panel."

He added, all details would be passed on to the executive and senior management to assess the performance of the panel or panels.

CGU was formed following the merger of Commercial Union and General Accident. Commercial Union cut back its panel prior to the merger.