QBE Mercantile Mutual has withdrawn from the commercial facility operated by major cluster group IBNA.

The remaining commercial facility insurers – CGU, Zurich and Allianz – have stuck with the facility, although at least one is understood to have warned IBNA that an upturn will be necessary to ensure its continued involvement.

IBNA CEO Paul Serong conceded the insurers have been unhappy with the facility’s high loss ratios for a considerable period. He said the cluster group’s board will “consider the alternatives” at a special board meeting. “Obviously, we would like to retain QBE Mercantile Mutual.

 “It’s not impossible to fix the problem, but it takes time.”

A major obstacle for the IBNA facility was the arrangement under which brokers were compelled to use the facility and the underwriters were compelled to provide the cover. That situation changed “a couple of years ago,” Mr Serong said.

He is confident the three other insurers will stay in the commercial facility, describing their attitude as “very supportive”.

“IBNA members know they have to deliver better business,” he said. “The facility hasn’t been profitable, and we have to find a way to fix that.”