Brokers risk losing PMI premiums worth around £300m as FSA regulation makes the cost of maintaining small medical books prohibitive, according to The Private Health Partnership managing director Jan Lawson.
Lawson warns that together with insurers culling smaller agencies, FSA compliance could see 50,000 policies drift back on to the market.
She said: "Under FSA compliance, costs may soon outweigh the commission generated for those IFAs and general brokers who only have small portfolios of private medical care.
"This equates to potentially £15m per annum in lost renewal commission for the advisers concerned, which will be quietly reabsorbed by the insurers unless the adviser takes action to protect his position."
Private Health Partnership is believed to be in talks with a number of brokers to buy small to medium PMI books.