The challenges continue to mount up against UK brokers trying to stay competitive
Brokers are fighting for their lives right now. They’ve been hit by the economic downturn, resulting in businesses going bust or cutting down on premium spend, insurers cutting lines, and commercial rates still in need of big rises.
Moreover, the cost of regulation has spiralled since the financial crisis. This has forced brokers to sell up and has raised the barrier to entry for start-ups.
There is one thing that the FSA could do to help insurance brokers in their time of need: give them their own sub-intermediation class as a ‘pure’ insurance broker.
Biba even commissioned lawyers to draw up a definition. Such a class would at least mean that they would pay for their own mistakes, rather than the blunders of those selling payment protection insurance (PPI).
But the FSA isn’t playing ball. It appears to believe a class for insurance brokers would be expensive and complicated.
The problem now is that the brokers will be paying for the PPI scandal for some time to come. Only a fraction of the people eligible to claim have stepped forward. Unfortunately, brokers should brace themselves for plenty more hefty regulator’s charges.
The EU vote
Leaving the EU would damage trade, warns Lloyd’s chief executive Richard Ward. He may be right, but then he may not be. The likelihood is that there would be benefits as well as drawbacks.
To gain a competitive edge, the UK would almost certainly have to slash corporation tax. That would be a real boon for hard-up insurers. Also, Lloyd’s is keen to trade more freely with emerging markets. A move away from the EU may leave the UK free to strike its own agreements with relevant countries.
Judging the unknown is a treacherous game in which many people have fallen foul. The question of the UK’s membership of the EU looks a particularly tricky one.