Royal & SunAlliance (R&SA) has become the next major insurer, after Norwich Union and Zurich, to reveal its plans to help its brokers become compliant. But in stark contrast to Zurich, R&SA's vision is weighted heavily in favour of brokers being directly authorised.

Whereas Zurich is offering brokers the option of being appointed representatives (ARs) or tied agents, R&SA is set against its brokers taking this route.

Its argument is that there is no reason for intermediaries whose business is primarily general insurance to be anything other than directly authorised. AR status, it says, will in general only be suitable for those whose main business is not insurance, such as property management companies.

In any event, being an AR would not be an easy option. R&SA has said that it is likely to be just as exacting as the FSA in the regulation of its brokers. It is not just R&SA that is attempting to put brokers off becoming ARs.

The FSA has said that brokers looking to become an AR should have a contingency plan in case their proposed principal fails the authorisation process. To have a fall-back plan will place a significant additional burden on any brokers who wish to become an AR. Should they go as far as to have the machinery in place to become directly authorised if the worst happens and they want to continue to trade? If so, this begs the question: why become an AR at all?

Michael Faulkner