Why aren't more brokers seeing potential for profits in the premium finance market?
The world of premium finance has been strangely quiet of late, following RBS’s decision to run off Finsure last year. That left just two significant players in the market – Close Premium Finance and Premium Credit. Today, Brightside revealed ambitions to join them with the news that it has doubled its premium finance capacity to £30m, after sealing a deal with Clydesdale Bank.
Given the lucrative nature of this market and its current duopoly, it’s surprising that so few other brokers have piled in. It seems an obvious space to play in profitably; perhaps Brightside could set a trend.
The listed broker is making noise in several areas at the moment. It has been linked with a bid to buy RAC, and recently announced profits up 40%. It has also restructured its top management in the interests of “good governance”. We can expect to hear more from Brightside this year.
Solvency II drags on
Hearts will sink at today’s speculation that Solvency II could be delayed by 12 months, not coming into force until 2014. According to reports, the rules would come online as planned in 2013, but insurers would have a 12-month period of grace before having to comply. This will mean more uncertainty, and have implications for the markets’ already gloomy view of insurers.
But if regulators and insurers across Europe are not ready for the new regime, then it is the right thing to do. The FSA has already admitted that it hasn’t got enough time to help firms develop their internal models, introducing a two tier system that will hold smaller firms back.
Meanwhile, actuaries’ salaries are soaring as they become an ever-more scarce resource. Every insurer should have the chance to work out how Solvency II can best work for them. If that means delays, then so be it. Solvency II is going to be with us for a long time – it’s better to get it right.
Ellen Bennett is editor-in-chief.
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