Norwich Union (NU) is to allow its brokers to co-mingle insurer and client monies in its new terms of business agreement (TOBA).

NU intermediary business director Ken Wallace said: "We have to be pragmatic. We will be looking closely at brokers' credit arrangements, and we must be sure that the money is protected in a non-statutory trust."

But Wallace said that for large accounts, co-mingling would not be permitted. "For a scheme of say £10m, we wouldn't want it co-mingled."

The move follows, the FSA decision to re-consult on the handling of client monies. In its consultation paper published last month, the regulator said that co-mingling would be allowed subject to insurer approval.

Royal & SunAlliance (R&SA) and AXA have also said that they would allow co-mingling.

R&SA UK commercial director Brendan McManus said: "There is a track record of our brokers co-mingling successfully and we trust the brokers we do business with."

But some insurers, such as Zurich and Groupama, still have to decide on the issue.

A spokeswoman for Zurich said: "We are in the process of finalising our Toba. We haven't got a final position on co-mingling yet."