Royal Bank decision will help brokers, says Michael Faulkner

NIG has been making the front pages. On the positive side, brokers can look forward to more capacity for SME business thanks to its new owner Royal Bank of Scotland (RBS).

Despite dominating the small business banking market, RBS will not be using its banking network to sell SME insurance. According to one source, RBS saw "how Lloyd's TSB fared" when it tried to do this. Instead NIG, and brokers, will reap the benefits.

Insurers will be less happy at this move. It has sparked fears of a price war, which would be bad news for the likes of AXA, Norwich Union and Groupama who are also gunning for the small business market.

Turning to NIG's bad news, it emerged that its special risks division, which underwrites areas such as mechanical breakdown insurance and legal expenses, is to go into run-off at the end of the year.

The division had been performing badly - not helped by an estimated £100m exposure to The Accident Group (TAG) - and NIG was looking for a buyer.

But despite a few curious glances over the book of business no one was willing to stump up the cash.

The fact that the TAG exposure was ring-fenced and retained by NIG's former owner Credit Suisse did not help to sweeten the pill it would seem.

The Department for Work and Pensions' (DWP) long-awaited second report into the employers' liability (EL) crisis is expected this month. The DWP is awaiting the completion of work being done by the Health & Safety Executive (HSE) and the ABI.

The HSE has commissioned a consultancy to develop a risk profiling index that could become a universal benchmark for insurers. And the ABI is studying the issue of legal costs and the separation of long-tail claims from accident claims.

The ABI is also looking into the possibility of setting up an EL adjudication panel that would provide a fast-track non-adversarial way of dealing with claims. Claimants would present their case to a panel of independent experts who would make an immediate decision on damages.

Such an approach could lead to faster and cheaper resolution of EL claims, but even in its early stages of consideration, the concept has its detractors.

Plaintiff solicitors are questioning whether it will only serve to achieve the opposite effects, increasing complexity and adding another layer of beaurocracy.

The Lloyd's franchise board has been casting its steely gaze on the energy market. The concern was that increased capacity in the market was putting downward pressure on rates. The problem for Lloyd's is that much of the additional capacity is coming from outside the market, particularly from Bermuda. Nevertheless, there is no doubt the franchise board will be keeping an eye on its own underwriters to ensure that they don't start doing anything untoward with their rating.

The publication of the FSA's near final rules looks to have sparked a surge in the number of brokers looking to sell or join networks. Brokers have reported "dramatic" increases in the number of inquiries to sell.

And networks have also been enjoying growing interest.

Experts predict that this trend will increase in the coming months as PS159 and PS174 have provided brokers with more clarity about their future options.

Finally, Lloyd's insurer Beazley has sailed into a storm of controversy over its involvement in a convey of US navy 'ghost ships'. The decaying ships, containing asbestos and other carcinogens, are being sailed to Hartlepool for dismantling. Beazley has underwritten the ships' journey by tug from their current moorings in Virginia. MPs and environmental groups fear that the ships will leak causing an environmental disaster.