The franchise board reckons there's too much PI cash, but it can't stem the tide, says Andy Cook

Regulation, not for the first time, dominates the news agenda this week.

Firstly, it seems, the Lloyd's franchise board is doing its level best to control the professional indemnity market.

While the board has been quietly approving 2004 business plans over the past weeks and months, the pace of capital coming into the apparently lucrative PI and D&O markets has been accelerating - as our story about Rupert Villers testifies this week.

But the board reckons that too much capital is coming in too fast. True, the market is possibly too hard, but judging claims in this area has become very tricky over the years and a rapid deflation would not allow underwriters to control their exposures with any accuracy.

Unfortunately, not all of the capital is coming through Lloyd's. Andreas Loucaides' new Catlin venture will be

FSA-regulated directly and will be looking to write £150m into the UK market and it is not the only one.

So the danger for Lloyd's underwriters is that they hold their line, while others take advantage.

Another threat to Lloyd's is coming under scrutiny.

It seems that the Treasury is looking at the issue of insurance companies in Gibraltar passporting capacity back into the UK.

This comes as the first liability underwriter to write from Gibraltar is looking to have its licence approved.

The Gibraltar operations have become more than an annoyance to the Treasury, which would dearly like all of those companies to be based in the UK, creating UK jobs and paying UK taxes.

This is proving to be a tough nut to crack as the Treasury's report on Gibraltar has now been delayed by three months, to February 2004 .