The aftershocks of Ward Evans are echoing around the industry, but corporate collapses will continue despite the mountain of red tape, says John Jackson

How financially secure are insurance companies - are brokers sitting on potential time-bombs of trading with insurers who may well go bust in the near future?

Conversely, just how safe are broking firms? Is everybody eyeing each other up warily? More to the point, who is next for the shock announcement?

This question of solvency is now echoing round the industry as the catalogue of disasters grows from the collapse of insurer Independent to the demise of broker Ward Evans.

What is ironic is that fears over solvency come at a time when premiums have been going through the roof. Surely, in such circumstances, companies should be more secure?

Even the European Commission is getting in on the act, castigating the government over allegations of failing to implement European insurance directives relating to Lloyd's.

However, full marks to Lloyd's chairman Lord Levene for talking up the Lloyd's Market when he recently addressed Airmic. We need more of this positive thinking - out loud.

The solvency problems have also come about despite ever-increasing EU and UK government regulation of company directors and business ethics.

The recent Higgs report on the role of non-executive directors is only the latest in this avalanche of attempts to make commercial life more secure.

So far this red tape has not been notable by its success.

Unfortunately, fewer players mean less choice. That, in turn, leaves brokers and insurers more exposed to the elements. It may mean fewer crashes, but unfortunately it will also mean bigger collapses.

Whatever the merits of FSA regulation, it has not stopped the rot. The FSA did not stop Independent, Equitable Life et al. It is unlikely it would have prevented Ward Evans.

The revelation by outgoing FSA chairman Sir Howard Davies that life insurers had sold between £20bn and £25bn of shares in the past 18 months to retain solvency is a worrying statistic. Some of those life offices are also general insurers.

The FSA largely seems to be there to shut the door after the insolvent horse has bolted. Moreover, all these collapses have come about despite rapid consolidation of the market, in which it was claimed that insurers and brokers would be stronger as weaker competitors exited the market.

In addition, there is the current London stock market gloom - but what a good time to buy insurance company shares.

However, while the solvency problem persists, underwriters are going to be under even stricter orders on the business they can accept.

More commercial firms will become uninsurable, as will many more private individuals. After all, if insurers and brokers themselves are seen as possible risks, why should their clients be regarded as more secure?

Do you agree that the insolvency problem cannot be resolved by regulation? Email your views to