With the market set to soften, and the FSA limbering up for a crackdown on add-ons, personal lines motor brokers look set to be squeezed from both sides

Brightside has fared well from the hard market in personal lines motor. As the broking group reported last week, its profits rose 44% in 2011, with the bulk of the growth coming from its eCar and eBike online products.

However, chief executive Arron Banks has warned that the market will soon soften. His business is well placed to weather the downturn in rates, he says – but not all brokers can boast likewise.

Personal lines brokers have been among the winners in the past 12-24 months, resurgent following a period of demise. As the commercial market lingers in the doldrums, personal lines have been turning a profit.

Insurers have recognised the value of intermediaries in this space – they help to cut fraud and bring more loyal customers than the aggregators can offer. Subsequently, insurers have wooed the sector. Meanwhile, the personal lines brokers have responded with creativity and innovation to the eye-wateringly tight profit margins in motor, developing new ancillary and add-on products.

But the happy days could soon be over. Not only are rates set for a downturn, but the FSA is limbering up for a crackdown on add-ons. Personal lines brokers could soon find themselves squeezed from both sides.

Job cuts at Travelers?

This is beginning to look like a trend. Redundancies seem inevitable at Travelers following the restructure announced this morning, though the insurer refused to be drawn. This quickly follows Chartis losing 130 jobs and RSA 120 in February, with 120 Aviva posts to go in Ireland this year.

As the soft commercial market drags on, insurers are cutting any last few millimetres of remaining fat. You can be sure there will be more jobs lost this year.

Lloyd’s robust despite cat losses

There are positive noises ahead of this week’s Lloyd’s results. The market is expected to post a loss of around £1bn which, given one of the costliest cat losses on record, is actually pretty healthy. Moreover, it is thought unlikely to have had to dip into its central fund to pay claims.

This is further evidence of the market’s robustness – and will hardly fail to catch the notice of potential M&A investors.