NU is about to cut loose some broker business. But others will want it, says Andy Cook

Tough choices. A memorable soundbite developed by Tony Blair about the UK's socio-economic future and soon to be adopted by Norwich Union (NU) about the future of general insurance distribution in the UK.

NU reckons brokers will have to start making some tough decisions about their future. Do they have a future? Can they sustain a profitable personal lines book? Can they stand alone or do they need to be in a network? These are key questions brokers need to ask themselves ahead of FSA regulation.

The time for burying heads in the sand is gone, according to NU. It has appointed 12 people to specifically ask brokers: where will your business be in three years time?

At the same time, NU will be presenting the results of its own tough choices. It has decided that it in the long-term the future of its broker-intermediated personal lines will be in support of commercial lines customers - so the car and house of the managing director, say. NU will continue to service personal lines (even unattached to a commercial lines customer), if the broker wants it to. It wants brokers to think long and hard now about its personal lines strategy rather than in 12 months about whether it is sustainable in the long term.

Of course, this does not apply to in-house broker Hill House Hammond, Swinton or any of the other mass market personal lines brokers who can use their size to provide NU with a decent return in the face of competition from Tesco, Sainsbury's and direct insurers.

If brokers have personal lines business that is not attached to commercial customers (who provide good value for money to NU) then it will offer to buy the lead in order to service it through NU Direct. NU calls this philosophy Choices.

Of course, there will be an initial hub-bub. But it is an inevitable commercial decision for NU. Competition is fierce with many brokers even pointing their customers in the direction of Tesco because they simply can't compete on price.