Brokers should try to help themselves

As predicted, regulation by the Financial Services Authority is starting to bite and provincial brokers are selling up and getting out.

Personal lines is widely expected to be the hardest hit, with Norwich Union and Outright among those already offering to take over personal lines that brokers can no longer support.

The hard market is also having an effect on provincial brokers. Things have got so bad that, according to Aon, companies and trade associations are now turning to captives. Smaller-scale alternatives such as protected cells are opening self-insurance up to newer, much smaller, customers and the market has expanded by an estimated 30%.

These are tough conditions for provincial brokers and just when they need the British Insurance Brokers' Association, the organisation will soon be without a chief executive. The search continues. When BIBA eventually appoints someone they are likely to have to give three or even six months' notice to their existing employer. Either way, BIBA will be without a figurehead throughout autumn, just as the FSA is finalising its rules for general insurance brokers.

However, instead of throwing up their hands and blaming everyone else, brokers could try to help themselves. Some provincial brokers may be selling up but canny intermediaries are buying them. It may be impossible to transact personal lines in small volumes in future but there are solutions. Provincial brokers could sell their personal lines books for an instant cash boost or outsource them to an outfit such as Outright for a regular income.

They could even be the buyers. Norwich Union is not buying personal lines books out of charity, it believes it will make money out of servicing these clients direct. Similarly, new broker Outright believes it can make money out of personal lines if it works in bulk. Personal lines customers are not disappearing - there is still just as much business in the market and someone will make money out of it. The trick is to face up to the changes and take advantage of them.

Similarly, brokers can watch business flow into captives or they can take control of the situation. Aon is itself a broker and will make money from these clients, whether they put their business into the traditional market or a protected cell. If provincial brokers really are finding it impossible to get cover for their commercial clients, perhaps they should look at alternatives. And it goes without saying that more active risk management helps bring prices down and attract capacity.

Finally, while it is unfortunate that BIBA has no chief executive, brokers can still be heard. Brokers that are really concerned about the FSA's rules could always go to the regulator direct - the FSA has repeatedly said it welcomes input. If not, BIBA is the biggest broker voice in the market and has never been a one-man show anyway. Technical director Peter Staddon and Chris Arter, chairman of the regulation committee, are still there. Any brokers who think they could do better could always apply for the job.