British insurers are joining brokers in opposing a key plank in the Blair Government’s Financial Services Authority (FSA) reforms. The Insurance Times says the insurers believe the move to treat all commercial clients with a turnover of less than £1 million ($2.57 million) as private customers will amount to a one-off cost of $128.5 million and an annual cost of up to $51 million.

The Association of British Insurers (ABI) is even more apoplectic about the proposal than the brokers, claiming that the additional costs will have to be passed on to consumers in the form of higher premiums. The ABI supplied the figures when the FSA showed just how heavy-handed it can be. It said the ABI should quantify the costs or cop the change.

The move would give full consumer protection to about 3.7 million companies, or about 97% of British businesses.

Both major broker organisations have warned the move would be costly, although they haven’t attempted to detail the costs. But they have indicated in submissions to the Government that documentation that would have to be supplied to commercial clients – in the same way as the Australian FSRA requires for private customers only – would come at a heavy price.

Compulsory FSA regulation comes into effect in January 2005.