The FSA has dramatically underestimated the cost of implementing insurance sales regulations on motor traders.
Norwich Union (NU) motor trade manager Barry Hogg said that the cost of implementing the regulations, which come into force in January 2005, will be more than £100m.
"The FSA calculated that the cost to the entire secondary insurance sales market would be £15m," Hogg said.
"In terms of buying PI cover, motor traders will spend more than £20m per year and then there are training costs and opportunity costs associated with compliance," he added.
NU has launched a stand-alone professional indemnity cover for its existing 20,000-plus motor trade customers.
Hogg said that cover would also be available to motor traders moving to NU from other insurers, but that it was not available separately for brokers to sell.
The cover launched earlier this month, but Hogg said that a lot of traders will hold off on buying cover until January when they need it. "We've had plenty of inquiries but this will cost £10,000-£20,000 for bigger dealers," he said.
Brokers said they were disappointed that NU would not let them sell the product.
