Brokers must embrace new technology soon or face financial ruin, said Grant Ellis of The Broker Network.

Speaking to the Software Solutions Partners conference in Telford last Thursday, Ellis warne ...

Brokers must embrace new technology soon or face financial ruin, said Grant Ellis of The Broker Network.

Speaking to the Software Solutions Partners conference in Telford last Thursday, Ellis warned brokers that if they failed to comply with FSA rules, their businesses could become devalued.

"By 2004, the value of non-compliant businesses will fall greatly. Those firms which fail to meet the regulations will face being broken up and being sold-off," said Ellis.

Sounding a warning to those brokers who have yet to embrace network technologies, Ellis said there may not be enough capital in the market to buy these businesses.

"I foresee the cost of buying these non-compliant firms to be around £600m. But there will not be enough capital by the end of the current rates cycle."

While Ellis sought to reassure brokers that the large insurers would support small brokers, he urged provincial brokers to implement hi-tech solutions to achieve compliance.

He said: "There is no future for the `stack-it-high, sell-it-cheap' provincial broker. With the advent of consolidation there could be 4000 fewer brokers in five years time.

"Those business with a lower costs base and wider distribution channels will succeed following consolidation."