Over half of brokers polled underestimated the cost of FSA compliance
The majority of brokers have found the cost of becoming compliant higher than they first anticipated, according to a new survey.
The 2004 Mazars Insurance Brokers Industry Survey, due to be launched today, reveals that 54% of brokers have found meeting FSA regulations more expensive than they expected, while 40% said they had anticipated the level of cost involved. Just 6% of the 200 brokers surveyed were unsure about whether becoming compliant would cost more than they had planned.
Mazars head of insurance Robin Oakes said the finding was not surprising. But Oakes said that some of the costs of becoming compliant, such as ensuring business, succession and disaster recovery plans are in place, have more to do with good management than regulation. "Really it's not a cost of compliance, it's the cost of running a good business," he said.
The survey, conducted in conjunction with Biba in March and April this year, asked brokers about their views on issues such as compliance and regulation, and how to maintain a competitive edge. When asked what impact the cost of regulation would have on profits, 45% said the hit would be less than 5%, while 40% predicted it to be between 5% and 10% of profit. Only 12% said the impact would be greater than 10%.
Last year's survey caused controversy, with brokers predicting that between 600 and 1,800 broking firms would shut by mid-2004 as the market consolidated, a trend which has not been borne out.